All businesses need someone to record their financial transactions, maintain general ledgers and prepare a periodic trial balance to maintain solid financial health. In this article, we will explain what these bookkeeping roles entail, and the importance of having a professional bookkeeper run the books of your limited company.
The responsibilities of a bookkeeper include:
Your bookkeeper will collect invoices and receipts and ensure they are entered into the accounting system.
They cross-check to see if the record of your business transactions matches those on your bank statement. If your business entries do not mirror the bank statements, they will find the discrepancies and make the required adjustments.
They calculate employee pay, deduct tax and national insurance contributions, and administer the workplace pension scheme.
They will ensure your customers know what to pay, chase any unpaid invoices and keep an eye on bank deposits.
Should you owe a supplier, a bookkeeper will organise your supplier invoices in your accounting system and list those that require payment. Once paid, they will update the accounting system, removing the supplier from the next payment run.
To understand the financial health of a business, a bookkeeper creates monthly reports (sometimes with the help of an accountant) to keep an eye on your finances.
The importance of bookkeeping in a business is unparalleled. With a bookkeeper, you have:
A bookkeeper will maintain up-to-date records with the help of accounting software of your choice, including Xero, Zoho Books, FreeAgent, Sage, and more. As such, finding crucial information is easy and with reduced errors ready for when you need it.
They don’t just understand how to use your accounting software, they generally have a robust understanding of tax issues to ensure items are claimed for correctly.
Knowing that everything is in order helps you to focus on your business without the worries of being fined or not knowing your financial position.
With a bookkeeper by your side, you will know the current state of the accounts, helping you make important decisions on budgets.
In the long run, clear and well-updated financial information will enable you to plan for the future. From the findings, you can plan on how to:
Now that you know the importance of a bookkeeper in your business, let's find out at what point you need to get one.
Depending on how organised you are, the amount of free time you have, and your desire to learn the complexities of double-entry bookkeeping, you can choose to do the bookkeeping for yourself. Many Spondoo clients perform their own bookkeeping using accounting systems of their choice, but with occasional support from our team.
If you cannot run your own bookkeeping, it is best to find a skilled bookkeeper as soon as you start your business. Leaving bookkeeping to the last minute, or not doing it correctly can cause major problems in your accounting records. This can lead to larger than expected tax bills, incorrect reports and even penalties from HMRC (HM Revenue and Customs) and other regulators.
If you are having trouble with your bookkeeping records, talk to Spondoo Accountants for a solution.
You cannot be blamed for interchanging these two words in your everyday conversation because their roles most certainly crisscross.
An accountant’s main responsibility is periodically inspecting created accounts (created by a bookkeeper). They also adjust figures in case of discrepancies. They use the acquired information to file tax returns as well as management of reports and statutory accounts. Accountants will also analyse the financial information provided by the bookkeeper to advise on tax planning, dividends, tax returns, year-end reports, and business growth.
A bookkeeper on the other hand will manage books (daily, weekly, fortnightly, or monthly), post data to the accounting system, and prepare records for the trial balance stage.
Still unsure on which one of the two you need for your business? Talk to us for clarification.
Honestly, there is no standard answer to this question. What you pay your bookkeeper will depend on the amount of work involved.
You can pay for bookkeeping services hourly or per transaction, based on what you agree with your point of contact.
Spondoo Accountants offer high-quality and low-cost bookkeeping services. If you want to increase shareholder value and reduce costs, let’s chat to discuss how we can help you. You can also call us on 02033 259 341 or email books@spondoo.co.uk
