Hidden costs of being your own bookkeeper

You may ask “Why do I want to pay a bookkeeper, when I can do it myself?”

Imagine the scenario, you have left your full time job to start up your own business, with a lump sum to help start you off. You have identified a market need, and you have the skills to produce the product. You’ve drawn up a basic business, giving yourself three months before you need to start earning money.

You spend the first few weeks split between working on your product and finding potential customers. Then you realise you need someone to man the phones whilst you are out and about generating new business. You employ someone to do this, next you need to set up a payroll system to pay them each month.

Your business takes off

You realise that you have got bills to pay and debts to collect. All on top of spending your normal working hours putting together your products and obtaining customers. As time goes on, there just aren’t enough hours to deal with the administration of the business as well as keeping production and demand going.

Payments start to be missed, and you don’t have time to chase debts. Then your Bank manager begins to get concerned that you are going over your agreed borrowing limits.

What’s your next step?

Can you afford to employ someone else to offload some of your work to? If so, who should you be employing?

What are my skills?

Most business owners see themselves as entrepreneurial, keen to be at the sharp end of the business, rather than wading through the admin. But unless it’s done, the debts collected; VAT returns prepared; the bills (and employees) paid on time; your business will start to fail. Suppliers will lose patience with unreliable customers, and in turn your customers will become disgruntled if your suppliers don’t let you have the materials you need to produce your goods.

Delegation

A good businessman recognises when to delegate tasks, and which tasks to delegate.

Admin tasks can usually be delegated, thus freeing up the proprietor to concentrate on sales and production.

In the early stages of a business, it may not be necessary to employ a full time accountant. A part time bookkeeper doing just the right number of hours to suit your business, may be exactly what you need.

being your own bookkeeper

A firm of accountants can supply you with staff at the right level to meet your needs, tailored to the appropriate number of hours required per month. Payrolls and VAT returns will be dealt with in time to meet deadlines, keeping your staff happy and HMRC at bay.

As your business grows, you may need more funding to give you the working capital to reach the next stage of development. This could be investment in larger premises, machinery, vehicles, or more staff. To obtain this, your Bank will ask for a business plan and cash-flow forecast to support your request.

This is where the accountant can step in

Working with you to produce a meaningful report. This will not only serve the purpose of satisfying the Bank, but will be most useful in providing you with information and insights into what your breakeven point is; which products are successful; and where costs could be more tightly controlled.

Consequently, in the days of online accounting packages, much of the accountant’s job can be done remotely. Keeping a ‘watchful eye’ on your business, enables you to get out and about to generate the orders.

There’s no doubt that you can keep your own records. But isn’t it good business sense to concentrate on the areas that your skills are most needed?

For more information

For more information on our bookkeeping service, please contact either:
Scott Harrower, Andrew Bagley or Lulu Emms, or call us on:

01483 416232