In-house v outsourcing your bookkeeping and admin

http://www.oakbookkeepingservices.co.uk/         Your local independent bookkeeper in Reading

Do you procrastinate when it comes to dealing with paperwork in your business? Finding time to run your business, network and spend time with family and friends can leave little time to keep your financial and admin records up to date. So a little extra help seems a good idea.

Do you hire someone in or outsource? There are advantages and disadvantages to both.

The advantage of having someone in-house means you have someone in the office to deal with the finance and admin tasks, answer the phones and other ad-hoc tasks.

The disadvantage is that you also have a payroll to run with a regular salary, national insurance, holiday, sick and possibly maternity/paternity to allow for. Let’s not forget the upcoming auto-enrolment.

Using an outsourced bookkeeper has the advantage of having some-one working only when you need them. There are no employment taxes – the bookkeeper is self-employed and pays their own.

If they work off-site there are no office costs, laptop and software costs. If they work on-site then the above may be provided by either the business or the bookkeeper depending on the business requirements. The paperwork stays on-site

The disadvantage is that they’re not on call when you may need them. If they work off site it’s not easy for either to ask questions. They would also need to take paperwork way so you have to wait till their next in should you have a supplier/customer query.

As a sole trader or small limited company when you don’t need a full time bookkeeper outsourcing definitely has more advantages than having an in-house bookkeeper.  You outsource only the parts you don’t want or have time to do, whether it's the general bookkeeping, invoicing or credit control. They work only when you need them to and ultimately you save money by reducing your overheads.

 

Desktop or Cloud

www.oakbookkeepingservices.co.uk  Your Reading based bookkeeper

The cloud is here to stay so do you stick with your desktop software or move to the cloud.  I see pros and cons with both.  For me the main ones being security and access to the internet. 

I want to be sure my clients will feel confident that no-one will hack into their accounts - if it’s on the web we worry it may happen but if it’s on my laptop we worry it may be broken into. 

The same with the internet – if it’s on my laptop I know I can work anywhere my laptop is and if it’s on the web my clients can also have access to it. The former means I am doing their bookkeeping for them unless they do their accounts during the month / quarter / year and then pass me the backup to do the reconciliations, month/ year end accounts etc.

The latter also allows them to see at a glance how their business is doing.  More and more clients these days want to have more of a hand in their accounts which is as it should be.  In the past if an owner was asked ‘how’s business’ they would have had to ask their accountant. Now they can see with the touch of a button how it is. 

With smartphones and tablets the clients can issue invoices as they leave their customer or can scan expenses and receipts straight in. 

Although there is usually a monthly charge for web based accounting packages it can easily be recouped by business owners  as they can also do some of their own bookkeeping which, if they have the time, will help keep administration costs down. Especially in the early start-up days when you’re trying to minimise your outgoings and don’t want to have to pay up too many upfront costs, a web based system is the way forward.

I have some clients who just want to know how much they’ve made, have to pay in VAT etc so don’t want to see the accounting system and I have some who want to be more involved in the day to day running of the accounts. So for me I’m going to keep a foot in both camps.   I also want to be able to do some work when my broadband occasionally goes down. 

www.oakbookkeepingservices.co.uk           Your local Reading Bookkeeper




I have contributed a news item to the ICB monthly newsletter.   If you want to read it please follow the link https://www.bookkeepers.org.uk/resources/news/general/4-ways-to-stay-up-to-date/a/1036


Regards

Tax return not what you expected.

It is thought approx 1.5 million people have still not done their tax return for 2012/3 for various reasons. Why does the self-assessment tax return take so many by surprise.  Its a bit like Christmas we all know what date it’s going to be on but unless we are all organised we are never ready for it.  I know several sole traders – not my clients – who have turned round and said they did not know how they were paying their tax demand as it was more than they expected.   With some they had not taken into account the payment in advance they are having to make but others had not realised how much they had earned. 

 

Firstly as a business you should be keeping track of your turnover and your expenses.  Secondly if you do your books – or get a bookkeeper to look at them - on a regular basis then you have a rough idea what the payment is likely to be.  Considering there is nine months from the end of the tax year till the return has to be done there is sufficient time to get the return done and if necessary set up an agreement with HMRC to get the monies owed paid.

