7 Things That Happen When You Don’t Do Bookkeeping

7 Things That Happen When You Don’t Do Bookkeeping

by | Dec 21, 2020 | BOOKKEEPING

7 Things That Happen When You Don't Do Bookkeeping

7 Things That Happen When You Don’t Do Bookkeeping

Bookkeeping is among all businesses’ least favourite things to do. It can be tempting to skimp on your business bookkeeping and pile it up until the far end of the tax season, only to finish it in a hurry when the deadline is around the corner. That is not the way to run a business!

Not staying up-to-date with your bookkeeping has significant costs that could end up consuming even more of your time and resources than if you had done it in the first place. Plus, you will have no idea how well or badly your business is performing.  Here are seven things that risk happening if you do not do your bookkeeping:

1. Your records become inaccurate and unreliable

When you do not update your books, your company financial records become outdated and unreliable. You no longer have an accurate idea of where your cash is coming from or where you owe money.

This makes it harder to sort out your fixed and variable costs and thus obscures what your company’s breakeven point is. Essentially, without bookkeeping, there is no financial trail you can refer to if there are discrepancies spotted.

2. Financing options become limited

The lack of updated books of records limits your access to financing, which is a massive disadvantage if you need funds fast. A bank, for instance, will ask to see financial records before granting you a loan so that they know you have the necessary assets to offer as collateral. Without written evidence of your transactions, your credibility with banks, investors and lenders will be extremely low.

3. Invoicing falls behind and cash flow suffers

Without bookkeeping, you are likely to lose track of all the invoices you are owed and which you need to pay, particularly over a long period of time. This could lead to unnecessary shortages of funds, and on the other hand, you risk piling up late fees for your accounts payable. In short, your entire cash flow for the business goes astray.

4. Payroll problems start to rise

Payroll is among the most critical aspects of running a business. Your employees need to be paid on time and accurately. Without bookkeeping, however, it gets difficult to track leave taken, overtime worked, bonuses due and so on.

You thus risk underpaying or overpaying your employees without even knowing it. And any errors will end up reflected on the employee’s payslips and cause you both tax problems. As a growing company, you cannot afford to land yourself in such troubles. 

5. Managing expenses becomes tricky

Without a proper system of bookkeeping in place, you risk losing money in slow but steady leaks over time. Small expenses that are easily forgotten end up not being recorded and can add up to a significant amount.

This, in turn, could lead to unclaimed tax deductions or overstate your expenses to the HMRC, which can lead to problems if your company is being audited.

6. Bookkeeping backlog drains your time and increases costs

It is possible in theory to catch up on your business records at the end of the year before tax season, but it is immensely time-consuming. Not only does it take you away from business-critical activities, but it could also lead to your accountant charging hefty overtime fees for having to wade through stacks of unsorted receipts. Ultimately, you end up more stressed and with extra bills to pay.

7. Do not risk playing “catch me if you can” with HMRC

Without formal bookkeeping practices in place, you risk arousing the suspicion of the HMRC. Failing to report incomes that have already been reported, not issuing information returns, claiming unusually large expense deductions and wrongly classifying your employees are all red flags that could put you on the authorities’ radar.

In case an audit is requested, you need to be able to provide complete records of all your business transactions – in the absence of which you risk having to pay hefty penalties.

Take help if you are struggling

If your bookkeeping chores are causing you stress and trouble, it is best to outsource it to experts. Good bookkeepers will help you keep a record of your expenses and receipts, track accounts payable and receivable and also create a balance sheet.

When your basic bookkeeping is sorted, you will be better equipped to plan an efficient tax strategy for your company and also ensure your business management is functioning based on accurate financials.

Plus, you can then offer your clients more value-added services which will not only drive more revenues for your business but also strengthen client relationships.

If you need help, then Agility Bookkeeping is fully equipped to help you move over from routine bookkeeping and transition to a modern, paperless and outsourced system. Would you like to discuss our partnership further? We would love to talk to you!

Please complete our contact form or email us at sales@agilitybookkeeping.com for an initial, no-obligation chat.

8 Productivity Tips For Bookkeepers This Holiday Season

8 Productivity Tips For Bookkeepers This Holiday Season

by | Dec 17, 2020 | PRODUCTIVITY

8 Productivity Tips For Bookkeepers This Holiday Season

 8 PRODUCTIVITY TIPS FOR BOOKKEEPERS this holiday season

 

‘Tis the season to be merry! And the quicker you can get your bookkeeping tasks completed, the sooner you can get down to celebrating with your family – social distancing observed, obviously.

