Many small businesses find bookkeeping a time-consuming chore whilst others find the whole process intimidating.
Instead of viewing bookkeeping as an end of year tax necessity, it should be thought of as a valuable process: one which enables you to have up-to-date and accurate financial information so that you can make important business decisions and run your business efficiently and profitably.
Why hiring a bookkeeper makes financial sense
Rather than doing the bookkeeping yourself, it is invariably better to employ a bookkeeper to do the inputting and checking of your accounts. This should be done on a regular basis. In particular your bookkeeper will look after your Accounts Payable (who you owe money to) and your Accounts Receivable (who owes you money). This then leaves you with much more time to focus on increasing your sales and growing your business.
If you don't want to employ a bookkeeper directly, then why not outsource the job? With no employee payroll taxes or benefits to think about, outsourcing your bookkeeping can be cheaper than you think and more cost effective than employing someone on a fixed-hours basis.
How a bookkeeper will help your business
It’s very easy to get tied up in the day-to-day running of your business and let the bookkeeping slide, so that come tax return time, you have a mountain of work to do. A bookkeeper, on the other hand, will keep on top of your bookkeeping and help you to stay in control of your business.
1. Accurate and timely financial reports
A bookkeeper will make sure that your accounts are reconciled with your bank accounts on a regular basis, so that you have up-to-date and reliable financial reports from which you can more accurately forecast and plan.
With today's accountancy packages, many reports are provided as standard and you can customise reports to your specific needs. A bookkeeper who works with these packages and understands your business will be able to produce these additional reports quickly to make sure you have the information you need at your finger tips.
2. Help with managing your cash flow
Accurate and up-to-date Accounts Receivable information (who owes you money) is vital for credit control. The longer that someone owes you money the more likely it is to turn into a bad debt.
To manage cash flow, you also need accurate and up-to-date Accounts Payable information (what money you owe to your suppliers).
Your Balance Sheet combines this information and highlights your bottom line straight away so that you don't spend money you don’t have - just looking at your bank account is not a true reflection of how much money you have to spend.
3. Avoid minor issues becoming big problems
By having your books accurately updated and reconciled to your bank accounts on a regular basis, you prevent minor issues becoming big problems. For example, if your Profit & Loss report is inaccurate then when it comes to year end you may overpay (which is cash going out unnecessarily) or underpay taxes (which may lead you to having your books audited). Also, when your financial data is incorrect or you don't have up-to-date financial information, you could be making important decisions based on the wrong information. Keep everything up-to-date and checked regularly.
4. Keeping pace with changing rules and regulations
A bookkeeper will keep on top of changing rules and regulations to make sure your books are not only up-to-date but comply with the latest rules, regulations and best practice. This is one less thing for you to do, so that you can focus on your business at a strategic level rather than working in your business on an operational and compliance level.
5. Managing journal entries so you don't have to
One area that often gets ignored by small business is making sure ALL your accounts are reconciled on a monthly basis – this ensures your reports are absolutely correct giving you ultimate cash flow management as well as the power to forecast your financial future. A bookkeeper will also manage the Journal entries of your accounts which is when any year-end adjustments are fixed - this is something the bookkeeper manages with the accountant so you don’t have to.
Why use a cloud-based software accountancy package?
Every business owner needs to keep an eye on their books and, in particular, on their cash flow. It's no good making a profit if you don't have enough cash to pay all your creditors on time - the last thing you want is for a creditor to sue you because you can't pay their bills. Fortunately, with today's cloud-based accountancy packages, not only can your bookkeeper keep an eye on cash flow but so can you. All your financial data is easily accessible wherever you are (so long as you have an internet connection).
Why QuickBooks for bookkeeping?
QuickBooks has a very simple user interface making it incredibly easy to navigate, whether you are a bookkeeper or business owner. And, as a business owner, you are able to look at your reports online without being bombarded with esoteric accounting jargon.
As with many accountancy packages these days, you can connect QuickBooks to (most) bank and credit card accounts making bank reconciliations quick and easy to do. The QuickBooks homepage summarises your finances using your latest income and expenses data, and shows you your bank and credit card balances. Being able to click on any number and see the detail makes understanding your numbers really easy.
With the QuickBooks app all your data is also easily accessible on mobile devices. This is invaluable when you are making day-to-day business decisions.
And lastly, you can try before you buy and when you do buy, you don’t have to be locked into a 12-month contract.
At the end of the day, QuickBooks is like many other cloud-based accountancy packages - they all do pretty much the same things - so your choice really boils down to personal preference which is why you should always try before you buy.
Bookkeeping - what's next?
I hope this inspires you to think differently about the importance of bookkeeping and how, with the help of a bookkeeper, you can grow your business. If you want to find out more about working with us, please get in touch.
Victoria Ashby, Bookkeeper and QuickBooks ProAdvisor