For a small business, paying a bookkeeper might seem like an extravagance. In reality, the time and stress of DIY bookkeeping may be affecting the growth of your business.
Since July 2000 there has been a new dance in the business world. It’s called the Business Activity Statement, commonly known as the BAS. The BAS isn’t easy to get the hang of. Many small business owners are still trying to teach themselves the steps. Worse, doing the BAS is only one of a number of bookkeeping routines that have to be learned if the show is to go on.
It’s an aspect of running a business that gets a lot of people down. Keeping up with day-to-day financial management, submitting regular BAS reports to the tax office, and preparing end-of-year information for the accountant are all on the ‘Yuk’ list for many small business owners. As a result, these things are often left to the last minute — or not done at all.
It’s no wonder. Bookkeeping is an expertise and it’s time-consuming. Learning how to correctly enter data into a software program, making sure GST is recorded properly, keeping up with tax office rulings on payroll and Super, and producing accurate cashflow reports can be unwelcome distractions from the work you are passionate about.
If this sounds like you, perhaps it’s time to consider hiring a bookkeeper.
Bookkeeping is different from accounting. Bookkeeping is about day-to-day management of the finances. An accountant can do that, but may charge a lot more than a bookkeeper. An accountant is valuable for preparation of tax returns, conducting an overview of the business and providing financial planning.
During the year, the bookkeeper will, at the very least, keep up-to-date records of payments your business makes to suppliers and income received from sales of products and services to clients. This information will be used by the bookkeeper to prepare the BAS statement which goes to the tax office, usually every quarter.
Bookkeepers can do more. They can maintain inventory records, manage a payroll, and provide you with regular management reports so you know how your business is going now and will be going in a week, month or year from now. It’s up to you how involved you want your bookkeeper to be.
Bookkeepers don’t need to be employees or even work at your office. These days many bookkeepers run their own business, often from home. They will organise a secure system to regularly pick up receipts and other documents which they return to you when they’ve recorded the information.
There is a huge range in the hourly rate contract bookkeepers charge, from $45 to $80 per hour. Like any service, paying the least doesn’t mean you are getting less and paying the most doesn’t mean you are getting the best. It depends on what qualifications a bookkeeper has, whether they have overheads, whether you’re getting an account manager as well as a bookkeeper for the hourly rate and how complex the work is that you want done.
To date the bookkeeping industry has been unregulated so there has been no specific qualification, amount of experience or association membership required for someone to call themselves a bookkeeper. Anyone could complete a few hours of training and claim to be qualified. This year the legislation is changing and bookkeepers providing BAS services will be required to have, at least, a Certificate IV in Financial Services (Accounting).
There is no standard amount of time a bookkeeper spends on entering data or preparing a BAS, so it’s impossible to suggest how much your bookkeeping might cost. A guess can be based on the number of purchases and sales made per week or month and how big your payroll is, but there are so many varying factors that you won’t really know the cost until your bookkeeper gets going. It always takes a bookkeeper longer in the beginning as they set up systems and generally get to know how your business works.
Hiring a bookkeeper can be tricky, especially if bookkeeping is something you don’t really understand. As with any recruitment process, you base your decision on qualifications, references, length of experience and personality. Knowledge of your particular industry can be a bonus but it’s not necessary. A highly experienced, well-qualified bookkeeper will ask the right questions and learn quickly.
You might pay more, but it can be worthwhile using a bookkeeping company rather than a sole operator. A bookkeeping company will have a few bookkeepers on staff, should conduct regular reviews of its bookkeepers’ work, should ensure their bookkeepers are up to date on all tax office rulings and software changes and will be able to supply a fill-in should your regular bookkeeper take leave for any reason.
The lowest-cost option for getting your BAS prepared and keeping basic financial records is for a bookkeeper to work directly from your bank statements. You note which are business and which are personal expenses, and the bookkeeper will enter and code the information. Some companies offer packaged fees for this, so the costs are set and there are no surprises. With this option, you can still get the regular reports that businesses benefit from, such as profit and loss and cashflow reports, as well as end-of-year reports for the accountant, which may make your tax returns less expensive.
Whichever style of bookkeeping service you choose, knowing that your financial records are being kept accurately and that you’re doing everything right as far as the tax office is concerned will give you peace of mind. More than that, the time you used to spend dancing clumsily around ATO deadlines can now be spent catching up on industry developments, training staff and, most importantly, growing your business.