If you are in business, you almost certainly have to deal with bookkeeping in one form or another. Bookkeeping simply means the recording of financial transactions as they happen, and it can be done manually or with software, depending on your preference and situation.
Manual or Professional Bookkeeping?
A very small business may choose to record its transactions by hand in a ledger, which is a simple form of bookkeeping. If you are running a larger business, you will probably want a professional bookkeeper who will keep accurate ledgers and records for you. Consider Bookkeeping Chippenham from Chippendale and Clark
Why Bookkeepers Matter
A bookkeeper’s role is very important in any business. Without accurate records, a business owner cannot keep track of what is coming in and going out. A good bookkeeper needs strong numerical and organisational skills, as well as good computer skills, as most bookkeeping is now done using accounting software that can produce reports quickly and easily. Many businesses also need digital records to meet HMRC’s Making Tax Digital rules.
Learning More
To learn more about bookkeeping, you can find online tutorials and guides that will help you understand how to keep track of your transactions and run a profitable business.
Related: Why you might want to consider employing a bookkeeper
Signs it is time to hand over the books
Keeping track of purchases is manageable at first, but there often comes a point when it gets on top of you. One of the clearest signs is struggling to keep financial records and transactions properly documented. Many owners simply do not have enough time left in a busy week to go through their accounts, and bookkeeping is time consuming.
When records fall behind, they become incomplete or inaccurate. That makes it harder to manage the cash the business has available, and in the worst cases it can lead to an HMRC investigation. Poor records can also mean paying the wrong amount of tax, whether too little or too much.
All of this makes it harder for a business to grow to the size its owner wants. Bringing in a bookkeeper can untangle the records and keep them in order from then on, often for a modest cost, leaving the owner free to concentrate on running the business.
What a good bookkeeper brings to a business
Keeping track of purchases is only one part of what a trained bookkeeper does. They are trained to record financial transactions accurately, which helps keep business records free of errors. For a sole trader or a company director juggling many other jobs, handing the books to a professional also frees up time to focus on products, services and promoting the business.
Tax time is easier too. A bookkeeper can make sure accounts are reconciled correctly before business and personal tax returns are prepared, and may be able to file the returns for you, leaving you simply to pay the bill and get back to work.
Perhaps the most useful benefit is insight. Because a bookkeeper sees the whole financial picture, they can show you where the business stands, which products and services are performing well and where there might be room to grow.
Bookkeeper skills and how the role differs from accountancy
A bookkeeper records and tracks a business’s financial data, literally keeping the books for a company, charity or other organisation. The core of the job is creating and maintaining records of purchases and sales, and these are often used to produce finance reports and tax returns. Payroll can be part of the role too, so it goes well beyond copying receipts into a spreadsheet.
Bookkeeping is a subset of accountancy. An accountant uses the figures a bookkeeper maintains to plan long term strategy, set staff rates, assess outgoings and judge whether sales are enough to sustain the business. The bookkeeper keeps that data accurate but does not analyse it in the same depth.
Anyone hiring a bookkeeper will usually want some training or experience, which can be gained through evening classes or distance learning, along with a working knowledge of accounting software and a very organised, detail focused approach. Smaller firms often find a contracted bookkeeping service more cost effective than a full time employee.