Use a Professional
A few weeks ago the fan in my central heating unit started to make a funny noise. Did I fix it myself with the aid of Google and a household toolbox? No, of course, I didn’t. I called in an expert who fixed it in a matter of minutes.
I firmly believe that we should outsource jobs to those who are experts in them. I am no plumber and don’t attempt to be.
Likewise with the finance function of a small business. The business owner may feel that they can’t afford to outsource the bookkeeping, credit control, VAT returns, payroll etc to a professional. Surely their time is too valuable to spend doing these tasks that can easily be carried out elsewhere. Although small business owners have to have at least some financial knowledge, the chances of them being fully up to date on current HMRC regulations are slim at best. I know this because I have to be up to date with them and this takes more time in Continuing Professional Development than I would really like. A typical sole trader will not have the time to read the HMRC website for fun and may only dip into it when there is a problem or a question they need to be answered.
As a practising member of the Institute of Certified Bookkeepers, I am obliged to stay up to date with the rules and regulations issued by HMRC and Companies House. I am regulated and supervised by the ICB and so have knowledge and skills that no sole trader would need nor want.
What is bookkeeping?
Bookkeeping, rather than accountancy, is the day to day record keeping legally required by any business. It is a necessity to keep account of your sales and purchases in order to report to HMRC and Companies House. Your taxes need to be calculated correctly so that you pay the right amount at the right time.
But bookkeeping is far more than simply entering the data given. A good bookkeeper can provide you with regular reports on the financial health of your business. We compare the performance to prior periods, and highlight where changes should be made. For example, one client of mine had 8 direct debits going out of the bank account for insurance. Two policies were doubled up and she was paying way over the odds on the rest of them having just let them automatically renew each year. By producing management reports we realised that her insurance costs were way higher than they should have been and managed to cut the amount paid each month by two-thirds.
There are many examples of where bookkeepers can help businesses to save money. Monitoring costs is a part of the services that we offer to all of our clients. It may be tricky to monitor yourself during the busy day-to-day bustle of actually running your business, after all, running your business is why you’re in business at all!
Let’s say you’re a reflexologist. You work appointments 40 hours per week and record those appointments and your income from them in a diary. Come to the end of the tax year, how do you translate that into a correctly calculated tax return? Obviously, you start by adding up your income from your appointments. Then comes the tricky business of working out the costs. Perhaps you’re mobile so you can claim for some motor expenses. Or maybe you rent a room in a salon. Perhaps you pay for some things in cash, debit card, or credit card so how do you keep track?
So the costs aren’t simply a case of looking at what’s come out of your bank. You make and receive business calls on your personal mobile phone. How to account for that? All costs that relate wholly to your business can be claimed back. A qualified and regulated bookkeeper will ensure that you are claiming back the correct expenses.
Because of our knowledge of claimable expenses, you could end up paying less tax.
You started your business because you wanted to run it, not to spend time on the record keeping. All of the finance tasks can be outsourced to people who can perform them quickly and accurately.