Why you shouldnt do your own bookkeeping
Posted on 13th May 2021 at 09:43
Setting up your own business can be really exciting, but also very daunting. One of the main things that can give new business owners restless nights is the company bookkeeping.
One way to give yourself less stress and your business more chance of success is to pass the accounting and bookkeeping over to a professional. To find out if this is the right path for you, here are some questions to ask yourself.
Are you experienced enough?
Just because you’re a maverick entrepreneur or able to make beautifully creative products or offer fantastic services, doesn’t mean that business admin comes naturally to you as well.
Are you good with numbers? Do spreadsheets float your boat? Do you have any previous experience in keeping accounting records?
If you’re uncomfortable with any of these and if the very idea of balancing your books, creating invoices, chasing payments or logging expense receipts fill you with dread, then hiring a professional could be extremely beneficial.
Are you an organised person?
Organisation does not come naturally to many people. Although you can train yourself to be regimented and organised, it can still be an upward battle to log all of your transactions and remembering to make your tax payments on time.
Taking care of your own bookkeeping means you will need to stay on top of tasks such as:
- Tracking cash flow
- Calculating your outgoings
- Estimating future tax payments
- Recording transactions
- Bank reconciliations
- Providing monthly reports
- Doing credit control
- Undertaking payroll
Knowing the true financial situation of your venture at any given moment enables you to make informed decision that could eventually lead to your business’ success or failure. Passing these tasks over to a bookkeeping company means you are always in control of your company finances. This can enable you to make informed decisions around investments and growth.
Do you have any employee?
If you are working by yourself then this isn’t a concern, however if you decide to employ someone, this can add another level to the complexities of your bookkeeping. When you take someone else on you will have to learn how to run a payroll, which includes:
- Registering with the HMRC
- Reporting any employee changes
- Working out your employee(s) tax and national insurance contributions
- Providing employee payslips
- Issuing P45/P60/P11 forms as required
- Calculating sick, maternity or paternity pay
This can become a very time consuming and tedious task. Outsourcing these processes could result in lowering your stress level and increasing your availability.
What motivated you to start your business?
The answer to this probably isn’t, so I can do my own bookkeeping! Learning to manage your own accounts is no mean feat. Think about who will run and grow your business when you’re trying distracted by balancing your books?
Trying to do all your company admin by yourself could result in loss of motivation and not enough time to focus on growing your business.
Most people start their own business to have more flexible working hours, calling your own shots, creating your own working environment and ethos, pursuing your passion, building something from scratch that you can be proud of and delegating the complex task of bookkeeping to someone else.
Bookkeeping is a task that can easily be given to somebody with accounting knowhow and experience without it costing you the earth. Investing in this service can make it much more likely for you to carry out the work you love of selling fantastic products or providing top-rate services.
Nicola J Sorrell -
Founder | Xero Champion | IR35 Expert
Tagged as: Business Tips, FAQ, For - Contractors, For - Limited Companies, For - Self-Employed, Xero
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