Wishing everyone a healthy and prosperous 2014 from Oak Bookkeeping Services

Expanding my business network

This is a one-off request as normally I use this page just for blogging about what I hope are interesting and useful business aspects.   I am trying to expand my twitter and Facebook presence and would appreciate people liking or following me on either.

The links are 

Twitter: https://twitter.com/OakBookkeeping

Facebook: https://www.facebook.com/OakBookkeepingServices

Please note you can also follow my blog posts by adding your email in the box on the top right.

Thank you in advance.

Liz

Money makes the world go round

Although we may not always use hard cash those words are still as true as when Liza Minnelli sang them in Cabaret.   It's said that more companies go out of business from lack of ready cash than from lack of sales, although without the sales the business isn't going to go anywhere anyway.

It's ok being asset rich but if you cannot convert this to ready cash when required then you have a problem. Looking at it simply if you think about buying stock on thirty days payment then selling - at a profit - but also on thirty days payment. When it comes to paying the supplier it looks as if you have done well but you have not yet received any payment so have no money to pay the supplier.  Your supplier stops your credit and you can't get any more supplies, your purchaser eventually pays but is not coming back to you as you couldn't guarantee their next order. End result you go out of business.

This is why a cash flow forecast is important to any business and is simple to create.  Start off with your projected sales, list your fixed and variable overheads, deduct one from the other. Link this with the cash in your bank and bring the balance forward to the next month.  The varied costs will change and the sales will probably not come in exactly to the date payment is expected but if you allow for this then you will be prepared for anything that happens. 

Keeping track as to whether your actual figures vary to your forecasted is important. Allow for seasonal adjustments.  This will always be an on-going project but it is one of the most important tasks necessary to stay in business.

If you have any questions on this please contact me on liz@oakbookkeepingservices.co.uk

www.oakbookkeepingservices.co.uk 
Adding value to your business.    Based in Reading, Berkshire.

Income over £50K and receiving child benefit? Only a few days left to register

If you earn over £50,000 and have received Child Benefit Payments since 7 January then you must register for Self Assessment by 5 October 2013 to pay the charge.

To find out if you're liable, what this means to you and what you need to do see the link http://www.hmrc.gov.uk/childbenefitcharge/   for more information.

RTI still a learning curve

http://oakbookkeepingservices.co.uk/         An independent bookkeeper in Reading.

 From accountancylive.com: http://bit.ly/19d3aTJ    

This update advises that SME's are still trying to get to grips with RTI.  After setting up a new client's payroll this month I have to agree.  The Payroll run once I had obtained all relevant information was no problem as expected however when I came to do the RTI part that's when the fun started. 

This was the first time I had set up a new client halfway through the tax year so expected a few problems.  Thankfully a couple of hours later after much to-ing and fro-ing it was all up and running with HMRC finally happy.  

Can't wait to see what the next query on RTI is going to be.  Unfortunately like most things you don't know what you don't know till you need to know it. 

I could never be a luddite

www.oakbookkeepingservices.co.uk    Your independent bookkeeper in Reading

Having worked in accounts since the early days of computers I wonder now how we coped without them.  The first accounting system I ever used was with an Olivetti ‘machine’ that looked like a giant typewriter.

Now everyone has a computer of some sort whether it’s a desktop, laptop, notebook, tablet or smartphone. We all use them for keeping in touch with friends, colleagues and acquaintances. 

With a love of travel I’ve always subscribed to different travel companies which has always helped me decide where to visit next. The web has also helped me with two of my hobbies geo-caching and genealogy. But it’s now that I am self-employed that it has come into it’s own.

LinkedIn and Twitter regularly keep me updated with accounting events in the news as well as well as new rulings by the HMRC etc.  The Institute of Certified Bookkeepers (ICB) which is the professional body I have qualified with and other accounting bodies all have websites and forums that help me keep on top of new rulings and allow me to discuss any queries I have.  If we didn’t have computers I would be tripping over the pile of books I’d need instead. 

Being able to send information and ‘paperwork’ such as payslips, direct to a client in an instant makes my life easier and no longer can they say ‘I didn’t get the invoice’. In fact in most cases I would say the computer has improved my life greatly.

