Many business owners choose to carry out their own bookkeeping; with the main benefit being the cost savings paying a bookkeeper. However, when you look at the benefits of outsourcing bookkeeping, you may find the cost is well worth it.
If the bookkeeping is relatively straightforward and the owner is content to spend their own time, away from the principal business activity, in order to complete the necessary books and records required for the business, then this may be the best option.
However, regulations and requirements for businesses are ever-changing. Making Tax Digital (MTD) for VAT, for example, where all businesses exceeding the taxable VAT turnover threshold have to now prepare and submit VAT Returns within an MTD compatible software programme. Many business owners are now having to maintain their business records on unfamiliar software or even transferring from entirely manual bookkeeping to computer-based.
Different businesses have different compliance requirements:
This process can be daunting enough in itself, but there are other benefits to outsourcing bookkeeping, such as:
Time saved by management/other employees to really focus on the principal activity of the business.
Let’s face it, it is doubtful any entrepreneurs go into business with their focus being which bookkeeping software they will use and how exciting it will be to reconcile the bank each month. It’s a means to an end and usually something that gets selected based on cost or a recommendation from other businesses.
When setting up and running your own business, a lot of time is put into ensuring the business is going to be successful and continuing to grow as desired. This tends to leave bookkeeping low down the priority list and something that can be seen as a time-consuming, though necessary, chore.
Outsourcing bookkeeping frees up a lot of time to allow management/business owners to focus on the business.
Deadline hassles outsourced
The last thing a business owner wants is a fine for failing to submit a return or report. Life can be hectic enough, and even more so when you have a business to run. By outsourcing bookkeeping, reliance can be placed on another professional to deal with/give awareness of any reporting deadlines.
There will be expenditure on the outsourced bookkeeping but this could actually save the business money in the longer term. Accountancy fees are often higher when the records the accountant is given incur queries as a result of poor bookkeeping. Having outsourced the bookkeeping, business owners can rest assured the accountant will be saving time, reducing the number of queries. The bookkeeper is often the primary contact for the accountant when dealing with any queries, saving more valuable time.
We are able to identify issues as they occur. For example we identified that one of our clients (was unaware) he was owed £5,800 from a customer. His customer had also not recorded the invoices correctly on their system. If we had not been doing the bookkeeping we would have identified this error. However it would have been at the year end, which could have been 15 months down the line.
Better cash flow/ financial planning
Outsourcing the bookkeeping also means access to regular updates and reports that show the business performance as and when required. Business owners often have to wait until the financial year end has passed to see the performance of the business. Cash flow is crucial to businesses and having reliable bookkeeping records enables this area to be managed more effectively.
Having up-to-date financial reporting on the business performance also enables better financial and tax planning.
Having your books maintained externally could also provide better credibility with regards to banks and other institutes. Outsourcing bookkeeping will give the business owner peace of mind that the company records are in good order. It also gives a potential lender, investor or other stakeholder greater confidence in the credibility of the business.
There are many benefits of outsourcing bookkeeping, especially with the continuous changes and requirements implemented on small businesses. It really is worthwhile to consider if outsourcing the bookkeeping of a business is something that could add value to an entity, rather than being seen as an additional cost.
If you wish to speak to a member of our team, please contact us. At present we have two specialist bookkeepers, but with the ever increasing demand we may be looking to expand this area of our business shortly.