Why you should hire a Bookkeeper
What does a Bookkeeper do, and how can they help your business?
New Zealand is officially the easiest country in the world to do business in, well according to the 2016 World Bank "Doing Business" survey.
It seems everyone's getting in on the game. But, (and without spending all my time researching the actual statistics here) many of those businesses in NZ don't last the test of time.
But let's assume that you have been in business for a while now. At first, it's manageable, orders/work are coming in, you have happy Clients, you're generating enough income to keep the family happy and you're doing what you love ... nice!
But before you go patting yourself on the back ... wait, sit back and ask yourself this question: "am I still doing what I love?"
Bookkeeping is not something that should be overlooked, not only is keeping accurate financial records important for the success of your business, but you are required (by law) to keep and maintain accurate books and records.
If you run your business accounting through a software provider such as Xero, MOYB, Quickbooks etc. then you are onto a good thing. It does make accounting so much easier.
However, mistakes can happen and because of the auto-recognition features provided within most accounting software providers, carelessness matching and coding when reconciling can all result in hours of frustration trying to locate what went wrong (that's if you even pick up that it's wrong in the first place).
The Dashboard helps you see at a glance what money is coming in vs. money going out, monitor cash flow with simple charts and graphs, see cash in the bank, proactively follow up on outstanding invoices and monitor your spending.
Cash is King - simples! And this information is very important in making the right business decisions. But it is not long until you realise that these figures just don't match up to the actual situation.
You can no longer rely on these figures alone. You know that bills you have paid are still showing in your 'bills to pay' list, and there are invoices that clients have paid, yet you are still sending them invoice reminders. Easy! You just void those invoices and bills right? Wrong! Now you're frustrated that you are paying for a so-called sophisticated software that in your view, isn't that flash.
We all love to see that green screen, where all you need to do is press ok because the software has automatically matched the transaction to a bill or invoice already created on the system, or a bank rule created earlier.
And you think: "this is easy, you have got this" ... but why is your Accountant so frustrated with you at the end of the year? Why is your bill so high? And what are all these documents that they are asking for?
How are you supposed to find them when it's been months or even over a year since you made the original transaction? This is just the start of your non-compliance. There are missed bank feeds, incorrect coding, spend money transactions in your reconciliation report, the list is endless and more than you care to worry about.
Cash flow; Balance sheets; Profit & Loss; Accounts Payable; Accounts Receivable; Creditors; Debtors; Fixed Assets; COGS (Cost of Goods Sold); Equity and Owners Equity; General Ledger..... the list goes on.
Then there is:
Gross Pay; Net Pay; Withholding Tax; Fringe Benefit tax; Holiday Pay; Work Week; Pay Week; Payday Filing; Salaried vs Hourly Employees; Contractors; ACC levies... Ahhhh, just stop!
Don't allow your business to turn into a life sentence, don't lose the passion for that work/family lifestyle balance you first set out to achieve. Compliance is just one headache you really don't need right!
Do you even know what most of those words mean and how they affect your business?
If you are figuratively and literally getting buried in a sea of paper/words/numbers, it could be time to consider hiring a bookkeeper.
So, what does a Bookkeeper do?
Generally, a Bookkeeper helps with the day-to-day accounts and recording of transactions and sales within your business. But a Bookkeeper can do a whole lot more.
A great Bookkeeper will also help with many aspects of running smooth operations for your business including:
. Legal Compliance;
. ACC Levies;
. Tax Obligations;
. GST Reporting and Returns;
. Cash Flow Management;
. Management Reporting;
. Debtor and Creditor Control;
. Payroll Services and Compliance.
They implement essential systems within your business to ensure you are working smarter not harder. They help you make sense of the numbers, tell you when you need to pay bills, help set up systems to pay those bills easily.
Don't underestimate the power of a Bookkeeper. Most Bookkeepers are highly skilled people working throughout many industries, working with different software providers, working with apps and add-on providers.
As such they will often recommend add-on solutions to help streamline the workflow of your business, they tidy up miscoded items and mistakes made by inexperienced staff.
Most Bookkeepers, although freelance Contractors, become a key part of your team and often take on a lot more than you could have ever imagined.
If you are looking to hire one (mostly all Bookkeepers work as a Contractor BTW), I would highly recommend that you look for an Certified Bookkeeper, preferably through the Institute of Certified NZ Bookkeepers.
So how is a Bookkeeper different to an Accountant?
This is a question that gets asked a lot, another one is: "why do I need to pay an Accountant if I have a Bookkeeper"?
Well, Bookkeepers and Accountants actually should work complimentary of one another.
A Bookkeeper: Handles the day-to-day work required to run your business successfully. They work on your accounts to a high standard of detail and accuracy, ensure source documents are where they need to be, and if you have a good one, your Accountant should (and will) love them. They can also advise and help you with current and short term reporting and advise you on how this could affect the running of your business, they can point out potential cash flow problems and help chase debtors. A Bookkeeper, in most cases, will not work on your tax, unless in rare circumstances they are a registered tax agent.
Bookkeeping: Day-to-day compliance, record keeping, technical advisor and perfection.
An Accountant: Will then review your accounts, most likely on a quarterly basis. They will make any required adjustments and should only get in touch throughout the year if there is an issue. You will usually hear from your Accountant after your financial reporting year has concluded. They use the information your Bookkeeper has collated and organised to create the end of year tax returns and provide all the official reporting. Accountants have almost certainly studied tax law in order to attain their accreditation. They provide you with tax advice and tax planning. Accountants will work with you on a more detailed and advisory level, helping you grow your business and guide you into clever spending decisions. They can help with strategic planning, mergers & acquisitions, and succession planning.
Accounting: Business advisory, performance and strategic planning, legal mergers and acquisitions and succession planning.
So, to conclude, if you want to run a successful business and keep your sanity then you need to know how to play to your strengths and when to get in the hired help to avoid you drowning in compliance and paperwork.
And remember, as with all industries there is plenty of cowboy's out there. Be sure to do your research and interview your potential Bookkeeper as if they were an employee because getting someone who does not know what they are doing really can cause you more risk than the return.
Again, consider looking at the Institute of Certified NZ Bookkeepers find a bookkeeper page.
Please share this article on social media if you found it helpful and please do get in touch if you have any comments or questions.
Thank you and goodnight xx