Bookkeeping isn’t an optional activity when you’re in business. Even those who love the job don’t always get the time to be as efficient as they’d like, and there are certain times in the life of a business when bookkeeping needs extra vigilance. If any of these situations ring alarm bells, your accounts could probably stand a second look.
You Dread the Thought of Opening Your Accounts
Bookkeeping for many people is a chore. It’s all numbers and cross checking and referencing, and demands a high level of accuracy to keep it legal.
When bookkeeping puts dread in your heart, it’s better to get some professional help than leave it for months at a time with the hope of catching up later.
There are two types of bookkeeping help available, offering different but equally important levels of service:
- Bookkeepers. These valuable people will make sure your business accounts run smoothly on a day to day basis. Transactions will be entered correctly, conciliation performed as a matter of course, and you’ll have the peace of mind of knowing exactly where you stand. Bookkeepers will also help to keep your accountant fee down, since your books will already be in the format your accountant needs.
- Accountants. Accountants are like gold when it comes to making sure you’re claiming all your expenses, not paying too much in tax, and are correctly submitting your end of year accounts to HMRC. They also have the specialised knowledge to offer pertinent business advice if they spot somewhere you can operate your finances more efficiently.
Your Business is Expanding
Business expansion is a great thing, but it brings with it more work, a possibly different infrastructure, higher staff levels and more paperwork. Expanding business usually means expanding roles too, with people taking on more responsibility and additional tasks. Increased revenue is another aspect to consider, with all the additional transactions that need incorporating into existing bookkeeping systems. You may even find your current accounting method is no longer fit for purpose if you have so far been using a very simple bookkeeping structure.
Extra pressure on existing staff may mean bookkeeping gets pushed aside or is a rushed exercise. Both situations can introduce errors into your system.
The advice of an accountant is invaluable when you’re expanding your business. They can suggest appropriate accounting methods or software, and let you know exactly what records to keep and in what format. They can also advise on where and how to minimise expenditure. It’s far better to invest money generated from expansion back into further growth than it is to waste it on correcting bookkeeping errors because your existing system didn’t grow in line with your business.
You’re Aware of Existing Problems in the Books
You know you’ve got problems somewhere when your ledgers don’t balance. Ignoring this kind of problem can escalate its severity and lead to more errors. You can’t, for instance, correctly analyse performance if you don’t have accurate financial records, and it’s harder to make future predictions without an accurate history to draw on. The other real danger is that you’ll submit inaccurate figures on your tax return or face problems if you’re audited.
Bookkeeping is such an important part of running a business, whether you’re a sole trader or a limited company that no one can afford to ignore it. If you need some help from either a bookkeeper or an accountant, the professional level of service and peace of mind will more than compensate for the fee you’ll pay.