Why should you have a bookkeeper?
Over the years I have spoken to a great many business owners; some of which don’t have a bookkeeper preferring instead to do their own books. Each have their own personal reasons for this, all of which I can empathise with. I thought I would share with you some of those concerns I have heard and dispel a few of the myths.
If I do my own books, I will be close to my cashflow
Of course, as a business owner you want to feel close to what is going on in your business this is completely understandable – more than that it’s imperative if you are to make timely decisions to ensure your business moves in the right direction. Does this mean you have to do the nitty-gritty of the bookkeeping yourself? I don’t think so. With a competent bookkeeper dealing with the day to day stuff you, as the business owner, can get on with running the business.
You should be reading your financial statements and the accounts receivable report, not preparing them. Your time and skills are too valuable to be doing work that others can do and probably do more efficiently, because it is their area of expertise. The bookkeeper is also a second pair of eyes and they will often pick up on things that would otherwise be overlooked: for example that direct debit that is going out of the bank each month for software you stopped using some time ago. I have personally come across a business paying in excess of £300 per month for Sage software and support a good 12 months after moving to Xero, costing the company £3,600 the saving when this was cancelled – effectively made the bookkeeping fees cost-neutral for that first year. When was the last time you did an audit of the direct debits coming out of your bank? Are any of them for software or services you no longer use?
You feel uncomfortable sharing confidential information
This is only natural, it’s private right? Well not exactly, if you are a limited company you will be required to file accounts at Companies House and these can be viewed by anyone. So this is something the business owner needs to overcome; especially if the business is a limited company. As a business owner you simply cannot maximize the value in your business without a small team of trusted advisors.
Trusted being the key word here, your team should start with a qualified bookkeeper and a good accountant both of whom abide by a Code of Professional Ethics ensuring complete confidentiality. I applaud all business owners whether sole traders, partnerships or limited companies, you are all amazing, doing a fantastic job. I would not attempt to service my car, fix my boiler or do anything remotely electrical in my home, I leave that to people who know what they are doing and it is similar when it comes to the bookkeeping and accounts. Leave the numbers to the bean counters! For example, we recently started working with a business who weren’t aware they could claim back the VAT on the fuel element of their staff mileage claims, thus reducing their VAT liability. Another who was paying a direct debit for Sage payroll 12 months after they stopped using it. The bookkeeper is there to help you succeed.
You think they’re expensive
Actually a qualified bookkeeper worth their salt will be able to offer you a package deal a simple scale of fees based on the number of transactions so you don’t get any nasty surprises when you received the bill. In fact, in many cases, as an experienced qualified bookkeeper, I will be able to identify efficiency savings in other areas of your business, which, in some cases, could equate to more than the fees.
A second pair of eyes looking out for your best interests, someone to bounce ideas off, books up to date, no pawing over paperwork at the weekend when you should be relaxing and recharging your batteries. Not as expensive as you think!
You don’t know how to find a good one
This can be problem especially because anybody can call themselves a bookkeeper. This is so true and it is especially important that you do some background checks before taking on a bookkeeper.
It can often not become apparent that there is something wrong until the accountant starts to do the year end accounts and by then there could be a big bill to put things right. So how do you find a good one? There are several professional bodies offering accreditation to bookkeepers. These professional bodies also ensure that their members follow strict guidelines, have the appropriate insurances and complete ongoing training to ensure they are offering up to date advice; especially important where tax matters are concerned as these rules are changing all the time.
Each professional body has a directory of members, their level of membership and their competencies. Check the websites below to see if the bookkeeper you are considering using is listed:
- Association of Accounting Technicians
- International Association of Bookkeepers
- Institute of Certified Bookkeepers
Your current situation is embarrassingly out of control
Believe me I understand this one! We are not here to judge your bookkeeping skills and it is a skill believe me. Bookkeepers are used to walking into messes and have seen it all before, after all it is what we do. You’ll probably be astounded at how fast we can clean up yours and create some useful management reports, giving you the all-important numbers to help you make sound business decisions for your business.
All told, a good bookkeeper is one of the best investments you can make in yourself and your business.
Having listed the five main reasons SME’s give for not using a bookkeeper, I would like to give you 10 good reasons to use one!
NOT using a bookkeeper can create some nasty problems, which, if left unchecked, can cause major stress for the business owner and employees alike.
Here are just ten examples that I have come across:
- Payroll filings get done late, incorrectly, or *shudder* not at all.
- Invoices don’t get created and sent to customers on time, impacting business cash flow.
- Outstanding invoices don’t get tracked and followed up on, no credit control in place.
- Bills are paid late, incurring late fees and ill-will among suppliers.
- Cash and inventory goes missing, more common than you think.
- Messy internal processes hamper business growth.
- The lack of current or accurate financial information makes it tough to make sound decisions.
- It’s stressful not knowing how much cash is available.
- Turnover not monitored, and a non-VAT registered business unknowingly goes over the threshold at which they need to register for VAT resulting in penalty charges.
- Doing the books yourself eats into family time and may cause friction (and more stress).
All of this takes away your time, energy and peace of mind – not to mention how badly it affects your business’s financial results. There is also the matter of increased accountancy fees as your accountant must put everything right before they are able to compile your year-end figures.
Most importantly of all it keeps you from your REAL job which is to maximize your business’s value for you and your family.
Originally posted 2020-10-28 15:35:30.
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