Bookkeeping Services
What is “Bookkeeping”?
There is a lot of confusion about the differences between bookkeeping and accounting. The truth is that you’ll get different answers from almost everyone you ask. Answers will even vary from one bookkeeper or accountant to another. In our opinion, bookkeeping is a branch of accounting.
It is a specialism that requires its own training & qualifications and is represented by its own professional bodies. Fun fact: double-entry bookkeeping dates back to the 13th century and is said to have been invented by Italian merchants.
By our definition, a good bookkeeper will:
- Ensure that all money moving through bank accounts, credit cards and expense claims is correctly classified
- Make sure that every sale and purchase is recorded accurately and promptly
- Understand the difference between a cost and an asset
Understanding Tax
To record sales, purchases and cash, a bookkeeper must know the fundamentals of tax rules. (And VAT where the business is registered). A good bookkeeper also understands the nuts and bolts of the business itself. They are the engine room and will often be the first to spot things out of the ordinary. Even when the business owner themselves has missed something.
At Composure, we rely on our bookkeepers to know when a business is growing or when it is in trouble. We also make sure that they are masters of the software we use (Xero and Apron).
Our bookkeepers work alongside accountants, which means that they benefit from seeing the bigger picture. They are aware of the consequences for the year-end accounts and tax returns of both the business and its owners. For example, when a director’s loan account goes overdrawn by more than £10K. Or when employees are being taken out for a drink after work on a Friday. Our accountants also gain a better insight into how the business operates on a day-to-day basis. Which means they can offer better, more informed advice. In turn the accounts will show a true reflection of the business’s financial performance and position.
What will our bookkeeping service do for you?
With accurate and up-to-date bookkeeping, you will know:
- If your business is profitable
- Which part(s) of your business is profitable (and what you should stop doing)
- How much the business can afford to pay you (or you can take as a dividend)
- What your future tax and VAT bills look like
- If someone owes you money
- If you owe someone money
- When you’re approaching the VAT threshold
You can plan your Cashflow. You can plan your exit. You’re buying time – either to focus on your business or to do something other than work.
These are the immediate benefits but looking ahead, let’s quote James Clear’s Atomic Habits:
“In order to improve for good, you need to solve problems at the systems level. Fix the inputs and the outputs will fix themselves.”
Or as we were taught at accounting college: rubbish in, rubbish out! (It might actually have been a bit ruder than that!). Good bookkeeping gives you control and allows you to make informed decisions.
What are the Consequences of Bad Bookkeeping?
It is no coincidence that the first 7 benefits of bookkeeping are about “knowing”. Knowledge is power and the two most important things that any business owner needs to know are: profit & cash.
You need cash and profit to build your business, or even just to survive. If you’re not making a profit, at some point the business will either be drowning in debt or go under.
Cash is timing. Profit is a matter of fact.
Profit and cash are NOT the same thing. Looking at your bank balance alone is not good enough. What you need are accurate financial records that you can rely on.
That’s why we only offer bookkeeping as part of a wider relationship. If you’ve been trained to handle it yourself, we’ll support you. If not, we’ll take care of it – properly, thoroughly, and on time.
Bookkeepers in Horsham
We provide bookkeeping services to businesses throughout the Horsham district, West Sussex and the UK. So if you are looking for more clarity and insight into your business’s finances, we’d love to hear from you. Call us today on 01403 780858 or send us a message.
