By taking a proactive approach towards the daily upkeep of your business finances, you can attentively witness the flow of cash entering and leaving the business. An approach as such can help develop a deeper interest in the everyday financials and the daily running of the business. The task of bookkeeping is an essential part of the business as without this; there is no regular stream of financial data entering the system, leading you to slack in the reporting of your finances.
Separating business from pleasure
If you are a sole-trader, you are an embodiment of your business which means that you are not required to separate your finances from your business. On the other hand, if you are a limited company, you are legally obliged to separate any business funds from your account as your limited company is classed as a separate legal entity. By keeping this separate, you can easily distinguish between which transactions personally belong to you and which belong to the business. This simplifies the task of bookkeeping as there’s no blurring of lines between business and pleasure.
Taking the long-term approach
If you’re familiar with the tasks associated with bookkeeping, you may require a little more training to set you on the right track. This is a longer-term approach; however, it could save you money as this gives you the ability to carry out bookkeeping in-house. By dedicating a portion of your time to learning the tricks of the trade, you can understand the methods behind basic accounting, such as calculating income and expenditure.
If your bookkeeping tasks begin to build up and bite into your working time, this may be a sign that it’s either time to pass on the baton by teaching other members of staff how to carry out routine bookkeeping jobs or turning towards outsourcing the job.
As part of your accountancy package, you may already have access to bookkeeping tools through your online subscription to accounting software. If this is the case, save money by taking advantage of the software available to you to streamline the link between your bookkeeping and accounting.
For example, FreeAgent Time Tracking software allows you to use their stopwatch to track billable hours spent on a project for a client. This can then be generated into an invoice and sent directly to the end party, speeding up the process. Automatic mileage trackers can also help you accurately account for the number of miles traveled for business purposes.
As part of your all-inclusive accountancy package, you may receive discounted services for the likes of financial advice, insurance or in the event that your business falls into financial difficulty, you may want to access information about winding up a business. Check with your accountant if they have any partnerships or referral schemes in place with other service providers, saving you time looking for a trusted recommendation.
Digitizing bookkeeping process
As part of your accountancy package, you may be able to take advantage of the software for bookkeeping purposes, such as Receipt Bank for Xero users. This cuts down the process of rummaging through receipts and sending these to your accountant or bookkeeper. If you have a subscription to cloud accounting software, you may be able to simply take a photo of the receipt and upload it to your online account, giving automatic access to your accountant. If you are required to retain your receipts for a specified time period, storing them in your online account can spare room and make them easily accessible.
On the topic of security, industry-standard accounting software typically adheres to strict security measures in line with those adopted by banking providers, ensuring that your financial data is safely fortified under layers of encryption.
In addition to security and accessibility, digitizing the bookkeeping process can make it easy to process your information and convert it into the desired format following relevant accounting reporting standards. By taking steps to update your data regularly, you can benefit from instant changes through the live view.
Putting a price tag on reputable service
If you decide to engage the skills of a bookkeeper, save money by contemplating whether you can complete this in-house or train yourself on the skills needed to carry out this job accurately. If you are unfamiliar with how to handle the complexities of bookkeeping, turn to a skilled specialist. Prior to signing an agreement, ensure that you negotiate a reasonable rate. Many bookkeepers charge by the hour which can amount to a more expensive rate in comparison to a fixed monthly payment. It’s vital to note that by turning to an inexperienced individual, it may cost you even more in the long run due to the inaccurate input of data which could skew your balance sheet. You may be left forking out double, once to rectify the mistakes of the first bookkeeper and second, to employ the skills of a second skilled bookkeeper.
Depending on your operating structure and your associated reporting duties, you may be able to satisfy your needs by employing the skills of a bookkeeper, over an accountant. The difference being that a bookkeeper will gather the relevant data and record it for use by the accountant. The accountant will then translate this data into helpful guidance for the business concerning performance and strategy and compile this into the specified reports for the relevant bodies.
Bookkeeping hacks as such can help you save money in both the short and long term through the use of innovative tools to simplify the existing journey and making the accounting data more digestible. By making the most out of existing tools available to you, you can use technology to assist you through the bookkeeping journey, making time and cost savings along the way which can help you reorganize your priorities to your business.
About the Author
Keith Tully is a partner at Real Business Rescue, a business recovery expert specializing in company liquidation and business rescue options such as company administration. His specialties lie within negotiating Time to Pay Arrangements for businesses struggling to pay tax liabilities to HMRC.