Bookkeeping is the financial foundation of your business.
Complete, accurate, up-to-date bookkeeping allows you to measure financial performance which means better decisions and better business performance.
You get a constant flow of information about:
- sales growth
- cost control
- who owes you money
- who you owe money to (suppliers, staff, HMRC, bank)
And when this part of your business is taken care of, not getting in the way, not holding you back, it’s much easier to get on with doing business.
A good bookkeeper will spend time understanding what sort of business you run – recruitment, media, retail – and make sure your bookkeeping gives you a clear picture of your business and not a “one-size-fits-all” solution.
Why having organised bookkeeping is important
Being organised has always been the key to good bookkeeping. It remains true today, whatever technology you’re using. Day-to-day:
- Are your sales invoices produced correctly and sent as soon as they can be?
- Do you have invoices from all your suppliers?
- Can you see your bank accounts online?
Less visible, but no less important:
- Are you depreciating your investment in computers and other assets?
- Will all of your debtors pay you?
- How quickly at the end of a month do you calculate sales commissions?
- Do you make a provision for the tax due on your profits?
No one likes surprises so make sure you gather together all your financial data as soon as it’s available.
And account for it in your bookkeeping software.
Bookkeeping and technology
Our view has always been that businesses should use accounting software whether it’s in-house or run by an external bookkeeper or accountant.
Bookkeeping requires each financial transaction to be accounted for, so data entry has to happen somewhere. This could be in a hand-written ledger or a spreadsheet.
But if the data entry is in accounting software then you immediately get financial information. You also get your VAT return produced and you can see the financial position of your business and act on it.
And it’s quicker so you save time and money.
We have a separate page on cloud accounting where we explore the rapidly changing solutions available and we would encourage all business owners in this direction.
VAT and Making Tax Digital
If your bookkeeping is right, then your VAT return should be right. Your VAT return should be available at the touch of a button so you can see your VAT liability build up as you go.
As HMRC roll out Making Tax Digital for VAT (MTD) more and more businesses will have to keep their financial records in digital form and accounting software will achieve this.
By managing your bookkeeping, your bookkeeping will manage your VAT.
Your annual accounts are basically the numbers from your bookkeeping slightly reformatted and sent to Companies House.
If your bookkeeping is correct, then the accounts can be produced soon after your year-end. But you don’t need to file them then if you don’t wish to. However, you save time and money because your accountant will find them much easier and quicker to produce.
Another win-win from good bookkeeping.
Financial health warning
You and your accountant must make certain that your annual accounts agree to your bookkeeping software and when you close the old financial year it is password protected.
If your bookkeeping records don’t agree to your annual accounts then your bookkeeping records are wrong and your current financial information will be unreliable.
Why do I need help with my bookkeeping?
Bookkeeping must be correct and complete if it’s to be useful and this is a skill like any other professional business service. Any errors and omissions will mean the financial information you rely on to run your business will be wrong.
A good bookkeeper can help by:
- Getting organised and spot errors or gaps in your accounts that need adjusting.
- Offer advice on efficiencies in your current accounting workflow.
- Ensure all the financial data is available to those who need it.
- Provide training to an in-house team.
- Helping you choose accounting software that produces the financial reports you need to run your business (they’re not all as good as they should be for reporting).
- Checking in with you for missing information, key dates in the year for production of annual accounts, VAT returns, corporation tax etc.
As cloud accounting has become more prevalent, we’re seeing too many examples of businesses doing bookkeeping themselves, getting it wrong and not realising.
We encourage business owners to check in and collaborate with their accountant as often as necessary to make sure the numbers are right, errors are corrected and proper training is given so bookkeeping is done right, first time.
Our clients have two service options:
1. We provide a full bookkeeping service for your company. The benefit of this approach is that you have full peace of mind that all your numbers are up to date and lined up ready for VAT returns and year end accounts.
Full service bookkeeping tasks include:
- Bookkeeping for invoices, receipts, expenses, bank deposits and payments
- Accounting adjustments to fine-tune your numbers
- Financial reporting – P&L, debtors, creditors, balance sheet etc
- Bank reconciliations
- VAT returns
2. You do all the day-to-day bookkeeping and we pitch in to make sure it is all present and correct. From experience, some tidying up and checking any differences is usually required. We then produce the annual accounts.
This 2 minute video explains our approach to bookkeeping for business:
If you’d like to hand over your bookkeeping to a qualified, experienced team or need a managed unraveling of your accounts, get in touch with Blue Dot Consulting. We’ve been working with clients on their bookkeeping for nearly 20 years and there isn’t much we can’t solve or haven’t seen.
It’s time to get your weekends back!