By Phil Ellerby

Entrepreneurs and SME business owners thrive by adopting a DIY mentality. They won’t pay for anything if they can do it themselves – unless they absolutely have to!

As a result, many of them like to handle their accounts on their own. This can be a good thing because managing the day-to-day finances is a skill which most SME owners need to learn (especially in the early days).

Thanks to the rising popularity of user-friendly accounting software like QuickBooks and Xero, the process of bookkeeping is now a lot simpler.

However, if you’re finding it hard to put aside the time to do this, it’s probably the ideal moment for someone to do it for you.

But does that really mean you should hire an in-house bookkeeper?

Let’s look at all the options…

Do I need a bookkeeper or accountant?

You can be self-employed or run a limited company without being legally obliged to use an accountant or a bookkeeper.

But for many sole traders and SME owners, there are plenty of things you could be doing instead of your finances and accounts:

  • Things you enjoy
  • Things you’re good at
  • Things that’ll make you money

Doing your own basic accounts may be (fairly) easy to do, but it does take you away from working on your business. Self-assessment tax and VAT returns are a little bit harder and will require a few more hours to sort out.

If you’re becoming time poor, a bookkeeper or an accountant can help to lighten the load.

Should you get to this stage, it’s important to think about the areas where you need support because there are clear crossovers between the two roles. But for your business to run smoothly you might need the best of both worlds…

  • An accountant – to take care of tax affairs and high-level matters
  • A bookkeeper – to control your day-to-day paperwork

Accountants: Their core role is to look at the accounts which have been created and make any minor adjustments. They should then use all of this information to file tax returns and other official reports to HMRC. Once they’ve analysed your overall financial situation, an accountant who provides good value should offer strategic advice on:

  • Businesses growth
  • Tax planning
  • Dividends
  • Tax returns
  • Year-end reports

Bookkeepers: Their day-to-day duties do vary depending on your business’ requirements but submitting invoices and chasing them up is one of their core tasks. Other reasons to hire a bookkeeper include:

  • Record all purchases and receipts
  • Pay your suppliers
  • Organise and collate financial data
  • Administer your payroll
  • Prepare your VAT return

In my experience, entrepreneurs who no longer do their own books (whether they use an accountant or a bookkeeper) usually find they work far more efficiently and productively.

Would it be better to outsource my bookkeeping?

For those businesses who’d like the help of a bookkeeper but are not sure they can justify hiring someone, the ideal solution is to outsource the task.

Outsourcing is a great way to acquire the specialist skills you need without the worries associated with employing someone.

The biggest benefit is that you’ll only pay for work which is done – no payroll issues, no national insurance payments, no pension contributions, no sick pay and no holiday entitlement.

Outsourcing means you also won’t be relying on an individual who could:

  • Leave your business
  • Do things wrong
  • Fail to pay people
  • Skim off the top (Yes, this still happens!)

At Northern Accountants, we regularly outsource specialist tasks (marketing and SEO) because we believe it’s a great way to make more money and grow. It can also save valuable time by letting us focus on what we do best – accounts and bookkeeping!

In fact, our bookkeeping package is one of the most popular services we provide for our clients. We can offer all of the benefits outlined above and also provide:

  • Unlimited Xero help
  • Business growth advice
  • Pricing strategies
  • Ideas for new revenue streams

Because we also act as your accountant, our co-ordinated approach helps to manage your money and tax liabilities much more effectively. In some cases, the savings we deliver has outweighed our fees by up to 20 per cent.

If you’d like to find out more about this service, please contact us – and one of our financial experts will be in touch to explain the day-to-day support packages we offer SMEs.

To hire or not to hire, that is the question?

Making the decision to hire someone else to do a job which you’re capable of doing is a big step.

However, the value of bookkeeping services should not be underestimated. They are often vital to SME owners, particularly those who do not have time to handle all their day-to-day finances and compliance. They can also add value by allowing you to concentrate on running (and growing) your business.

In truth, most entrepreneurs would probably be better off outsourcing their accounting or bookkeeping until:

  • Their revenue reaches a certain level (Eg; £500,000 upwards)
  • They employ a certain number of staff
  • They complete a minimum amount of daily transactions

Until that point, most SMEs don’t usually have enough work to keep a full-time staff member busy.

We currently help a wide range of companies with their bookkeeping, including building contractors, HR firms, marketing agencies, independent retailers and service providers in almost every sector.

Obviously, you’ll know which staffing solution suits you best and recognise when it’s the right time to bring in outside help. But if you do take that leap of faith, it pays to focus on the benefits it will bring rather than the money being spent.

As a general rule of thumb, it’s probably the right time to hire full-time help if you start to call your accountant so often that you wish they were in the office permanently!