In those heady early days of starting your own business, you probably thought you could get away with working 18 hour days, 7 days per week, indefinitely. You were drunk on the notion of success lurking just around the corner and who needs sleep anyway? The trouble is it isn’t possible to sustain that kind of output forever and there comes a time when you cannot physically do every single task, administrative or otherwise.
The DIY Mentality
There is no reason why small business owners shouldn’t be responsible for their own record keeping, but not everyone is qualified or even has the time to maintain the books regularly or accurately. It is tempting to try and do it all yourself, particularly if you want to save money, but there are a number of reasons why it is often a good idea to seek help.
Reasons to Hire a Bookkeeper
- Save time – Every hour you spend updating the books is time away from the more important tasks such as chasing new orders and building the business.
- You’re not good at record keeping – There are numerous finance software packages for small businesses, but unless you have undertaken a thorough training course, you could be making a real mess of your accounts without being any the wiser. And the more mistakes you make, the more it will cost you in accountant fees to sort out the mess at the end of the year.
- Pay the bills on time – Hiring a bookkeeper will ensure time critical stuff such as bill payments is done on time, which will save you money.
The Difference between a Bookkeeper and an Accountant
Bookkeepers can help you with the financial record keeping, which for a small business would probably only be a part-time role. Bookkeepers are generally responsible for the day to day tasks such as updating the sales and purchase ledger, paying bills and administering the payroll.
An accountant’s role is more of a strategic one. Your accountant can help you see the bigger picture financially and advise you on where to make changes to improve profitability and cash flow. Accountants usually prepare profit and loss statements as well as the end of year accounts for filing with the appropriate government bodies.
Reasons to Hire an Accountant
- To produce the business’s Final Accounts – this is the main reason small businesses need the services of an accountant. Some bookkeepers are qualified to produce final accounts, but in most cases this falls under the remit of the accountant.
- You need advice on future financial strategies – Part of an accountant’s role is to analyse the financial situation of the business and offer advice on how you can reduce costs and improve profitability.
There may come a time when you need to hire a full-time bookkeeper and/or accountant, but for most small businesses, such roles are better outsourced. Of course you may feel that you don’t need either a bookkeeper or an accountant, but remember that going it alone isn’t necessarily the best strategy for long-term business success.
About the author:
Doug Barden is a managing partner at Barlow Andrews, one of the leading chartered accountancy firms in Lancashire and North Manchester. For more information on the services offered by Barlow Andrews, visit http://www.barlow-andrews.co.uk/.