5 Reasons Why Your Small Business Needs A Good Bookkeeper

Every small business should have a good bookkeeper.

If you run a small business, particularly one that is just getting started, your finances will be at the forefront of your mind. You will likely have a plan for every penny in your pocket, and will be doing everything to keep costs as low as possible. For these reasons, you may think that hiring a good bookkeeper is a luxury for further down the road, when really it could be a factor that makes or breaks your business. Below are five reasons your small business needs a bookkeeper.


Bookkeeping takes considerable time and effort

Even if you’re a mathematical whizz who got straight As in school, bookkeeping takes a huge amount of time and effort to do properly. Money is coming in and out of every direction, and it quickly becomes very easy to lose track of things. Trying to keep on top of it when there are a million other aspects of your business calling out for attention is a difficult thing to do, and then there come the moments when you realise the final tally doesn’t add up, and you have to go through everything again to find where it all went wrong. In the end, bookkeeping is a black hole that will literally devour your time and pull you away from other tasks.

Handling Payments with Consistency Is Key

When getting started out in business, it’s not unusual for there to be a little bit of disarray, and many suppliers will be somewhat forgiving of this. To a point. But if you are constantly paying late and allowing bills to stack up, people begin to lose their patience rather quickly. More importantly, if you are sending out invoices inconsistently, your incoming cash flow will be inconsistent, which means your outgoing payments will be too. If you don’t know how much money you’re going to need and have at any given point, you may suddenly find yourself unable to replace stock, because your outstanding bills are so high, even if your customers have assured you that their cheque is in the mail. All businesses ultimately boil down to finance, and this level of inconsistency and uncertainty will ultimately come back to haunt you.

Bookkeeping helps to set targets towards running your business smoothly

If this is your first business, you will be familiar with the fear you feel when you lock the doors after an abysmal day of trading. That same mindset can put dollar signs in your eyes when you suddenly have a day that goes much better than expected, but it’s important not to lose the forest for the trees. One day of doing twice as good as expected is not enough to cancel out three days of weak sales. With proper bookkeeping, you’ll know how much you need to bring in to keep the doors open, not just in a day, week, or month, but all year round. Without a firm target in your sights, it is easy to think things are going a lot better than they are until it all comes crashing down.

A bookkeeper will provide Neutral, Expert Advice

When you hire a bookkeeper, you should remember that you are not just their employer, you are their customer. They want you to keep bringing in cash, because that means they will too. They may not feel the same love and passion for your business as you do, but that also means they won’t be as blinded by fear when things get tough, and will be able to assess the situation in a more logical manner. Furthermore, while this may be your maiden voyage, they will have navigated troubled waters before, and the benefit of that experience is invaluable when it comes to course-correction. The bottom line of your business is your bottom line, so if there is one area where you want logical, expert advice, this is it.

Complexity

The business world is not just complex because of things like calculating profit margins or estimating supply and demand. Whether they come from the Irish government, the EU, or the WTO, regulations abound, and there will be countless challenges, expenses, and blockades that you never would have considered. Similarly, there will be advantages, incentives, breaks, and aid that you may never find on your own. With so much to think of already, a firm and accurate grasp of the legal systems in which you operate is not something you will pick up overnight, but a simple, honest mistake can wreak havoc on your ability to operate. Rather than trying to figure things out as you go, hiring a bookkeeper and learning through observation will serve you best in the long run.

For many new entrepreneurs, hiring a bookkeeper may not seem like the most pressing issue. Most are fired up about their new business, and are trying to do everything they can to make it work. But doing everything you can does not mean doing everything yourself. It may appear that holding off on a bookkeeper is keeping costs down for now, but it is only when you see the cost-benefit analysis in action that you’ll realise how much bang you are truly getting for your bookkeeper.

5 Things That Contractors Starting Out Should Know About From A Financial Perspective

Some things to consider as a start up contractor from a financial perspective.

In just the past few years, the nature of work has undergone a dramatic transformation. While contractors and freelancers have existed for a long time, technological advancements mean that an increasing number of people are drawn to the idea of being their own boss.


Like starting a new job, becoming a contractor can be an intimidating experience. But when you do become a contractor, you have a lot more to worry about than making new friends or meeting sales targets. There are many advantages to contract work, but the financial side of things is very different to that of a traditional 9-5 job, so here are 5 things that start out contractors should know from a financial perspective.

Be Prepared For Financial ups & Downs.

One of the most obvious qualities of contract work is that you won’t have a steady income. Your income one month will be totally different to the months behind and ahead of it, particularly when you are just getting started. Even if you have a few different jobs lined up for the near future, or the promise of regular work, nothing is guaranteed when you are a contractor.

For this reason, it is important to plan ahead, to have some cash you can fall back on, and to be prudent with your spending while you get a feel for your cash flow. Ideally there should be some overlap between the job you are leaving and the contract work you do, so you can make an informed decision about when to take the leap and fully immerse yourself in contract work.

