“Can I do my own bookkeepinng?” asked Eddie, a potential client for the firm. “I’m OK with numbers and I’d like to keep my costs down”. It’s hard to overstate the power of great bookkeeping. Organising your books brings all the numbers into focus, providing financial clarity that guides the day-to-day running of your business and determines how you’ll grow.
Many business owners start off doing the bookkeeping themselves. They think it will save them time and money; a sentiment echoed by accounting software companies (“It’s so easy anyone can do it!”).
In fact, doing your own bookkeeping (or even hiring a friend to do it) almost always has the opposite effect, especially in the long run.
Bookkeeping is the foundation for having good financial control of your business.
Clean, clear books provide financial clarity on which you’ll base decisions, big and small, for your business. Great bookkeeping gives you the ability to:
- Track which customers owe you money.
- Track which suppliers owe you money.
- Understand if you’re making money or not.
- Make better-informed decisions.
- Ensure you’re staying HMRC compliant, e.g. paying the correct amount of VAT.
If your books aren’t kept in order, you’re leaving yourself in the dark and missing out on incredibly important nuggets of information you could use to your advantage.
Organising your own books isn’t the best use of your time.
You’ve got your company to where it is through your sheer entrepreneurship and unique skill set. Your time is best spent utilising the skills that got your business to this point.
Think of the hours or days you have to set aside going through financial admin. Apart from it being a hassle you could do without, it represents an opportunity cost. It’s time which would be better spent growing your sales, developing your products or services or improving your customer experience.
Delegation and outsourcing are fundamental to business growth.
No one likes letting go of control, but your business will be stunted if you try and keep doing everything yourself. Yes, the handover process will take some time and will be a bit of an upfront investment, but once you’ve got other people to take on some of the tasks it’ll pay off in dividends.
It also pays to take your time finding a bookkeeper who delivers outstanding service. We’ve heard one-too-many tales of “amateur” bookkeepers who don’t get it right.
When auditioning bookkeepers, make sure they know how to deal with:
- Loans. The initial setup including any fees, ongoing payments, and splitting out interest from repayments.
- Hire purchase. Setting up assets, claiming back VAT, splitting out ongoing payments between interest and repayments.
- Foreign currency. If your supplier’s invoice is in EUR but you pay in GBP, you’ll need a bookkeeper with experience in such transactions.
- Expensing capital spend. An inexperienced bookkeeper might not know whether to put a new laptop through the profit and loss as IT expenses or to add it to the fixed asset register under computer equipment on the balance sheet.
- What to treat as capital spending. It’s not a good idea to add the £30 office kettle to the asset register.
- Setting up and reconciling payments. Knowing how to process transactions received through your card machines/payment gateway against the sales posted from your point of sale system.
- Dealing with deposits and payments on account. This applies to both those you make and receive.
Remember: during the transition period it can take longer to identify and fix problems than it does to process them. That’s okay. You’ll end up paying more in the long run if you don’t choose an experienced bookkeeper who knows what they’re doing. Definitely food for thought when asking yourself “Can I do my own bookkeeping?”.
Start unlocking powerful insights into your business.
At One Accounting, giving established business owners financial clarity is our thing.
We use our years of experience to take the bookkeeping off your plate and use that information to advise you on the best steps to grow your business. If you think we could be just what your business needs, get in touch with us via our form.
