Do you need a bookkeeper or an accountant?

As most small business owners know, time is precious. It’s important to prioritise the things you do best. 

 

When it comes to keeping your accounts up to date, the answer is usually easy. Ask qualified professionals to do it. 

 

Your bookkeeper is your day-to-day contact, keeping all your receipts and records properly organised for you. 

 

Your accountant adds extra value to your business by: 

 

Bookkeepers' fees are usually based on the number of transactions they handle while accountants normally charge hourly rates. Your accountancy costs might be averaged out over the year, so you can pay a monthly fee. 

 

You can ask for the rates for each type of service you would like to use, as well as quotations for the services you want. 

 

Income and expenditure. Managing your costs and sales keeps your business going. You need accurate figures so that you know how things are going on a weekly, monthly and quarterly basis. 

 

You can’t afford to wait until the end of the year to find out you’ve spent more than you’ve earned. 

 

You also need accurate figures for your tax returns, salaries, National Insurance contributions and VAT. 

 

By making sure your accounts are regularly updated all this is much easier (and cheaper) when it comes to completing your year-end accounts and tax return. 

 

A finance system. A small investment in Cloud-based computer software such as Xero can make your life much easier. It provides all the records bookkeepers and accountants need to prepare your accounts. You can also see your latest financial information at any time. 

 

Your bookkeeper can add invoices and receipts for you regularly to keep everything up-to-date, ready for your year-end returns. 

 

If you’re registered for VAT, your bookkeeper can prepare and submit your quarterly online returns for you. Making Tax Digital for VAT means that accounts for VAT-registered businesses can only be submitted using ‘compatible software’. 

 

Using purpose designed software also makes it easy to create useful financial reports about the things you really want to know. 

 

Budgets. To avoid any nasty surprises, it’s a good idea to put aside 25% to 30% of all your income to cover your tax liabilities. If you are registered for VAT, you also need to make sure that you have enough money to cover your quarterly VAT payments. 

 

Your bookkeeper can make sure everything is properly allocated so that you have the right amount in reserve. This can be a great weight off your shoulders. 

 

If you have plans to grow your business an accountant can help you prepare reports for lenders and investors. Accountants can also advise you about setting and managing your financial goals. 

 

Expenses. Making sure you claim all of your allowable business expenses help reduce your tax bill. Your bookkeeper helps you to keep track of allowable expenses.