By Jonathan Amponsah CTA FCCA, The Tax Guys.
When you start a business you want to keep costs such as bookkeeping and accountancy fees as low as possible. However, if you cut back on such service you may find those pesky invoices and receipts begin to take up your evenings and weekends. So how do you strike a balance and prepare your books correctly in order to reduce your accountancy bills, without it taking up all your spare time?
Here are some cost-effective and time-saving tips:
Discuss options with your accountant…
This might sound like asking a whether you need a haircut but the first thing to do before you dive into preparing your books is to ask your accountant what you can do to lower your accountancy fees. The aim is not to take on more work at the expense of your weekends or family life. Most accountants offer packages and you might get the year-end accounts and tax return work at half price. Or they could simply take over all your paperwork chores, produce regular management accounts and handle your VAT and payroll requirements. In return you get your end of year accounts done and filed for FREE. Why free? Well if the bulk of the work is completed and there are no additional complications or work at the year end, then I see no reason why the accounts cannot be filed at no cost to you.
Agree the format you’ll use
If the above doesn’t work and you’re happy to do the books, then agree with your accountant what format to keep the books in. Do they want you to simply keep record of income and expenses on Excel? Do they want you to use a particular software? Should you match, cross reference and analyse the transactions or will they do it? Do they want you to keep a cash book, list of your sales and purchase invoices? And do they want you to reconcile the books by applying what is called “Double Entry” bookkeeping? Unless you are a professional bookkeeper or a member of the Institute of Certified Bookkeepers, don’t attempt double entry bookkeeping. You may end up paying for the accountant to rectify errors. You may even end up with some tax issues.
Use bookkeeping services
Another way to prepare the books and reduce your accountancy fees is to use a professional bookkeeper to help you. Their rates are certainly cheaper than that of an accountant. But do choose carefully. Shortlist a few and involve your accountant in the process if possible. What you want to avoid is a situation where you end up paying for the same work twice because the format and quality of the bookkeeping is not at a level to enable the accountant to produce the accounts at a cheaper rate. Or the bookkeeper and the accountants use different systems and speak different languages.
Whether you use an accountant, a bookkeeper or do it yourself, avoid complicated record keeping and try to streamline your transactions. Things you can do include having a dedicated business account, using the bank for most transactions, refrain from using the business bank account for personal expenses, avoid multiple bank accounts or credit cards and have all your records in once place (preferably in a digital format).
Take HMRC workshops
If you are registered for VAT and you prepare your own VAT returns, do spend some time to attend HMRC webinars on VAT, bookkeeping and others, or watch other free videos from reputable accountancy firms. This will help ensure you’re not making mistakes which might cost you more in the long run.
Then make sure you give your accountant copies of the returns that were submitted, with your workings showing how all the figures on the returns were calculated.
Use Receipt Capture System
It can be time consuming for you to collate and record all those invoices and receipts. And if you send them to your accountant in a shoebox, they will spend additional time reviewing and sorting them – which means more costs. There are some good apps including Auto Entry and Receipt Bank that allow you to capture these receipts on the go and send them directly to your accountant. You can even ask your suppliers to send their invoices to the app to free up your inbox a bit. And this will also reduce your accountancy bill because accountants are not chasing you for records or sifting through a pile of invoices.
Use a cloud-based system
Gone are the days when bookkeeping software was written in complicated language that only accountants could use or understand. The likes of FreeAgent, QuickBooks and Xero have truly transformed the way bookkeeping is done. And if you’re going to do your own bookkeeping, then do use one of these platforms to save time and accountancy fees. Plus, some accountancy firms would even cover the cost of the platform for you or include it within their packaged services. Again, do agree with your accountant where your bookkeeping duties would end.
Open banking and artificial intelligence are taking away a lot of work when it comes to receiving your bank statements and analysing what the transactions are for. You can authorise your bank to send bank transaction to a cloud boo keeping platform avoiding the need to spend time downloading them and keying them into, say, a spreadsheet. You can also set a rule to say that if a direct debit payment goes to, say Aviva, then this should be analysed as insurance so next time you don’t have to analyse it manually. Imagine how much time and fees you can save by doing this. However, don’t assume that you can ignore it completely – it’s very important that someone check though to ensure that the robots are behaving the way you want.
Agree the date to handover records
Did you know you can ask for a lower accountancy fee if you prepare your books for your accountants at their quietest times? Accountants have peak times with many businesses having December & March year-ends, plus the Tax Return deadline in January. Avoid such times and make sure you ask your accountant for a discount for being so helpful!
Look at Apps that integrate eg inventory
If you run a retail or restaurant business and you’re using a cloud bookkeeping platform, you can go further and get an EPOS (Electronic Point of Sale) and inventory system that integrates with your chosen cloud platform and helps keep track of stock. Platforms such us Izettle, Vend and others should be considered. A key area that often causes issues with the accounting process is the value of your stock. Where you or your accountant spends less time on this area, you can both save time and costs.
Use these ideas, negotiate a good deal with your accountants and avoid letting bookkeeping issues get you down. Bear in mind that your accountants are there to help you and your business. Once the bookkeeping is under control you can use them for other value-adding services such as tax planning and other advice.
ABOUT THE AUTHOR
Jonathan Amponsah CTA FCCA is an award-winning chartered tax adviser and accountant who has advises business owners on entrepreneurial tax reliefs. Jonathan is the founder and CEO of The Tax Guys. www.thetaxguys.co.uk