Most small business owners believe they don’t need a bookkeeper as they can do the books themselves and save some money. In reality, not all business owners are interested in maintaining the books for their business. Ultimately, they then get left for “a later date”.
The problem with this is that the workload builds up and often gets squeezed in on a late night or weekend and this is the organised business owners! Others leave it until their tax return is almost due to sit down and do the books quickly.
What are the issues with leaving your books until a few weeks before the tax return is due?
- A whole year’s work in one go! Taking time away from what you should be doing – running your business. In many trades, this will mean a loss of income for the time taken off.
- Mistakes could be made. If HMRC decided to do an audit of your company, there could be potential fines payable.
- If you run over the deadline, you will receive a late filing penalty.
What if you are on top of everything, is there still need to hire a bookkeeper?
Yes, there are many reasons why you should still hire a bookkeeper:
- They have studied for many years to get qualifications and experience, just as a business owner has done in their trade. This means all the transactions, receipts and invoices will be posted correctly. A business owner who hasn’t studied bookkeeping, would not know all the correct way to record transactions, which could end up in incorrect accounts being filed and ultimately a fine from HMRC.
- The work will get done whilst you are getting on with running your business, so you don’t have the hassle and your books are always up to date.
- Value will be added by preparing reports on a regular basis showing who owes you money, who you owe money to, turnover and profit.
- The correct business expenses will be put through to maximise your tax deductions.
This all sounds great, but aren’t bookkeepers expensive?
Bookkeepers vary in price depending on the services offered, but based on the above, surely it’s more costly not to have a bookkeeper? Below is an example of a sole trader:
Phil is a self employed plumber. He turns over £40K per year. He doesn’t have time to keep on top of his books, so needs to take time off in January each year to complete his books and submit his tax return:
Phil’s costs – doing it himself:
8 working days at £200 per day of lost income: £1,600
Tax Total owed: £8,000
Total tax return costs: £9,600
Phil’s costs – using a bookkeeper:
40 hours at £25 per hour: £1000
Tax Total Owed: £6,500
Total tax return costs: £7,500
A bookkeeper will complete the accounts a lot quicker than someone unqualified and maximise the tax deductions. In this example, there is a saving of £2,100 by paying for a bookkeeper to do the work for you. Direct Peak prefer to offer a fixed price so the hourly rate is not necessarily based on Direct Peak’s rate.
If you are interested in hiring a bookkeeper to help your business, you can contact Direct Peak on any of the below contact details:
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