I need to cut my costs, so I can’t afford a bookkeeper.

Have you ever said this to yourself?

This may make sense initially, you need to make some cost savings so you don’t want the extra expense of a bookkeeper, you can handle this yourself. However, the extra cost of a good bookkeeper could actually lead to more cost savings in the long run.

Imagine you are doing your own bookkeeping on top of running your business. You’re probably very busy and don’t have much spare time so you may be rushing through the bookkeeping and missing things. For example, are you keeping on top of HMRC deadlines? If not, you could face fines and penalties, like missing a VAT deadline could result in a £200 fine. with more fines to follow if you keep missing the deadline.

Are you categorising your costs and expenses correctly? If not, you could be paying more tax than you need to. Thinking about VAT again, do you know what items you need to collect VAT on? If you get this wrong and are subject to an HMRC investigation there could be penalties and backdated taxes which could be a big hit if the mis-categorisation has been going on for a while.

Are you staying on top of invoices and supplier payments? Are they starting to pile up? If you miss payments some suppliers may put a stop on your account until you’ve paid them leaving you short of products or ingredients, which will ultimately cost you more if you can’t sell everything you need to.

Do you know when your tax return is due and how much you should be paying? Do you have enough money to make the payment? How will it affect your cash flow?

Then when the above all gets too much and you can’t keep up with it and you have to hire an emergency accountant to get it sorted and get your tax returns submitted on time, that is not going to be cheap.

You can see the risks above of doing your own bookkeeping. A good bookkeeper will keep on top of tax returns, cash flow, supplier payments and make sure your products are all correctly categorised, saving you a lot of money. They can also bring in more money too by chasing invoices that you haven’t been paid for, finding discounts, and tax savings.

We really recommend thinking about all this before you decide to handle the bookkeeping yourself, it can really make a huge difference to your business.