In today’s digital world, knowledge is available to everyone at their fingertips. What Google tells us is a fact, undeniably so. More and more people are taking a DIY approach to certain things that they would have paid someone else to do.
This is certainly the case when it comes to bookkeeping and tax returns. Some small business owners are taking advantage of the benefits of cloud accounting tools such as Xero to do their own bookkeeping as well as completing and submitting their own tax returns to HMRC (i.e. VAT, payroll, Self Assessment).
This has been a fear across the accounting industry for a number of years now, with some practitioners feeling that the onset of cloud accounting and digital apps will be the death of the profession.
The truth is, however, very different. Whilst small business owners are keen to get more involved with their bookkeeping and understanding their finances, those businesses who want to succeed are relying on their accountants EVEN MORE today than ever before.
Business owners who have made the decision to do everything by themselves without the services of an accountant are missing out in a number of ways:
- By doing your own books, you are using up your most valuable resource – your own time. If you spend 7 hours every week doing your own books (even using the likes of Xero to speed things up with bank feeds etc), that is a full working day spent on purely administrative tasks. Such time would be much better spent developing your business, nurturing your clients and customers and driving more sales. Just think, if you value your time at £100 per hour, that’s £700 of hidden cost in your business. Or, to look at it another way, if you believe that having an extra day per week on sales would give you the chance to generate £1,000 from new or existing customers, that’s £1,000 of turnover missed out on.
- Whilst there are loads of guides and useful info on Google (and indeed Xero’s Help Centre) about how to do your own bookkeeping, let’s face it……….you have NO bookkeeping experience at all. The likelihood of your figures being completely muddled is much higher if you take a DIY approach, and there will be extra costs when you eventually decide to hire an expert to fix the mess.
- If you decide to keep your bookkeeping in-house, don’t miss out on the opportunity to get set up and trained on cloud accounting by a certified expert. Properly certified Xero Advisors will help set up Xero suited specifically to your business needs and make sure you know exactly what you need to do every day, in what order and using the most efficient tools for your business. This approach will massively cut down on the time you spend on your bookkeeping by building automation into your systems as well as minimising the risk of costly errors in your numbers.
- If you do make mistakes in your bookkeeping, you may be thinking what’s the harm and that things are easily fixed. Not so if you are picked for a visit by HMRC. Mistakes in your bookkeeping leading to underpayment of VAT and/or tax can be a very costly mistake. Not only will you have to pay back the underpaid amount to HMRC, but they will levy a penalty for your mistake and the penalty starts at 100% of the underpaid amount! Working with an accountant can actually mitigate your penalty down as it demonstrates a willingness to comply with the rules.
- Another option for small business owners is to completely outsource your finance function to a cloud accounting firm. This will free up 100% of your time for admin duties immediately. Not only that, but any good cloud accounting firm will not only keep your books in good shape, but they will give you useful info and reports on your business on a regular basis, spotting opportunities that you may miss yourself and keeping you compliant with the complex world of VAT and tax.
- Accountants are great at doing all the boring stuff………….filing everything that needs to be filed with a variety of government departments, making sure your accounts are in line with the technical standards, saving you tax…………all of this is a given. Working with an accounting firm as your trusted advisor, however, gives rise to much more opportunity for your business. Modern firms are asking their clients about their personal goals, what they want in life, what’s their ambitions………..and then helping design and build their business accordingly, to improve their revenue and profits, systemise their processes and work with their entire team to work towards the goals of the business owner.
There is nothing to stop small business owners doing their own bookkeeping and returns. In fact, it is a good thing to see more business owners taking a keener interest in the numbers and finance side of their business. But if you’re set on keeping your finance function in-house, you should still consider hiring a cloud accounting firm to oversee things for you. It will give you peace of mind knowing you have the services of an expert supporting your business, checking your data and pointing you in the right direction.
Before you decide on doing your own bookkeeping, in fact before you decide on anything about how your business will operate, sit down and think about your goals. Design the life you want and build your business to give you your goals.
Build the systems to allow you to focus on what’s important in your business and your life. Build a great team around you to run those systems efficiently. And a modern accounting firm with cloud accounting experts should be part of that team.