During this month’s Facebook Live, I took things right back to the basics. I talked about what a bookkeeper does and how they can help your business.
What is a bookkeeper?
In simple terms, a bookkeeper helps to keep the financial records of a business up to date and helps to prepare the accounts. However, there is a lot more to it than that.
Keeping financial records for a business isn’t straightforward. Even though the purpose is to record all sales and purchases for the business so that your tax return can be filed, businesses also need to know other information – like the total value of their business, how much money they are owed, how much money they owe to other people, the value of the assets of the business. Without having a full financial picture of your business, you will not be able to grow your business and achieve your goals.
While you do not need to have a specific qualification to be a bookkeeper, it is a legal requirement that all bookkeepers are supervised by an approved body and comply with the Money Laundering Regulations.
How does a bookkeeper work?
Different bookkeepers will have different ways of working – some will go into a client’s office while others will work 100% remotely. The advancement of cloud-based accounting software has meant that more and more bookkeepers are able to work remotely and have clients from a wider area.
Some bookkeepers may choose to work with a variety of software, while other bookkeepers will specialise and only use 1 or 2 types of software. They will work with their individual clients to set up processes to share the information required to get the accounts completed within the agreed timeframes.
Your bookkeeper may only work on your accounts once a month or once a quarter, or they might even work on your accounts on a regular weekly basis depending on the size of your business. Many businesses will only have a bookkeeper (or accountant) involved after the end of the financial year when the tax return is due. By having your bookkeeper work on our accounts on a regular monthly basis, you will be able to access “real-time” information about the business and then be able to make better-informed business decisions in a timelier fashion. The frequency you need your accounts done will depend on your specific situation – for example, if you are VAT registered and need to submit a VAT return every quarter, then it is extremely important that your accounts are completed on a regular monthly basis to ensure you do not miss the VAT submission deadlines.
If you have a bookkeeper, making sure that you provide the necessary information to them by the deadlines they have set, is extremely important. Without the information being provided, your bookkeeper will not be able to keep your accounts up to date and ensure they are accurate. It is a collaboration between the business owner and the bookkeeper – you are a team working together to ensure you are able to achieve your business goals.
How can a bookkeeper help my business?
A bookkeeper can be a great addition to your team and really help you to be able to grow your business.
- Ensuring the accounts are done correctly.
A qualified bookkeeper can help you to ensure that the information in your accounts is accurate and up to date. They will know how to correctly categorise the money coming into, and going out of, the business, ensure that you have all the paperwork to support each transaction and that all bank accounts are fully reconciled. By having an accurate and complete set of accounts, you will have a better understanding of the financial picture of your business, but it also means that if HMRC ever investigates your accounts, they are less likely to find any mistakes and fine you.
- Provide you with a better understanding of the financial picture of your business.
With the bookkeeper ensuring your accounts are kept up to date on a regular basis, you will have a more accurate picture of the financial situation of the business. This means you will be able to make important business decisions such as whether you need to register for VAT, whether you can afford to hire new staff, or did that marketing campaign work.
- Help improve your cash flow.
Having a set of accounts that are up to date means that you will have a better understanding of who owes you money, and who you owe money to. This can help you to have a much better handle on your cash flow and ensure that you are being paid by your customers on time, but that you are also paying your suppliers on time.
With having the accounts kept up to date on a regular basis, the bookkeeper can help you to have a better idea of the amount of tax you might owe throughout the year – allowing you to plan ahead.
- Make sure you are meeting your legal obligations.
With a bookkeeper on hand ensuring that your accounts are kept up to date on a regular basis, you will also be able to ensure that you are meeting your legal obligations such as filing VAT returns on time – which will help you to avoid any fines or penalties for late filing.
At the end of the tax year, the bookkeeper will help to ensure that all the year-end financials are completed and ready to pass over to the accountant who can then prepare any adjusting entries and file your end-of-year tax returns. The accountant should then in return provide these adjusting entries to the bookkeeper so that they can ensure the accounts software reflects what has been submitted to HMRC and/or Companies House. Some bookkeepers will be able to file the end-of-year tax returns for you, so it is important to find out whether your bookkeeper is able to do this or not.
- Free up your time!
Probably one of the biggest advantages of having a bookkeeper is that it will free up your time so that you can focus on the things that you do best – which is providing your products or services to your customers. There are so many different things that a business owner has to do, and if those tasks are not something the business owner is skilled at, it can mean that more time is having to be given to those tasks which then takes away from the time the business owner has to focus on their business, their family and themselves. Having a bookkeeper to help with the accounts will free up that portion of your time. You will of course still need to provide the information to the bookkeeper, and there will be questions that you will need to answer, but you won’t need to worry about getting all the financial information entered into the accounts or having to take time to research how to enter something into a set of accounts. You will be able to use your time in a more valuable way.
Work with your bookkeeper, and accountant if you have one, as a team, collaborate so that you can grow your business and achieve your goals.
If you would like further information about what a bookkeeper does or how I can help you with your business, please feel free to e-mail me.