The grass isn’t greener on your side of the fence – why doing your own bookkeeping doesn’t save you money
Posted on 2nd June 2021 at 09:03
If you’re a small business owner you might think that doing your own bookkeeping is a way to save money.
While it’s important to manage your costs, it’s estimated that almost one third of businesses fail within the first two years because they simply run out of money. If you don’t have a good overview of your business finances because you have fallen behind with your bookkeeping you could be putting your business at risk.
Keeping things organised
We often meet business owners who have simply put all their receipts into a carrier bag or shoe box. Of course, they planned to organise all this information but the longer they have left it the harder it has become to deal with.
By the end of the quarter or the year, this jumble of information has become a real problem. VAT, self-assessment tax returns, and company accounts all need to be completed and there isn’t enough time left to do it themselves.
We recommend accounting software in the cloud and useful apps to help keep things organised, but many need urgent help to sort out their backlog of information.
Managing your margins
Even when you are issuing plenty of invoices it’s possible that your business isn’t profitable. If you don’t have a complete picture of all your costs and expenses you could simply run out of money.
Working with a professional bookkeeper will help you to keep track of your profit margins and provide you with useful financial reports which can show you how to reduce operating expenses and improve profitability.
Your bookkeeper can input all your monthly transactions, handle payroll, and make sure your suppliers are paid on time, so you won’t find yourself faced with large, unexpected bills to pay.
Making best use of your time
Although we really enjoy bookkeeping, we know that there are a lot of people who don’t. Recording expenses, checking invoices, and reconciling bank accounts can drop down the list of priorities very quickly when you’re busy running your business.
Bookkeepers will take less time to keep things up to date because they are trained and experienced and know how to record everything in the right way.
So, don’t think about how much it might cost for a bookkeeper to take on this role for you, think about how much more time you can spend doing what you do best.
Paying your taxes
assessment tax return still needs to be completed you won’t know how much additional tax must be paid or how much your first payment on account for the coming tax year will be.
A bookkeeper will help you to avoid this situation and will also know what you can claim as legitimate business expenses, which can help to reduce your tax bill. With everything up to date you can make sure you have enough money in reserve to pay your taxes.
Knowing your business
Working with a bookkeeper regularly means they can learn how your business operates. They will know when regular bills need to be paid and can let you know when invoice payments are overdue. In many cases they can identify missing or inaccurate information quickly, saving you time and making sure important transactions aren’t delayed.
You might consider employing someone to do your bookkeeping for you on a full- or part-time basis. When your business is bigger this might be a good option, but you will also be paying for their holidays, illness, National Insurance, pension contributions, and insurance. In quiet times they might not have enough to do.
In the meantime, you can work with a bookkeeper on an occasional, monthly, or quarterly basis and know what you will pay per hour for their services. You will also have the flexibility to ask for some extra hours at busy times.
If you would like to know more about how a bookkeeper can help you run your business, please get in touch.
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