Consider your Pay Rate

If only out of curiosity, most of us have calculated how much we earn per hour. When you become a contractor, this figure can suddenly seem to jump dramatically. While most companies don’t mind paying a higher amount to contractors, because it’s still cheaper than hiring a full-time employee, you need to remember that the per-hour wage is not as scalable for contractors as it is for full-time employees.

Even if you get paid €100 for an hour’s work, you’re not going to fill 40 hours with that rate, and certainly not at the beginning, so don’t expect to be taking home €4,000 a week in the near future. There will always be 168 hours in a week, but there won’t always be 40 hours of work, so you have to stretch whatever you take in.

Be Confident in the value of your work

New contractors often feel awkward when it comes to putting down a price for their work. Many people will be afraid that charging X amount for Y hours will make them look arrogant, or unrealistic. Furthermore, there is a fear that no matter what number you put down, someone else will be willing to do it for less, which drives many people to undervalue their work. Ironically, this can sometimes cost people business, as a lack of confidence can make it seem like the quality of your work is not as high as your competition, and a business may be willing to fork out a little more if they think the result will be better.

This is a hurdle all new contractors must overcome. One of the best ways to do so is to join an online group and ask others how they arrive at their own valuations. There will be plenty of people online with the first-hand experience to know what works, and since most of them won’t be your direct competition, you can get some truly great advice for your specific field.

The Lack of security as a contractor

For all the advantages of contract work, one of the biggest disadvantages is a lack of security. While a person in full-time employment may be entitled to paid annual leave or sick days, contractors enjoy no such benefits, and only get paid when they actually hand over work. For this reason, it is important that you put aside a portion of every pay cheque, no matter how small.

You need this rainy day fund to tap into, because further down the line, whether you simply want some time off or find yourself unable to work, there will come a time when there is no money coming in.

Self Employement and taxes

In order to keep everything above board and avoid incurring penalties further down the line, it is important to register as a self-employed person from the get-go. This can be a little daunting, as people fear running afoul of the tax man, so it may be in your best interests to get some advice from an accountant, or someone who has already been through the process.

The good news is that there are advantages to being self employed with regards to tax, such as a reduced USC rate, and an earned income tax credit for self-employed people that is set to rise from €1,150 to €1,350 in Budget 2019. Making sure you take advantage of all the benefits available to you is another reason to seek expert advice, at least in the beginning.

Entering the world of contract work can seem scary and complex at times, but it can be an attractive alternative to working for someone else. There will be risks and challenges involved, but if you plan properly and do things right, contract work can offer you a tremendous amount of freedom and satisfaction, as well as a high quality of life.

If you would like to discuss anything from this article or have any other questions relating to working as a contractor, get in touch with us today and we’ll be happy to advise you.

Signs of a brilliant bookkeeper

Good bookkeepers are as frequent as rain in Ireland but a truly great bookkeepers are as rare as a week of sunshine. As a business owner you need to recognise the impact a bookkeeper can have on your business Being so rare it’s difficult to hunt a great bookkeeper down but here are some tips on how to know one when you see one.

 

Educate Themselves On Your Business Needs

Great bookkeepers take the time to adapt to your business and understand how you operate so they can make sure that the processes are as simple and efficient as possible. They will be able to identify opportunities for your business to be more organised, labour-saving and efficient.

Excellent Communication Skills


Great bookkeepers are great communicators they are able to explain complex ideas in easy-to-understand ways, if your bookkeeper regularly uses accounting and bookkeeping jargon, the conversations you have will feel restricted and unproductive. Look for someone who’s willing to communicate key concepts at a pace you’re comfortable with, and don’t be afraid to ask questions!

Experience In Your Particular Industry

What may seem like a good bookkeeper to most could be a great bookkeeper in your industry. Working with a bookkeeper who has expertise in Legal bookkeeping would be very different than working with one who has experience with retail. Specialised bookkeepers can provide reports on how your business is performing month-to-month, and have an idea of what success metrics look like in your industry.

Evolve With The Industry

A sign of a really great bookkeeper is one who is up to date on what is happening in the bookkeeping, accounting and technology spaces. The bookkeeping and accounting industries have evolved considerably over the past few years due to changing technologies. When bookkeepers utilize the latest business software and technologies, it shows that they’re committed to increasing efficiency and providing a more robust service. Great bookkeepers should be explaining to you and encouraging you to use technology to save time and money by automating processes with cloud accounting packages.

Are Trustworthy

Finally, the relationship between a client and a bookkeeper is sacred. Most people won’t share their financial details with friends or even family, so it is important when picking a bookkeeper that it is one you can trust. Great bookkeepers are transparent with things like billing and pricing, they’re responsive and you never have to question what kind of value they’re adding to your business, you are one of the lucky ones that have a great bookkeeper.

