You might have an idea about what a bookkeeper does, or you might have no clue whatsoever. I certainly didn’t until I became one! So let’s take a look at what a bookkeeper can do for your business and for you.
To finally get your bookkeeping sh*t together.
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Now, obviously, this will depend on exactly what you’ve instructed your bookkeeper to do. However, there are a few standard tasks that most bookkeepers do regularly.
Depending on how many financial transactions your business has on a day-to-day basis, these tasks could be daily, weekly or monthly. But it usually starts with gathering your purchase receipts. Hopefully, this is using software where you’ve already uploaded the receipt. Please don’t leave a box full of crumpled receipts on your bookkeeper’s doorstep! Then it’s making sure all your sales data is in your software and in the correct accounts. This could be creating or uploading invoices or bringing data from your selling platforms like Etsy or Amazon.
All your sales and purchases are then matched up with your bank feed to ensure every penny is accounted for. If you’re VAT registered, every month or quarter (depending on what scheme you’re on) your VAT return will be reviewed. Every transaction will be double-checked to ensure the correct VAT rate has been used. We want to make sure you’re claiming all your business expenses and not claiming anything you shouldn’t! If you have employed staff, your bookkeeper can also run your payroll for you.
Absolutely we can! At the end of your financial year, we’ll first work our magic to make sure your business finances are all complete. There might be extra items you need to include, such as working from home expenses or business use of a car. Once that’s all done, we can get started on your financial statements. For a sole trader, this would be your self assessment. We can prepare and submit this for you so you don’t need to stress over the complicated HMRC paperwork. If you’re a limited company, we can prepare and submit your corporation tax return as well as your annual accounts. We can also prepare and submit your confirmation statement for you.
Above is what I consider to be all the generic “any bookkeeper can do this” type of stuff. The real magic is in the extras we can do for you. First thing is what is commonly called management accounts. This is where your bookkeeper will prepare some documents that show how your business is performing. I call these my Business Pause sessions. I meet with the business owner every quarter and review how things are going. We discuss ways to reduce costs and increase sales. We also look at goals outside of the business and how we can achieve them.
Bookkeepers will naturally keep an eye on your expenses over the month. However, the really good ones will proactively spot ways you can reduce your expenses or increase your sales. They can help you to grow your business or to maintain it. They can be a sounding board for you to bounce ideas off. Helping you to spot things you might not have thought of. They will be your biggest cheerleader.
You don’t know what you don’t track. You can’t make any changes or improvements if you don’t know where you’re starting from. You need to keep accurate financial records, and up-to-date ones at that!
When you stay on top of your bookkeeping, you can see exactly what money has been spent or earned in real time. It’s not just a “once a year” thing that you do. This means you can see where you might be overspending. For example, you might have bought a lot of stationery (who hasn’t!). So you can review where you can cut back and not buy any more pens or pretty notebooks.
You can also do the same for your selling platforms. If you’re monitoring where the sales are coming in, you will know which platforms are performing well. It might encourage you to prioritise those so you’re not wasting time on others. Equally, it will show the platforms that aren’t doing well. You can either ditch these or if they’re important, increase the effort you’re putting into them.
Creating a cash flow forecast can also give you a very clear view of your small business finances. They’re surprisingly easy to make too. Simply write down all the money you’re expecting to receive into your bank over the next 3 months. Then write down all the money you’re expecting to spend over the next 3 months. Take those numbers away from each other and voila! A positive number means you’re gaining money; a negative number means you’re losing money. If you’d like a bit more help with this, I have a short course here.
Using relevant reports can give you a better view of your business’s financial data. For example, a profit and loss report can show you how well your business is performing. You can compare different periods of time to see whether any changes you’ve made have been successful. You can also more easily see your total spending for different categories. A balance sheet can tell you what liabilities you have, such as loans you need to pay back. It can also tell you how much work you’ve invoiced but haven’t been paid for. Both of these together can help your business to grow by giving you up-to-date information on your finances. You can then use this information to help you make informed decisions in real time.
Bookkeeping is essential for your business. But small business owners often disregard it in favour of literally anything else! So let’s take a look at how to tell if your business needs expert bookkeeping.
Business owners often do as much as they can when they first start running a small business. But eventually they will need to get some help. So if any of these things sound like you:
Get in touch!
There’s no right or wrong answer here. You need to do what’s right for your business. So I’ll just cover some of the pros and cons of hiring or outsourcing. When you hire a professional as an employee, they will only work for you, for the hours you want them to. This means you have some control over what they’re working on. However, it also means you need to pay them through payroll, which comes with additional costs such as National Insurance. You also need to cover their holidays, any equipment they might need, such as a computer, etc.
If you outsource your bookkeeping, sometimes they will work unusual hours so you can get support outside of the regular 9-5. They’ll also usually be cheaper as you’re not having to put them through the payroll or pay for their equipment, etc. It will also be their responsibility to ensure the work is completed around their holidays. However, you won’t be their only client, so they might not be able to drop everything to fix any emergencies.
When you get expert bookkeeping services, they give you back the time, space and knowledge to concentrate on what you’re best at: running your business. They can free you up to focus on growing your business. They help you identify new ways to save money or increase sales. They can ensure the financial health of your business is well-managed. They can keep your business on track to achieve the goals that you want. I can’t say enough good things about how getting a bookkeeper will improve your business!
They all go hand in hand, skipping down the financial road together! But there are differences between accounting and bookkeeping.
Typically, an accountant would get in touch with you once a year to sort out your self-assessment or corporation tax and annual accounts. Outside of that, you could contact them for tax advice. Whereas a bookkeeper keeps your business running smoothly by regularly reviewing your transactions on a daily, weekly or monthly basis. They can also do your self-assessment, corporation tax and annual accounts; however, they cannot give tax advice. Sometimes it works really well to have both on your side! One to do the year-end and give tax advice and the other to keep track of things on a more frequent basis. Bookkeeping and accounting go together perfectly.
If you’re organised and already have all your financial records in order, your returns get much easier and faster. You don’t need to be scrambling to find your bank statements at the end of the year. Or that receipt for that purchase from 11 months ago. And if you’re using accounting software, things get even easier! You should already have accurate records in your software, which means you can get your return done early. If you get it submitted in April, you have 9 months to save the money to pay your taxes. Talk about being prepared!
Ell Evan Bookkeeping are not Tax Advisors and so our advice and suggestions on the application of tax rules cannot be construed as tax advice.
