5 reasons why your business needs bookkeeping
Created: December 2014
Most entrepreneurs starting out in business are usually characterised by certain common traits like drive, energy, imagination and creativity.
The one thing that therefore doesn’t sit happily with them is routine administration involving things like bookkeeping and tax records. They get fidgety and impatient knowing that their time could be much better spent drumming up new business on the phone or out networking to establish fresh contacts. The problem is that the bookkeeping function is absolutely essential to the viability and health of any enterprise and here are 5 main reasons why :
1. Efficient use of time
As has already been suggested, the leader of any small business has to weigh time and energy spent on the bookkeeping function against what he could otherwise be achieving using his own particular skillset. He could have installed the best software package in town but he still has to input appropriate data on time and comply with various tax requirements. This is why the DIY route for bookkeeping is generally regarded as false economy. The cost of outsourcing a qualified bookkeeper usually works out cheaper in the long run when compared to the value the entrepreneur could be adding to his business by using the freed up time on other things.
2. Cash is King
Regardless of whether or not a young business has moved into profitability, the lifeblood of any fledgling enterprise is cash. Without up-to-date and accurate bookkeeping, it is virtually impossible to ensure that you are optimising cash flow by issuing invoices on time, not paying suppliers earlier than you need to and being in a position to chase up late payers on a daily basis. If your business inexplicably starts to haemorrhage cash, a good set of current management accounts will quickly identify the problem and enable you to do something about it.
3. Management Accounts Your secret weapon
Professionally produced monthly and annual sets of accounts are the window into your business. Needless to say, if it is hazy, neither you nor anyone else is going to get a clear picture. By carefully going through each item at the end of each month and comparing the numbers with previous months and years, you will quickly be able to pinpoint areas where you are either spending too much or too little. If fraud is occurring anywhere, you will be able to spot it before it gets out of hand. This is where quality bookkeeping is worth its weight in gold.
4. Impressing the outside world
Whether it’s the taxman, your bank manager or your investors, it is vital that outsiders feel confident that your accounts are presenting a clear and accurate picture of what is going on in your enterprise. Any professional will quickly be able to see what is the result of amateurish bookkeeping and what is a professionally prepared product and they are much more likely to believe in the latter than in the former. In the case of HMRC, the more questions that need to be answered, the more new ones they are likely to raise even about previous years. Your modest investment in quality bookkeeping should not only save you a lot of aggravation but might also spare you financial penalties.
5. A shoulder to lean on
We all know that running your own business can very often be a very lonely affair even if you have plenty of employees around you. Most of those individuals who provide professional bookkeeping services will have direct experience of scores of other small businesses and, regardless of what particular sector each one is in, they all tend to have more or less the same problems and concerns.
A seasoned bookkeeper will be able to pass on the benefit of his experience to you as well as being in a position to introduce you to other clients and contacts who might be of benefit to you. This will be especially valid if the services are provided by the bookkeeping arm of a large accountancy firm with other specialist departments.
If you would like to discuss the possibility of outsourcing your bookkeeping to us, we would be delighted to hear from you. Please feel free to contact us.
T 020 7874 7958