How "PAYE Modernisation" will affect Employees and Employers?

In 1960 Revenue introduced the PAYE system. This system was designed for employees and employers to have the most accurate, up to date information relating to pay and tax deductions. Ensuring the right tax deductions are made by the right individuals at the right times, improves the accuracy, understanding and transparency for all the stakeholders. This version of the PAYE system has been used for the past 60 years but for not much longer…

On the 1st of January 2019, the PAYE system will get a long overdue update to evolve with the times. For example, people switch job more regularly and changes in personal circumstances   ( i.e marital status) are much more common compared to when PAYE System originally launched

Now you are probably wondering what do these changes mean for me. Don’t worry, this update will benefit both employers and employees.

 

For Employees

Before the start of the tax year, an online statement will be sent detailing your tax credits and standard cut-off points for the upcoming year. This will be based on estimated income and information available to Revenue for the employee. Employees will be prompted to make any necessary adjustments to or to update this online statement, including claiming any additional entitlements. This contrasts with the current system where the employee must wait until the end of the year for such reconciliation and wait for any refund or be faced with a tax underpayment.

For Employers

This update will have changes on how employers pay their employees. When processing payroll, a file must be submitted (electronically) to Revenue containing details of employee payments. The contents of this file will be like the details currently submitted in the annual P35, but unlike the P35 this file must be submitted each pay period e.g. weekly or monthly.

The update enables employers to submit a new employee’s detail before they start employment their details. This allows the final payroll run in the year will generate a pre-populated statement setting out the total tax deductions for the year both at the level of the employer and the employee. This, in turn, should reduce incidences of year end over/underpayments of income tax.

This new reporting process by employers to Revenue is anticipated to be fully integrated into the employer’s payroll run and will result in a significant modernisation of business processes and reduce the administrative cost for employers.

To discuss these changes further Contact us

Should You Do Your Own Bookkeeping?

Should you do your own bookkeeping? Similar to the DIY mentality of the husband doing the plumbing, probably not. Except in this case instead a flood of water in your kitchen you have a flood of paperwork in your office leading up to an audit. It’s not a question could you do your own bookkeeping, it’s not even a question of why should you, it’s a question of why would you? Here are 3 reasons why doing your own bookkeeping isn’t in you or your businesses best interest.


Control

Oftentimes business owners are notorious for Micro-managing. Observing and undertaking any and every task that the business needs. This is unnecessary stress inducer, learn to trust in the ability of the people you hire. You can’t control everything in business. Trying will only lead to frustration. Control the things you can. Attempting to be the jack of all trades will lead you to be the master of none.

 

Time is money

A lie business owners tell themselves when deciding to do their own bookkeeping is that they will make time. Realise that you are highly skilled and that your time has value, after all time is money. If you're hell-bent on being in control of your business's financial health, then you likely need to make the time commitment. Why not commit your time by focusing on what you do best?

 

Interest

It is almost normal not to enjoy maintaining accurate accounting records, it’s a tedious task that can have you leaving the office drained. This can change your outlook, motivation and efficiency in the workplace in a negative way. Don’t under estimate the power of a positive mind-set on not only your work efficiency but the impact it can have on your personal life.

Is your bookkeeper retiring? Here's what to do next.

The working relationship you have with your bookkeeper is oddly intimate, there is a lot of trust involved and a sense of loyalty to one another. This makes the bond hard to break even when it’s in the individual’s best interest. It can be a bit scary when your long-term bookkeeper retires. When looking for a replacement its important you know they will be just as efficient, reliable, honest, and flexible. Here's what to do when your bookkeeper retires:


Bookkeeping is most likely not your forte and now that your bookkeeper is gone, you might be feeling more lost than ever. Find the silver lining and view this situation as an opportunity for you to rebuild how your business financials are being managed, and assess what other aspects of your business can use some fine-tuning and implement. Technology is ever changing in the world of bookkeeping and a new bookkeeper armed with the latest tech and strategies can greatly benefit your business.


As you get ready to start fresh, take some time to consider what your options are. When you’re considering who your next bookkeeper will be, don’t be afraid to ask hard-hitting questions. Look for someone who will nurture the business relationship, who specialises in your particular industry, has a positive track record with their other clients, and someone who’ll go the extra mile.

Also, it is important that you ensure a smooth transition and get all of your latest financial reports and files from your old bookkeeper. Your new bookkeeper needs this data to do their job efficiently. Accuracy is essential in bookkeeping. Without proper records it's a dangerous guessing game at your expense.

It's important to know the signs of a brilliant bookkeeper before finalising your selection. At Shelbourne Accountants our bookkeepers have experience in a variety of industries which allows them to offer sound practical advice to assist you in the day to day administration of your business.

For further information Contact Us.