Running your own business is a big adventure and there’s always something new to learn, but staying on top of your finances is a crucial element if you want to succeed. Once you get over that initial flurry of excitement at the beginning (I call it the business honeymoon period) you’ll need to get real about the numbers if you want to keep things running smoothly.
So, before we get to the good stuff in this blog let me ask you a question or two. Are you the owner of a small or micro-business? Awesome! How good are you at keeping up with the books for your business? Be honest…ok maybe not so awesome.
Does the end of the month, or worse still the end of your financial year, create major anxiety and massive overwhelm for you? If this sounds like you then you may be ready for some help, but who is right for you, an accountant, a bookkeeper, or both? Let’s find out.
What’s the actual difference between a bookkeeper and an accountant?
A recent Q&A session with my lovely ladies networking group revealed a surprising fact – most of the group didn’t know the exact difference between bookkeeping and accounting, and those that did know about bookkeeping thought it was simply record keeping.
The second shocking fact was admitting that they’ve never asked anyone the question before because they didn’t want to appear unprofessional or look stupid! Truth is, they’re not alone in their thinking.
In short, a bookkeeper will handle all the day-to-day financial data for your business whereas an accountant will analyse and interpret your numbers in reports to help you understand your finances. However, this is an over-simplification, so read on to dig a little deeper…
Good financial management = the recipe for success
Good financial management is going to be essential if you want your business to go the distance. But here comes the reality check – not all of us are natural number-crunchers and while you’re head down working in the business, the paperwork can mount up around you. What starts as a small backlog can quickly become a complete time drain and a big source of stress, diverting you from what you really need to be doing.
Having an expert on your side, keeping an eye on the numbers, and making sure you never miss an important payment, invoice or paperwork deadline is vital. This is where a bookkeeper can really add value, and with someone else carrying the paperwork burden you can stay focused on doing what you do best.
What is a bookkeeper?
Keeping it simple (which I always like to do) a bookkeeper will keep a record of all your business transactions. Using online software, they’ll build a ledger that tracks everything coming in and going out of your business, and might also manage your sales invoices, pay bills, chase customer payments, file VAT returns, and even set up and run your payroll.
A bookkeeper can keep a close eye on your cashflow which means you can check in on the financial health of your business whenever you need to and know it’s all good. Think of us as your financial eyes and ears on the ground, keeping a watchful eye on the key financial activity and helping you make better decisions for your business.
What is an accountant?
An accountant is less interested in the detail of the day-to-day transactions within your business, and more focused on analysing and interpreting your numbers and making sure your business is compliant with tax and reporting obligations.
They can often help at a more strategic level too with advice on more efficient tax planning, reducing costs and ideas for growth. Needing an accountant is often closely linked to the size of your business and the extra financial obligations that creates.
Is there any overlap between bookkeepers and accountants?
This is probably the area that causes most confusion! Yes there is some overlap as many licenced bookkeepers can also help clients with payroll, VAT returns, tax returns, budgeting, and management accounts, which are often tasks associated with an accountant.
A licenced bookkeeper can add even more value to those small and micro-businesses that aren’t quite ready for an accountant and want a bit more handholding with their business while it grows.
Signs that you might need a bookkeeper
So now you know the difference between a bookkeeper and accountant, here are some of the classic red flags to look out for that signal you’d benefit from a bookkeeper:
– You’re struggling to stay on top of invoicing and payments every month
– Cashflow is a critical factor for your business
– You don’t get time to reconcile spending against your bank account
– Your business generates a lot of transactions every month
– Your record-keeping is now spread across multiple excel spreadsheets
– Your expense receipts don’t make it out of your car (I see you!)
– You’re VAT registered, or will be soon
– You need to start hiring staff and will need to set up a payroll
– Preparation for your year-end tax return starts one day before the deadline
– You’ve tried to do it all yourself, and have got into a bit of a mess
If you just ticked these off like a winning game of bingo, then it’s probably time to invest in the future success of your business and speak to a licenced bookkeeper!
Getting more from your bookkeeper
Firstly, I’d like to stamp out the myth that bookkeepers just keep records (phew – that feels better!). It may have started out that way thousands of years ago (yes we really have been around that long!) but so much has changed since then.
Forward-thinking bookkeepers do so much more than just record keeping and data entry. They can collaborate with you to establish good business processes, which is an absolute time-saver further down the line if you’re a new or growing business.
They can help you identify financial goals and work out a plan for staying on track to achieve them. We’re a bit like a financial fitness trainer, checking in on your progress regularly, gently nudging you in the right financial direction and giving you the odd kick-up-the-backside when needed!
Working with Purple Orchid Bookkeeping
Those that know me know that I don’t like talking about myself too much. But what I will say is that I love numbers (a bit weird I know!), I love analysing them, getting them in order, unravelling problems within them and making them simpler for small and micro businesses.
I’m at my happiest taking someone else’s number chaos and organising the hell out of it and I get a huge kick out of seeing businesses that initially came to me in a muddle absolutely smashing it.
I know myself that running a business requires owners to wear a lot of hats, but that not of all of them fit us well! Outsourcing the tasks you don’t have time for (or simply don’t enjoy) will free up time to focus on the parts of your business that you’re truly passionate about. There are aspects of running my own business that I prefer to outsource for exactly those reasons!
Knowing your numbers is one thing, but understanding what they mean and keeping them in check is another. I take time to explain things in a simple way (no jargon allowed here) and because I’m licensed and regulated by the Institute of Certified Bookkeepers you know you’re in safe, experienced hands.
I like to think of myself as more than just a bookkeeper. I like to become more of an integral part my client’s business, working alongside them to help make life easier and provide the extra (financial) cheerleading needed to see you make a success of it.
If you like the sound of a friendly straight-talking bookkeeper sorting out your number nightmares then I’d love to chat with you.
Book a free discovery call today: https://calendly.com/jq_bookkeeping/discovery-call