 Now if I could stop those emails telling me it’s 100 days to go till Christmas……….

You know you've made it when......

You know you've made it when your trademark is used in a generic term. 

How many of us Hoover rather than vacuum or Sellotape presents instead of using sticky tape.  That post it note we used rather than the sticky note.  All of these are trademarks that have come into general use over the years. 

The number of times I have asked for a Coke in a pub (ok not too often as its more likely to be a glass of wine) but get given a Pepsi.  If I was to ask for a specific beer by name the barman would likely say they haven't got it would you prefer xx brand. Almost did 4 there but didn't want to use another  brand name.  With Coke that never happens.  

We all Google rather than search on the web. I was surprised when googling what words were now used that are still brand names. 

That item that needs Bubble-wrapped before FedEx-ing to a client.  The kids play with a Lilo in the water before playing with their Frisbee. 

There are many more that are slowly becoming generic.  I wonder what words we will have in ten years time that are only just trademarking now.

Networking and Referrals

Your bookkeeper in Reading
www.oakbookkeepingservices.co.uk

‘People buy from people’ is a mantra you will hear at many a networking event.  We want to work with people we like and trust.  It’s the reason we are happy to refer the plumber or builder who did work in the house. 

Networking and referrals are the mainstay of many a small business.  Which is why I cannot understand why at several recent networking events there is nearly always someone who either comes up to me while I’m in mid conversation with someone, butts in and says ‘can’t stop but I’m  Joe X, I do this, here’s my card, gotta go’. Alternatively we’ll be in a group listening to a conversation and you can see one of the ‘listeners’ has switched off and eyes have glazed over.  OK I can understand it’s because they’re not interested in X’s product but either excuse yourself or feign interest.   I know both these types of people are not going to get my referral if I get asked to recommend someone in their profession. 

I always say that it’s not likely to be the contact I meet at networking that’s likely to be my client but a contact of theirs, current or future.  In the same way I may not have need of their skills but may know / meet someone who does.

There are some people I see regularly at various networking or trade shows and we always ask how the others getting on, what they’ve been up to etc, and these are the ones that I’m more likely to  remember when someone asks ‘can you recommend’ or ‘the type of contact I’m after is’…….

 

Check out my website or email me on liz@oakbookkeepingservices.co.uk if I can be of assistance.

Bookkeeping for hairdressers and beauticians ..... guest blog for another website.

oakbookkeepingservices.co.uk       Your local independent Bookkeeper covering Berkshire and the surrounding areas.

I was asked to do a guest blog for bookkeeping for a mobile hairdressers and beauticians website.  Read it at http://www.thevirtualsalon.co.uk/janines-blog/      

Credit control - you either love it or you hate it.

www.oakbookkeepingservices.co.uk             Your Reading based bookkeeper

At a bookkeeping meeting yesterday I heard about a client that hates to chase her clients for outstanding invoices because ‘they’ don’t like it.  Now that company is struggling to stay afloat. 

Although this business deals with high end clients they are afraid to chase their clients too much in case they lose the regular business. 

While it is great having your own business if you are afraid to ask for monies that are owed to you your business will not last. Once you have decided on your credit terms and agreed them with your client you should stick to them. The best way to do this is to ensure that the invoice is sent to the client as soon as the work is done or on a specific date of the month, depending on the type of service you have provided.  If they start to delay payments then ring them up a few days before the payment is due to check it is on their system and confirm the date the payment is going to be made. 

Requesting them to pay by bank transfer means payment can be made quicker. Sending a monthly statement showing everything due means there is no excuse if they say they have not received the invoice.

If it is a product you provide then ensure a credit limit is set, this way if they are near their limit then request payment before the next order is completed. If the client is unhappy about this then consider whether you really need this client.  At the end of the day you are a business not a charity.  Providing credit is the bank’s job not yours.  Late payment by your client’s will also affect your cash flow and your ability to pay your creditor’s which affects future purchasing power.

If you do not like asking for payment then outsource this to someone who can do it.  There are credit companies that specialise in this or ask your bookkeeper to include it within their remit.

