The importance of GOOD bookkeeping in your business finances.
Now you will notice the emphasis on GOOD there. Because there is a difference between just bookkeeping and good bookkeeping.
Just bookkeeping is the guy who is entering things on the spreadsheet with details like - Tesco - April2021 - £15.01. This could be anything from a personal shop using the wrong card to dinner to a paint brush for a decorator. Not helpful at all people!
Or if you have accounting software, just using the suggested category the software suggests. Now, if people worry robots will take over the world, fret not. When it thinks that Screwfix purchases are Entertaining expenses, I think the world is safe. Your accounts however, are now in a mess! Why? Because entertaining expenses are not allowable for tax deductions whereas Screwfix as a repair cost usually is. Do you know which is which?
Good bookkeeping, however, means you don't have to continuously go back and check previously entered stuff. So that when you run a report you aren't screaming "What is THAT doing under THAT category?" etc.
It means that at any point you are able to run a good financial report to see that state of your business, and maybe more importantly for you smaller businesses, you can more easily provide the accounts that banks and funders require when applying for funding, loans, grants etc.
Now I have your attention right?
Good bookkeeping comes into its own when you then need to start doing things for your year end.
No matter what business type you are, sole trader or limited company, if you provide your accountant with a black bin bag full of receipts it is going to cost you A LOT! Likewise if your bookkeeping has been done all a bit slap dash or you’ve used someone who doesn’t have a clue, getting that fixed is ALSO going to cost you A LOT.
Even worse, if you have to go through that bag yourself when your filing & Paying deadline is tomorrow, I can guarantee you won't be getting any sleep that night! And if you are doing it yourself, can you guarantee that everything is in the correct category?
If the answer is no, again, it will result in another sleepless night.
How much easier and stress free is it knowing you have it all in hand and is all sorted.
Now here is where I get a bit sale-sy...
Did you know that all of our monthly support packages Silver Tier and ABOVE include bookkeeping as standard? This means we take all the hassle and time that you would have had and make it disappear. POOF!
What sorcery is this?! It’s not! It’s clever software. We use QuickBooks online accounting software (included in the price of the package). This means that all we will need you to do is upload pictures of your receipts when you get them! And the hassle is taken out of this too. You can do it with the handy QuickBooks mobile app OR we can set up a dedicated e-mail address you can forward pictures to meaning it’s in there ready for us to process.
It's as easy as taking a picture it really is.
No sorcery here people.
This gives you the peace of mind that not only have we handled all of that pesky and time consuming bookkeeping for you, but it's all in the right place. AND NOW you are in a position so that at any point you can run a report or ask us to and know that it is up to date and correct.
And what about year end?
Pfft, whatevs!
All the data is already entered ready to go. So whether you want to do it yourself or have us do it for you (by the way most of our monthly support packages come with a hefty discount on our year end service costs as well), it’s all ready to go. Alright there may be some journals we need to sort for you but it's not going to cost you sleep to get them filed!
Want to keep things ALL to yourself? Ok, but please do it right. Here’s how:
-1 use a good organised spreadsheet to record ALL incomings and outgoings. If you haven't already, we have a free to download "Money Tracker" spreadsheet that will help you on your way. This option has a limited time use however... read on. Just be aware to include as much detail as you can so that it won't take Sherlock Holmes to figure out what on earth you have purchased!
-2 use good accounting software to record everything. The benefit of this is that usually you can streamline a lot of the data entry by attaching pictures of the receipts, meaning you can bin the hard copies. Buh-bye bin bags. You can also connect your bank account to see exactly what you have spent money on. Meaning you don't miss a penny! Literally. This helps you keep a close on eye on everything.
Option 2 is recommended, even if you choose another software other than QuickBooks, because as of April 2023 ALL sole traders will be expected to have MTD (Making Tax Digital) compatible software in order to file their tax returns…not yearly but QUARTERLY!
Told you it’s time limited.
This means by April 2023 you need to not only sign up for but already be able to use this software. You do not want to be one of the millions of people this catches out as no doubt that time will sneak up on all of us and become incredibly busy!
So, the moral of the story... say it with me...
Bookkeeping is important!
NO!
GOOD Bookkeeping is important!
Important, if not essential, to run a modern business, especially with the way HMRC are expecting people and businesses to file for taxes these days, no doubt, to get even worse.
If you don't have the time to do it, you need to either make or find time or hire someone to do it for you! It's that simple!
If you think we can help you with your books, book in a discovery call now (get it? :p).
If you just want some advice on where to run or where to go, book in our power hour for a 1:1 hour with our very own Jessica.
I hope you have all found this helpful and maybe a little terrifying (we all need a scare every now and again).
Stay safe all.