When should a small business outsource its bookkeeping?

So, if your question is “when should a small business outsource its bookkeeping?” The answer is when DIY bookkeeping starts taking your time and focus away from running and growing the business.

Here are a few signs that it is time to outsource your bookkeeping?

1. It’s taking up too much time

If you’ve started spending your nights or weekends recording transactions, reconciling bank accounts, chasing bills or managing payroll, then maybe it’s time to obtain expert help.

2. Your company is growing quickly

This is a fantastic thing for your revenue and expansion goals, but a growing business implies additional staff, vendors, customers and payments to manage. The more transactions you process, the more likely you are to overlook an entry or make an accounting error.

3. Issues with cash flow visibility

Strong revenue doesn’t necessarily mean a business has healthy cash flow. Without clear, up-to-date financial information, it can be difficult to understand current account balances, anticipate upcoming expenses, identify potential cash shortfalls and assess overall financial performance. Keeping accurate, up-to-date books provides the visibility needed to make informed decisions, manage cash flow effectively and plan confidently for the future.

4. Tax errors have started increasing

Managing your own bookkeeping can make it easier for mistakes to go unnoticed, from incorrect VAT calculations and missed allowable expenses to inaccurate financial records. These errors can create extra work for your accountant, lead to incorrect tax returns and, in some cases, result in penalties for missed deadlines or incorrect submissions. Without accurate, well-organised accounts, you could also miss legitimate tax reliefs and end up paying more tax than necessary. Keeping your books up to date and ensuring your records are accurate helps reduce the risk of costly mistakes and makes tax time far less stressful.

5. Difficulty keeping up with MTD regulations

If your business comes under the remit of Making Tax Digital (MTD) regulations, such as keeping digital records and completing quarterly filings, you may need professional bookkeeping to ensure your business is compliant. Professional accounting services can also help you understand and implement the necessary software required for MTD compliance.

To learn more about digital tax rules, read our full guide on why Making Tax Digital is good news for your business.

Why could an outsourced bookkeeping service be helpful?

Outsourcing the bookkeeping and accounting duties can help your business in many ways.

Prevent oversight: It can provide your accountant with reliable, up-to-date information, making it easier to prepare accounts and manage tax obligations.Bookkeeping oversights are not always obvious mistakes or inaccuracies. They can include failing to record eligible business expenses, overlooking discrepancies or not keeping the records needed to support tax claims.

Accurate, well-maintained books can help ensure that allowable expenses are captured and relevant information is available to your accountant. With appropriate accountancy and tax-planning advice, you can also explore whether your remuneration structure, including salary and dividends where appropriate, is tax-efficient for your circumstances.

Get additional services: Along with maintaining your books, you can also access additional accounting and tax services, such as credit control, CGT, VAT services, return filing and payroll management and more, all under one roof.

Proactive rather than reactive: If you employ a professional accountant you don’t need to worry about adapting to evolving legislation, reporting requirements and regulatory obligations enforced by the government authorities such as HMRC and Companies House. A professional accounting and tax service can guide and advise you properly from the start.

What Abbott & Brown can do for you

Abbott & Brown is a specialist UK-based accounting and tax firm, backed by a team of professional chartered accountants specialising in personal and corporate taxes. We assist small businesses and SMEs to streamline their accounting processes and provide advisory solutions to optimise tax liabilities.

Our expert bookkeeping services start from £49 per hour and include recording daily and weekly transactions, reconciling bank statements and accurately categorising expenses, documenting sales and purchase invoices, tracking payments and monitoring VAT submissions and maintaining payroll journals. We will also provide full support with compatible accounting software tailored to fit your business needs.

Get in touch for a free consultation to learn more about our bookkeeping and tax services.

FAQs

Q1. When should a small firm consider outsourcing bookkeeping?

There is no fixed revenue or turnover threshold you need to achieve. If you’re spending a lot of time on bookkeeping, or your transactions are becoming more sophisticated and you’re lacking financial visibility, then it’s worth considering outsourcing to a professional.

Q2. What is the cost of outsourced bookkeeping for a small business in the UK?

The cost of outsourcing depends on transaction volume, complexity of your business and the services required. At Abbott & Brown, our comprehensive bookkeeping services start from £49/hour.

Q3. What is the difference between bookkeeping and accounting?

Bookkeeping focuses primarily on recording and organising day-to-day financial transactions. Accounting generally entails the interpretation of financial information, the preparation of accounts, tax planning and wider financial advising. Many small businesses use both services simultaneously.

Q4. Can you take over from my current bookkeeper or accountant?

Yes. With your authorisation, we will liaise directly with your current bookkeeper or accountant to complete the professional clearance and obtain your records, so the handover is handled on your behalf.