I personally have it in my engagement letter that if payment is not received by me by the required date I have the right to stop working until payment is made. As yet I have not had to do this but I would rather spend my time on clients that are going to pay than on those that are not.

 

Reviews, Recommendations and Referrals

www.oakbookkeepingservices.co.uk    Based in Lower Earley, Reading

At a networking event today I got talking to sole trader who said that he was struggling to get referrals.   Not that people thought he wasn’t any good but he wondered why nobody was sending him testimonials or recommending him.   My question to him was did he ask them to refer him then did he think to refer other suppliers / contractors when they did work for him.  Surprisingly he didn’t and when asked why he said he never thought to although he would have been happy to in most circumstances.

I must admit it’s only a few years ago that I started to put a recommendation or negative remark, if warranted, on tripadvisor. Now if I go on holiday I now look to see what’s been said about hotels or restaurants and also what sights are worth visiting beforehand. I will still look to see what else is at my destination but it’s good to have a rough idea of what to do when I get there.

 In the same way I think it’s good to let companies know when you have been given good or bad service, and I happily go onto websites (info usually provided on the reverse side of the till receipt) and spend five minutes commenting on the quality of service.

 Sole traders and small businesses rely on referrals so if the customer says you did an excellent job it’s worth asking them if they will put that in writing so you can add it to your testimonials, alternatively leave a couple of business cards for them to give to friends / colleagues if they ask who did the work. 

 Most people are happy to refer and recommend, we just need a reminder to do it.  Once my clients have been with me a year I plan to ask them if they are a) happy with my work and b) will they refer me / provide a testimonial.  I’m hoping the answer is yes in which case I’ll be adding a testimonial tab to my website.  So watch this space.

Who do you trust with your business

www.oakbookkeepingservices.co.uk    Based in Lower Earley, Reading

After attending a talk by a local private investigator it made me think about who you can trust these days.  If we open a paper, look at updates on LinkedIn or look at the latest events on twitter, not a week goes past when a director, a member of staff or a member of a professional body has been arrested for fraud or embezzlement.   

We read about the latest scam and know it’s not going to happen to us, we’ve seen through the scam, those that have been affected we tell ourselves they should have had more sense. When it comes to business though are we any the wiser.  When a fraud has been found out we all say ‘ I would never have suspected it, I trusted them’. True – we would not have employed them if we had not.

But what do we do to safeguard ourselves or our business against it happening.

As a small business you have probably started off either on your own or with a couple of friends or like-minded colleagues.  You’ve set up your limited company or partnership and you’ve worked out how the profits are going to be shared.   Have you ensured that cheques need to have at least two signatures if not what’s to stop the other director(s) disappearing with the funds when you take that well deserved holiday? 

While your time is spent bringing in sales or providing the great service your company is getting known for, you decide to take on additional staff.  They do all the back office functions, setting up new accounts, ordering goods and making sure everything is paid on time. Their doing a fantastic job, you have no need to supervise them and you don’t want them to feel you’re keeping an eye on them. 

However  if they do all these functions what's to stop them setting up a false account, issuing an invoice and authorising  bank payment. Small values would probably go unnoticed it's when people get greedy they tend to get caught. Make sure you have processes in place to ensure that you are keeping track of what is being bought and who from. 

While the majority of us are honest there are always going to be the odd one that takes advantage of a situation.  If they didn’t then the fraud squad, the police and the private investigator would be out of work.  The less opportunity we provide for it to happen the less it can happen. 

These needn’t be expensive solutions.  We have burglar alarms to put off people from breaking into our houses but we need to put solutions in place to ensure that nothing gets taken at work.

These can be as simple as ensuring a second signatory on a cheque, purchase orders signed off by management, new accounts needing authorisation before being set up.  The list is endless but a bit of thought can make a big difference.

As stated before the majority of people are honest but opportunity can change people and a change of circumstances can be the tipping point. 

What’s the difference between an Accountant and a Bookkeeper

www.oakbookkeepingservices.co.uk      Based in Lower Earley, Reading


Well the joke answer to this is about £30 an hour?  Ok I don’t expect you to be rolling on the floor at that one but on a serious note do you pay your accountant to do your bookkeeping? If so why?  Do they charge a cheaper rate for the bookkeeping  or charge you at their normal rate.  Do they do your bookkeeping  themselves or do they outsource it to a bookkeeper?

