The biggest question for a business owner is when do I start using a bookkeeper? 

The answer, as soon as possible.

While doing your own accounting can be a good idea in the very early days of a business, it isn’t sustainable.  By the same token, you probably can’t afford the office setup costs, then on top of that hire a full-time bookkeeper, so using a bookkeeping service like Account 4 IT is your best option.

Let’s look at why you should use a bookkeeping service like Account 4 IT for your business as quickly as you can. 

🗸  You’ll Save Money and Valuable Time

The most obvious benefit of using a bookkeeping service is the fact that you will save valuable time and money. 

Routine tasks like invoicing clients, reconciling payments, accounts payable, accounts receivable, and preparing financial information for your BAS might seem simple, but can be extremely time-consuming.  

In fact, the average small business owner spends about 31% of their time doing the accounting tasks needed, adding to that if you employ one to four employees.

For most businesses, those hours per week are better spent on operations or business development – which are the two most critical functions. Unlike accounting, it can easily be outsourced to a bookkeeping service.

Engaging a bookkeeper will allow you to spend more time increasing your revenue.  Professional bookkeepers are also more efficient than most small business owners, so they probably won’t need to spend as much time per week on your accounting, which helps you save even more money.

🗸  Might Pay Less Tax

Tax is an increasingly complicated area of finance and law, and most business owners don’t have the time to learn about the various deductions and minimisation strategies out there or keep up to date with the ever changing rules.

A good bookkeeper – especially one with our experience should be able to help you find additional deductions to claim on your tax return.  

🗸  You’ll Get The Information You Require and Need

Understanding how much money is coming in and going out is essential to running any business.  Engaging a bookkeeper means getting access to that data through accurate, professionally checked financial statements. Some of the insights good bookkeeping will give you access to include:

• Projected revenue, allows you to plan for the future and adapt your business strategy accordingly.

• Debt management, you need to track the management of it and other liabilities.

• Potential weaknesses,  successful businesses are constantly looking for and correcting vulnerabilities in their structure and operations.

• Refinement, streamlining your business to improve profits and reduce costs can have a dramatic impact on your overall performance.

🗸  You Won’t Make Financial Errors

Engaging the services of a bookkeeper will help reduce the risk of errors being made in your accounts.

The complexity of modern finances means making mistakes is easy, especially if you aren’t a practising bookkeeper or accountant.  Many business owners make mistakes with areas like:

• Tracking petty cash

• Claiming GST on purchases

• Reporting Sales Tax

• Coding your translations correctly

• Classifying employees and contractors correctly

• Reconciling bank accounts

Although financial errors might not seem important, making a mistake can lead to serious sanctions and financial penalties from the ATO.  Problems with staff / payroll can result in massive penalties that can potentially bankrupt a business.

By engaging a bookkeeper who fully understands financial compliance, you’ll protect your business from these kinds of situations.

🗸  You’ll Reduce Your Accounting Costs

By using a bookkeeper to keep your accounts correct and tidy during the year, you will reduce the amount your accountant charges you when you need to lodge your tax returns. 

Bookkeepers aren’t qualified and accredited in the same way as accountants.  While this means bookkeepers can’t do things like give business advice, they generally charge a lot less per hour than accountants.  The average bookkeeper costs a lot less than junior accountants which starts at about $100 per hour, and senior accountants can charge upwards of $300 per hour.

This means that it’s much cheaper to have a bookkeeper take care of financial admin tasks.  By getting your bookkeeper to handle your finances throughout the year, you will save a lot of money and time at tax time.   

🗸  Your Books Will Be Cleaner

The inherent benefit of engaging a bookkeeper is that your accounts will be tidy and easily comprehensible.  While this might not seem important, well-ordered books can be essential for securing loans from banks, raising capital from investors and easily getting through an ATO Audit.

If you’re seeking a loan to grow your business, the first thing lenders like banks look for is your ability to repay the loan.  Your liquidity and your past financial performance are good indicators of that ability, and you need well-kept books to be able to prove both.

Without proper financial data, the bank or investors can’t adequately assess investment risk, which will make them wary about investing with you.  Bad bookkeeping is also a sign of inexperience or mismanagement – neither of which is conducive to investment.

By: Account 4 IT | 7 January 2023