Small businesses and startups have a great can-do mentality and they take their admin as it comes. They think hiring an accountant is a luxury. After all, why not work an extra evening every week or a week-end and do the books yourself?
Of course, as a small business owner, you should do a lot yourself. There simply isn’t the money to outsource much. But now on the topic of bookkeeping this attitude needs to change as getting an accountant or bookkeeper has become a lot easier and cheaper.
Cloud bookkeeping software and online bookkeeping services will make your life a lot easier at half the price traditional bookkeepers would charge you. So, no more missing tax breaks, falling behind with invoicing or getting in trouble with the government.
Here are our top 3 reasons why small businesses need an accountant or bookkeeper.
#1 Set up your books correctly from the start
When business owners do their own bookkeeping, it often only happens when they can find the time. That’s not really giving your financials the attention they deserve, and it results in data-entry errors, lost documentation (such as proof of purchase for expenses), books that are out of date and a lot of time looking and searching for stuff.
Setting up your books will cost you probably four hours of work of an accountant. They’ll for example set you up with software that makes it much faster to send out invoices and record expenses and a non-cost system of how to file your invoices, expenses, and bank statements. This way you have all at hand when you need to do your VAT or chase your clients to pay their bills.
#2 Do your tax really well and on time
Late filing or payment of taxes results in penalties and interest. We’ve taken on clients in the past who’ve lost thousands this way. When you get an accountant, you won’t miss any more deadlines. The good ones will work well in advance so that tax filing is smooth and stress-free. You’ll forget what it was like to dread tax season.
Also, an accountant can often reduce the amount of tax you have to pay. If you engage them at the start of the year and ask for tax planning services, they’ll come up with a strategy that keeps more money in your business.
#3 Improve your cash flow
Cashflow is king. This is true for all businesses but especially for the smaller ones. Your invoicing system is central to the health of your business. If you don’t bill on time, you won’t get paid on time and that’ll leave you short of money. It sounds basic, but this factor alone undermines a lot of businesses.
When you do work for a client and send your invoice at the end of the month, you have already lost some time. Then the client gets 30 days to pay your invoice. If they pay on time your business has been waiting more than a month to get paid even though your employees who did the work were paid the week the job was done.
Get an accountant or bookkeeper to set up a simple invoicing system and you’ll be able to send invoices quickly and check at any time to see which ones have been paid and which haven’t. Accountants can also give you good advice on invoice payment terms, to help reduce the time you spend waiting on money to come in.