Who Needs Bookkeeping Services
- Posted by:
- Bookkeeping, Tax, Accounting, Expenses, cash
- Posted date:
Who needs bookkeeping services? This article asks: does your business needs bookkeeping services? Find out more about when you should hire a bookkeeper.
Does Your Business Need Bookkeeping Services?
Small business owners take great pride in the fact they've built themselves from the ground up. This fierce independence is a natural benefit when starting, as it keeps costs low and allows for greater control over operations. But as any small business grows, so do the responsibilities of running it. One of these responsibilities is accurate bookkeeping, which, on top of everything else, can be a real drain on your time. And, being such a crucial part of any company, a DIY bookkeeping approach might not be in your best interests.
While you may be able to stay on top of the bookkeeping for a small business using Excel or online accounting software, the paperwork will quickly start to swamp you as that business grows. Eventually, the financial needs of your own business will become a burden, preventing you from attending to other crucial areas. However, knowing when you've reached this point in your business life can be difficult. So, here are our signs for when your business requires a professional bookkeeping service:
Are Your Books Outdated?
If you have a giant backlog of receipts, paperwork and unreconciled income and expenses, you're likely in dire need of a professional bookkeeper. While these symptoms are usually caused by people's general fear or unwillingness to manage their accounts, there are several other reasons why your books might be outdated.
Your paperwork system or accounting may be too fractured, meaning it's incredibly difficult to keep track of all your financial records. This will take a lot more work to reconcile, again putting most businesses off getting around to sorting their accounts, leading to errors and inconsistencies. If you're currently keeping your client or supplier invoices in one place, your expenses in another, and tracking inventory and time elsewhere, chances are professional bookkeeping can help you.
Keeping accurate track of your finances is crucial for the growth and prosperity of your business, meaning outdated books can cripple your efficiency. Tracking cash flow can become almost impossible, making keeping track of your business's health much more difficult. Hiring an in-house bookkeeper or outsourcing to a professional bookkeeping business will solve all this, giving you a better picture of your financial situation.
Do You Have Enough Time For Your Business?
As your business grows, you're likely to start to find clients, meaning more bills and more paperwork. With all this to do, finding time for your bookkeeping and ensuring your business continues to grow can be difficult. Outsourcing your bookkeeping to a professional bookkeeping business is the perfect way to prioritise your time toward the more important parts of running a business.
Do You Only Update Your Books Before Tax Season?
Suppose you're one of those business owners who struggle to keep up with their bookkeeping before rushing to get everything together just before tax time. In that case, professional bookkeeping is a must-have for several reasons. Some of the problems that usually arise when doing your bookkeeping this way include:
- Never having accurate financial statements, profit and loss statements or up-to-date books to guide your business decisions and track your financial health.
- When you finally get around to sending your returns to your accountant, leaving everything to the last minute will make this more expensive. Having a bookkeeper on hand throughout the tax year ensures all your paperwork is kept together accurately for smooth filing.
- All the additional stress that naturally arises from leaving your taxes to the last minute can hurt the rest of your business.
Have You Missed Out On Tax Deductions?
Without accurate bookkeeping, you won't be able to take advantage of the many tax deductions available to smaller businesses. Phone bills, professional subscriptions and other expenses can all be claimed against your tax bill to improve your tax efficiency. Ultimately, anything that reduces your business's total income can reduce the amount of tax you owe.
However, if you haven't been keeping track of your expenses, how can you know what you can deduct from your tax bill? You're also equally likely to miss an obvious tax write-off when rushing to complete your important statements at the last moment. A professional bookkeeper can categorise all of your income and expenses to help you know what you can and can't claim.
Are You Overworked And Tired?
Again, it's almost impossible for owners of small businesses to maintain control over every single element. Trying to stay on top of everything can drain you fast, meaning your creative energies aren't going in the right direction. So why wouldn't you outsource something as vital and easily handed over as your bookkeeping?
Giving yourself the freedom to fall in love with your initial vision again can rejuvenate a business that's feeling tired. You can even focus on new jobs and projects in your free time. Whether you want to undertake professional training or coaching, or oversee investment in crucial areas of your business, outsourcing your bookkeeping is the best way to afford yourself this kind of freedom.
Are You Confident In Your Bookkeeping Skills?
While you may be an expert in what your business does, your bookkeeping skills might not be the greatest. Therefore, if you feel your bookkeeping isn't up to the task, it's always best to bring in someone who is. Not only will this keep your financials in check, but it will provide you with greater peace of mind, knowing your books are in capable hands.
Do You Have Unpredictable Cash Flow?
Unpredictable cash flow can stagnate a business if it isn't on top of its finances. Not that it's entirely the business's fault - there are many reasons why anyone could have irregular cash flow. From surprise expenses to late-paying clients, small businesses can be struck with a cash flow problem at any moment.
At least with an expert bookkeeper on hand, you can better prepare for when these issues arise. Chasing unpaid invoices, chasing accounts receivable and accounts payable, generating expense reports or keeping a little to the side for emergencies all fall under the remit of a bookkeeper, proving just how essential they are for small and growing businesses. Accounting software can even generate cash flow statements and financial reports for you, so you know how much money is going in and out of your business over a set period.
Is Bookkeeping Removing You From Other Tasks?
If you're sacrificing your client relations, marketing or other elements of your business for your bookkeeping, then you're more likely to struggle. Of course, if you've always done your own bookkeeping, it's not easy to hand over this crucial duty. But if you're neglecting other crucial duties for one easily delegated, you're making a mistake. So, if you know you could spend your time more productively in your business, consider hiring a professional bookkeeping business.
Are You Paying An Accountant More To Do Your Bookkeeping?
Bookkeeping and accounting services are not the same. While they both provide essential financial services, there's a great deal of difference in what they do. Therefore, if you're paying an accountant to carry out your bookkeeping, you may be throwing good money away. Accountants or accounting technicians are highly specialised individuals who oversee your accounting processes. Those in the bookkeeping profession can be hired at a much cheaper cost to generate your accounting records.
What's the difference between a bookkeeper and an accountant?
Again, accountants and bookkeepers are often mistaken for offering similar services. But there's a great deal of difference between these roles. For one, certified bookkeepers primarily keep track of the incoming and outgoing cash flow in your business bank accounts, accurately keeping financial records of all your transactions. They also prepare year-end tax returns, VAT returns and ensure your finances are efficiently run.
On the other hand, accountants offer their expertise, using the information and financial data that bookkeepers, your balance sheet and your bank statements gather. With this information, an accountant can analyse your financial data, generate business plans and offer expert tax advice. Therefore, you can see how different these two roles are and how they provide different services to small and medium enterprises (SMEs).
When should you hire a bookkeeper?
Effectively, the sooner you hire a professional bookkeeper or bookkeeping business, the better. It is prudent to consult with financial professionals when you first start your business, so you can prepare for what you'll need as you grow.
Ensuring your books are in order from the start allows you to monitor your growth accurately throughout the life of your business. Most bookkeepers can help you from the very start of your business journey.