What is bookkeeping and why is it important?

I touched on this recently when writing the What’s the difference between bookkeeper and accountant? blog but will go into a little more detail now. Whether you need an accountant for filing purposes at the end of the year or not, having a well-prepared set of books will make your life easier and could save you money! Presenting your accountant with a well looked after, accurate set of books will make their life a lot easier than being presented a box of invoices and receipts and make your bill a lot lower too!

Even if you get your bookkeeper to do your end of year self-assessment and reporting on your business, or even do it yourself, a good set of books is still an essential requirement, as they’ll make it so anyone looking can easily find the information they need! It’s not just useful for self-assessments, your books are a wealth of information about your business just waiting to give you an insight from a different angle.

Reports can be viewed easily to allow you to analyse the financial side of your business easier. I’ve mentioned before the case where one of my clients had us setup some reports to get e-mailed monthly to them, analysing a particular client who they did a lot of work for. The reports showed them that although they spent a lot of time working for this client, the profit didn’t justify that amount of time. This caused a restructuring of how they worked with this client, freeing them up to do more work with more profitable customers.

So many people see their books as something they do simply to meet the legal requirements of them, so they’ve figures to submit in their tax return. However, they can show you so much more, it’s often people either don’t know how to get something from them, don’t have time to or just don’t want to spend their time doing their books, causing resentment towards them.

My husband was a great example of this (before I met him, I should add!). He used to lose every Christmas to doing his books, as he was “too busy” to do this during the year doing the work that he could invoice. This timeframe meant they were done just in time for self-assessment, no time to analyse them in any form, they were just there for that one legal requirement. He’s no longer self-employed so I can’t help him, but he has said he wonders if he’d done things differently if he’d had time to actually look at how his business was performing, other than looking at how much money was in the bank!

Existing customer or not, please feel free to have a chat with us about how we can help you get the most out of your books!

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