Most people hate dealing with books and records for their business, and I understand why, but there are cost implications if you don’t give this area the attention it deserves.
I hear people moaning about the cost of annual accounts (not my clients I might add) but in many cases that cost can be reduced by ensuring the records you give your accountant are of reasonable quality.
Here are my tips on maintaining your business records:
If you are not sure what information and detail is required- ask your accountant. Most will have a basic template you can use in Excel as a starting point.
Keep all the paperwork in monthly batches so it is easy to find if you need to go back to something at a later date.
Do little and often. Entering details of receipts and invoices can be tedious so don’t leave it until you have almost a year’s worth to do in a hurry. Try to do quick and painless chunks each week or at least once a month. The benefit of this is that you not only avoid hours of mind-numbing work but that you have an up-to-date picture of your financial situation, rather than operating in the dark until the year-end.
If you are using a bookkeeper, outline in advance exactly what you want and get a cost agreed.
Get a couple of different quotes to make sure you are getting value for money.
Check what is being produced to ensure it’s what you were expecting, but also look at the figures regularly. This will help you understand your spend and income. It can help you spot patterns or possible cash flow issues.
Keep communication open; make it easy for the bookkeeper to ask about things as and when they crop up. You may get questions at the year’s end from the accountant and you will not remember any of the details required especially if you have just been handing over any paperwork to a bookkeeper.
Negotiate a lower cost of year-end accounts with your accountant due to you having fab and organised records and all the information they may need at their fingertips.
Business records cost increases
If you hand over a box full of receipts and random paperwork to your accountant at the year’s end, the cost of your accounts is likely to spiral. Your accountant will then give all of that paperwork to someone to sort and process- the time it takes attracts a cost which is added to the bill of your year-end accounts.
Once the basic accounts are drafted your accountant will likely come back to you with questions, probably tax-related. If you have kept enough information to answer questions quickly with the correct level of detail, the accounts will be finished quickly and the bill minimised. If you have not kept information regarding complex or tax-sensitive issues, then the work your accountant has to undertake is more time-consuming and may involve communications with the revenue which again pushes up the costs.
You may be thinking- not if I agreed a fixed fee!
But the fixed fees are usually based on the assumption that you can provide the required information, it can be argued that work resulting from missing information is additional work to the initial quote- so don’t get caught out.
Have fun!