If your accountant is a good one they are probably advising you how to keep your tax costs down after they have examined your books.  If they are doing your bookkeeping too then any savings may have been wiped out by the accountancy bill.  

So what’s the advantage of having a bookkeeper?  If you are a sole trader or small limited company or partnership then having a bookkeeper do your books on a regular basis means you will not be waiting till the end of the year before finding any problems or unexpected surprises.  You may only have them working for a day a week or month but as they have a more hands on feel to the business they can point out irregularities, overpayments, debtors outstanding, problems with cash flow etc sooner.

Obviously this does depend on the experience of the bookkeeper so just picking the cheapest because ‘all their doing is inputting to an accounts package’ is not always going to be the best option. Value for money is finding one that understands your business and understands you. 

Finally if your one of those traders that hand over a bag of receipts to your accountant at the end of January asking for it to be done urgently as the taxman wants paying,  then think about having a bookkeeper look at the first half of your accounts now. You might be surprised what a difference it makes.

Nine days and counting

www.oakbookkeepingservices.co.uk  Your Reading based Bookkeeper

Only nine days left for completing the Self-Assessment Tax Return.  Many are asking if they need to complete a tax return. Ask yourself these questions. Do you rent a property out or have more than one lodger in your main residence? Are you a director of a company? Are you making or buying products to sell on?  If the answer to any of these is yes you should be completing a self-assessment tax return.

If you do not have your UTR or have not yet gone online for your Gateway Id then you may have left it too late as it usually takes about 10 days for the Gateway Id to come through.  If you are able to complete your assessment online don't forget if you owe tax this needs to be paid by January 31st. Leaving it till the 31st then saying you didn't realise is a bit like not being ready for Christmas.  We all know when it is but are still not prepared when it comes round the same time the following year.

If you have left it late or are unsure if you have to do one the best thing to do is ring the HMRC now and discuss the best way to resolve things.  It's still not too late to contact a bookkeeper or accountant to help you with your tax returns and they can ensure your penalties (if not completed by 31st) are kept to a minimum.

Cash Flow - staying afloat

oakbookkeepingservices.co.uk        Based in Lower Earley, Reading.

No matter how good a sales team you have, or if you have the best product ever invented, without good cash flow control your business is dead in the water.  Many a business has gone into insolvency because they had no hard cash to pay their invoices.  All it takes is one large payer to delay making payment to you, you then delay paying your creditors which delays your purchases being delivered.   

The best way to resolve this is to ensure your invoices are sent out straight away.  The number of small businesses that leave invoicing till the end of the week, month or ‘when I have time’ is astounding.  This is the one time when as the saying goes ‘time is money’.

 A lot of companies pay once a week or once a month. By delaying the invoicing you could miss a client’s payment run and as a lot pay on thirty days this can also delay when payment is made.

Solutions

If you complete the work today leave your client with the invoice

Are you able to take immediate payment by credit/debit card?  More and more tradesmen now have mobile card readers to do this.

Offer a discount for early payment.

If you do not have time to invoice straight away see if your bookkeeper will do it.  Many will agree a cost per invoice and  can issue, post or email the invoice that day on receipt of the information from yourself.

Finally ensure they have several ways to pay so no excuses.  Bank transfer, cheque or debit /credit card.

Finally if you think you’re going to be paid late which will delay payment to your creditors notify them straight away and agree a date(s) for payment.  If they know when payment is being made this in turn will help their cash flow and they are more likely to keep trading wheras no payment will make them think you are next to go under and could stop deliveries.

What are you offering?

oakbookkeepingservices.co.uk  Your local Bookkeeper based in Reading

Another High Street store went into administration this week. For small businesses this is a reminder that we need to have more than one string to our bow. HMV lost out as more and more of us buy online.   

This reminds us we need to be able to sell to more than one market.  For me this means not just doing month end accounts but offering credit control, Tax returns and later this year – Payroll, and offering these to small businesses and sole traders alike.  

Ask yourself these questions. How are you diversifying?  What will you do if your main buyer stops trading?  What are you doing to attract new customers?