Productivity is always a priority for bookkeepers, but never more so than now when businesses everywhere are looking to wrap things up before Christmas. A big part of creatively ‘amping up’ your productivity is committing to making conscious efforts to get more done every day.

Looking for some inspiration? Agility Bookkeeping’s founder Rachel Roden shares eight tips to help fellow bookkeepers to keep their productivity levels at an all-time high:

1. Be protective of your time

Time is the most valuable asset you have – you deserve to be protective of it! Schedule well-defined work blocks during the day or week for your most important tasks and then work your other priorities around those.

To avoid being flooded with meetings, ask colleagues to book their meeting slots in advance. Even if you only work part-time, it is essential to have control over what you are doing through your workday.

We use Microsoft Teams to manage our calendar. Choose a scheduling tool of your liking and manage your time better.

2. Upgrade your team communication tool

Efficient and speedy internal communication is a must for productivity. Choose a tool like Microsoft Teams that allows you to communicate with your clients, team members or stakeholders easily without filling up their inboxes with multiple follow-ups and long email trails.

Virtual meetings are now the norm, and tools like Zoom and Google Hangouts make this easy. If you manage a large bookkeeping team, provide quick training to your team members to help them navigate these tools better so that they need not resort to texting or calling each other at inconvenient times.

3. Embrace automation

Accounting software has evolved tremendously over the last few years, and embracing software will go a long way in freeing you up from mundane tasks and keeping your attention on what’s critical.

There are different software options to handle your monthly bookkeeping online, automate your tax compliance, automate your transaction categorisation, and so on.

While many accountants hesitate to adopt software as they fear that their jobs will become redundant, automation is, in fact, a significant step forward in making high productivity the norm in the accounting industry.

Use a modern, online bookkeeping system such as Xero, Quickbooks or Sage – one that you can link to your bank account. This way, all your transactions automatically get synced to your system at the end of each month or week, making it easier for you to tally your in-flows and out-flows.

4. USE DATA ENTRY APPS

Are you tired of spending hours on data entry? Apps such as AutoEntry or HubDoc link to most modern bookkeeping software packages and are a lifesaver when it comes to routine data work. Then make sure your paperwork gets auto-forwarded to the email inbox – this way, all your paperwork is attached to the relevant transactions, and you do not need to waste time hunting down bills from six months ago.

5. Do not allow the paperwork to build-up

Some amount of paperwork is inevitable for bookkeepers, and it is almost always their least favourite thing to do.  However, the more you put it off, the bigger your workload will be when you finally get around to doing it. Instead, allocate time each day to ensure entry and invoices are raised.

6. Delegate wherever possible

Given that you only have a limited number of working hours each day, you must use as much of it as possible for critical tasks that demand your attention and creativity.

Wherever possible, pass on routine tasks such as scanning paperwork to a member of your team or a freelancer. Plus, check if there is a software or third-party service provider for the task you need to be done – there is likely to be one.

7. Do one task at a time

It is easy to be distracted by phone calls and emails, and not relatively as easy to regain your concentration afterwards. To get the most out of your workday, focus on one task at a time and put your phone away while you are doing so.

You can also try dividing each task into smaller chunks so that you can visibly measure your daily progress. It is easy to get overwhelmed if you have a lot to do, but take it one page or one month at a time, and you will be surprised how quickly you are getting things done.

8. Do it once and do it right

Mistakes can be costly, especially in bookkeeping. If you are having trouble figuring something out, do not hesitate to reach out to a colleague for help. You could even consider outsourcing the project while you focus on other areas.

Remember, the cost of not seeking help and getting the project wrong is much higher than taking a step back and acknowledging that something is outside your skillset. And in the process, you also save all the time that would go on you puzzling it out yourself!

Get professional help if you need it.

If you are struggling to manage the ins and outs of bookkeeping along with your primary business, you can consider outsourcing the job to a professional. An experienced bookkeeping service provider will save you time and money and advise you on making the most of tax returns.

Thankfully, Agility Bookkeeping is fully equipped to handle all your bookkeeping tasks and enable you to put up your legs and relax over the holidays. If you’re interested, please complete the contact form, and we will get back to you for an initial, no-obligation chat.