If you’re a small business owner the chances are that you are doing everything for your business yourself. Of course many small business owners love the freedom, excitement and fulfillment that owning their own business brings to them.
On the flip side it can also mean that finances can be tight, especially in the early days. Losing control of who owes you money, who you owe money to and not remembering to save for liabilities (such as Tax for example) means cash flow management can turn into a nightmare. Before you know it you are in the red.
Cash flow is King in a small business.
Keeping this in the forefront of your mind is vital. I will say it again, cash flow is king! And is extremely important to ensure the success of your small business. A very high percentage of small businesses are destined to fail within 24 months because of increased expenses, low profits and clients owing them money.
So what can you do to help your business? Employing a bookkeeper might seem like another unnecessary outgoing, but their expertise can really look after your business. Think of their service offering you a sound return on investment instead of another outgoing.
Below are five reasons to demonstrate how working with a bookkeeper can save you money:
1. Makes Managing Your Profit Margin Possible
Owning a small business often means working long hours and with small profit margins. A professional bookkeeper will keep track of your profit margins and will give advice on how to leverage them into larger returns on operating expenses and what you can and can’t claim against the business. Getting accounts in order to present in a compliant way to the HMRC whilst ensuring every allowance is included is KEY to what a bookkeeper can do for you and KEY to your return on investment.
A bookkeeper can also manage your monthly transactions, handle payroll, take care of government remittances and ensure that invoices are paid on time, freeing you up to concentrate on growing your business. The more time you have to focus on your business sales rather than where to post a payment invoice the better it will be for your business!
2. Lets You Take a Load Off
Running a small business, especially in its early years, is no easy task. In fact, the first few years are often the most difficult, and many small business owners struggle to make ends meet. This often means juggling multiple tasks at once, which can translate into neglecting administration with costly consequences (think late payments, late tax return fees, non compliance fees). This is a task bookkeepers can help with.
3. Alleviates the Stress that comes via the HMRC
We would all like to avoid it, but taxes are a necessary part of business. Employing a bookkeeper, even on a temporary basis, means accurate and timely reporting of your expenses, write-offs, salaries and budgets. It will also calm your worries about the finances letting you concentrate on the rest of your business. You may even get some sleep once in a while which is of course, priceless!
4. It’s not as expensive as you think
The majority of small business owners won’t have enough work to employ a full-time bookkeeper. Discussing your needs in advance with a bookkeeper and agreeing a monthly fixed fee for services required is a great way forward. Fixed fees mean you know what your expenditure is every month and also means no surprise bills at the end of the year. Traditionally you might take a bag full of receipts to the bookkeeper and ask them to ‘sort it all out’ at the end of the year ready for your tax return. This would mean an unknown bill from the bookkeeper and also an unknown bill from the HMRC. Will you actually know until then that your business is in profit? Working monthly with your chosen bookkeeper and paying a fixed monthly fee puts you in far more control of your business finance and gives you peace of mind that there are no horrific financial surprises at the end of the year. Which leads to……
5. Peace of mind = better decision making
Beyond the very real benefits to your business, bookkeepers can also provide you with peace of mind. At Team 4 we receive countless end of year phone calls from frantic small business owners asking us to sort out their returns immediately as they have done nothing all year. Making Tax Digital will have a huge effect on the way returns were presented and how frequently they are submitted. The end of the yearly return is on its way.
While employing a bookkeeper may be a big decision for a small business owner, the decision will be worth it in the long run. It will save you time, money and reduce some of the stress of running your small business. Think of them as a partner who has your best business interest at heart, freeing you up to get on with making the most of your self-employed future!