April is a busy month. It begins with it April Fool’s Day, No Housework Day (don’t miss that one!), Earth Day and occasionally Easter. It’s also the start of the new tax year, which means that it’s the perfect month in which to look at how you manage your business finances and whether additional support could help you.
What is a bookkeeper?
A bookkeeper isn’t an accountant though the two usually work very closely together. It’s important not to get the two confused. They maintain financial records and keep track of accounts, recording transactions and checking that everything is accurate and up to date.
They’ll check that your accounts match up to your current bank balance and that you’ve not lost money without recording where it’s gone, and with a knowledge of tax returns they can also help you to properly evaluate what you can claim and what you can’t (though it’ll be your accountants job to ensure that you’re running a tax-efficient business).
They can generate reports and collate all of your financial details to send on to your accountant if you’ve got one. Essentially, your bookkeeper deals with what you buy, sell, earn and pay.
Do I need a bookkeeper?
It’s certainly possible to run a small business without using a bookkeeper. If you can keep track of your own income and outgoings then you might decide that a bookkeeper is an expense that you don’t need.
Yet, a bookkeeper could be a valuable asset to your business if you’re not sure that you’re accurately recording your income and your expenses. It’s possible that you’re losing money without realising, that you’re forgetting to invoice clients or to chase up those invoices and that you’re not keeping records of all of the expenses that you should record to reduce your tax bill. If you can’t be 100% sure that you’re running your company finances efficiently then a bookkeeper could help you to get things in order.
Your bookkeeper can also help if you know that you’re looking after your company finances correctly, but it’s taking 20 minutes out of every day. Over the course of a working week, you could lose more than an hour of your time, and it could be better spent doing what you‚ are supposed to be doing.
Imagine that your time is worth £40 per hour to your business. If you’re wasting upwards of 100 minutes a week looking after your financial records, then could you save money by hiring a bookkeeper? It’s very likely that, when you really think about it, you’re spending far more than 100 minutes per week trying to keep your financial records up to date.
What if I already have an accountant?
If you already have an accountant then you might think that a bookkeeper is a waste of time. After all, your accountant is looking after your company’s financial records.
Here’s the problem:
Jane is a bookkeeper. She charges £20 per hour for her services. She gets financial records in order so that they can then be passed on to an accountant, saving the accountant hours of work.
James is an accountant. He works for £50 an hour. When he receives documents from a bookkeeper, his work takes half the time it otherwise would.
Fred is a business owner. He’s currently paying his accountant, James, £200 per month for four hours of his time. James is spending two of those hours doing bookkeeping tasks for £50 an hour, and the other two are spent doing his accountancy work. Fred could cut his costs by working with Jane. She would do those first two hours of work for a total of £40, and Fred would only have to pay £100 to James. Overall, he’d save himself £60 per month.
How do I find a bookkeeper?
If you’ve decided that a bookkeeper could help your business, then how do you go about finding one?
It’s important to decide if you actually feel the need to meet with your bookkeeper regularly. If not, then consider working with a virtual bookkeeper. You can send documents by mail and communicate with your bookkeeper online and over the phone, which saves you even more time.
Alternatively, a search online for a local bookkeeper should provide you with some choices – make sure that you give your bookkeeper a call and get to know them and their business, as you’ll be handing over a lot of important financial details.
What are your experiences of working with a bookkeeper, and when did you decide that a bookkeeper was a valuable investment for your business? Would you work with a virtual bookkeeper?