Running a business is arguably one of the most demanding ways of making a living. Regardless of the type or size of any business, the one constant factor they all need is good, accurate bookkeeping and accountancy.
It’s tempting to try to save money by running your own books, but the pitfalls for the unwary can be huge. From unclaimed allowances to miscalculated tax liabilities, DIY accounts can end up costing far more than professional help.
Keep Cash Flowing
When business is booming and the bank balance is buoyant, being in business is a great place to be. Unfortunately many small business owners go through the feast or famine cycle, with the famines really biting hard so the feasts, when they next roll round, get used to catch up rather than fuel business growth.
Closely monitoring cash flow can help to fill in the chasms that famines open up. Daily monitoring and updating of accounting business records provides a current and historical record that gives clear insight into potential danger zones. When you know, for instance, which months tend to be slow you can compensate during busier periods.
When an accountant or bookkeeper takes care of everyday accounting tasks they build up an overview and can offer timely advice so a downturn won’t catch you unawares. They’ll also take care of invoices or pay bills (as agreed between you) and make sure your ledgers are balanced.
Bookkeeper or Accountant? Actually, both.
You could ask your accountant to take care of everyday bookkeeping but you might be better off hiring a bookkeeper for the daily stuff. People often confuse the roles of accounts and bookkeepers, or assume if an accountant prepares end of year figures they must also keep the books through the year.
It’s often cheaper to use bookkeeping services through the year, with the added advantage that bookkeepers are flexible so you only need hire someone for the number of hours each month you need.
At the end of the financial year, your books are ready for your accountant’s attention. They will take a holistic look to prepare your tax return, calculate your tax liability and make sure you’re claiming all you can in allowable expenses. Not having to first organise the books could substantially reduce their fee.
Conserve Creative Energy with Professional Help
For creatives, burnout is a real danger. When you’re spending long hours building and guiding the business or devising new strategies and products, bookkeeping can be a burden. Unless you love balancing columns of figures, those hours might be better spent relaxing and recharging your creative batteries.
There are other mental and emotional benefits too, aside from the physical release from daily bookkeeping:
- You’ll know you’re legal and compliant with HMRC tax laws.
- You’ll know you have up-to-date records should you face an audit.
- You’ll know your money is looked after, and that business advice about finance is there when you need it.
- You won’t have to worry about filing your tax return on time, and you’ll know your allowances are all claimed.
Accounting is a cost of doing business, whether you pay through your own hours of work with your books or you hire an accountant to do the job for you. But where most business costs are hard to recoup, good accountancy can virtually pay for itself, in real terms and in peace of mind.