We each became business owners for our own reasons. For some, it was working for yourself and not having someone else telling you what to do and when to do it. For others, the idea of making a heap of money for someone else is what drove them to set up on their own.
Whatever your reasons. now you are here, you need to figure out what is next. Do you want to grow your business and then ultimately sell it or pass it on? Are you happy with it just ticking along and keeping you out of trouble?
Okay, so hopefully now you have the answer to those questions. If you are looking for business growth and to make more money, then there may be things that you are doing that could be slowing you down.
We all agree that there are times when being a small business owner is great. Being bored is rarely something that you must deal with; there is always so much to do. You get to do:
- Marketing
- Event planning
- Sales
- Recruitment
- Staff training and so much more.
Being involved in so many areas of your business means that you get to use skills you might not have known you had.
There is one essential task that many small business owners choose to do themselves as a cost-saving solution. We see this in so many businesses and that thing is bookkeeping.
Usually, the only reason that they do the books themselves is to save money. We are here to give you 7 reasons why that one decision could be slowing down the growth of your business.
Reason Number 1 – Inaccuracy costs money
Incorrect coding of your expenses and your invoicing will cost you money. If you put a bill against a code that does not have GST on it, you are giving the taxman money that should be yours.
Reason Number 2 – Your time is too expensive to do the books
Most tradies charge an hourly rate of around $80 – $120 per hour. A bookkeeper charges between $75 and $100 per hour. Because they are experts, they may spend 4 – 5 hours reconciling and invoicing every month. Then maybe a couple of hours every quarter to do your BAS preparations. So, let’s say a total of 17 hours every quarter at $100 per hour. That is a total cost of $1700.
What takes them 5 hours will likely as not take you 7 and the BAS preparations maybe another 4 hours. So, if you charge your time at $100 per hour (the same as we have used for the bookkeeper) that is costing you $2500.
Add to this the cost of incorrect coding and there is a good chance that you are possibly looking at it costing you nearer to $3000 a quarter.
Reason Number 3 – Bad Financial Decision Making
Your bookkeeper will do your books regularly. That means that you have accurate, up-to-date records. That is a big help when you need to make financial decisions. Good decision-making can be made better. This happens when the information you have is current and accurate. If you are currently doing your own books then there is a chance that they are behind. Maybe only by a few weeks, but behind all the same!
Reason Number 4 – Late BAS Lodgements
If your books are not kept up to date and you are doing them yourself the time scales are shorter for lodgement. You have around 4 weeks from the end of the period to the date your lodgements are due and payment is required.
If you lodge late, you open yourself up to two situations:
- Fines for let lodgement and payment
- Flagging your business to the ATO
Reason Number 5 – Miscalculation of Due Dates for Bills
One area that which having a contractor to do your books can prove useful is prediction.
Here’s the scenario. You decide to upgrade the computers in the office. You have had a great couple of months. You are sure that you have the funds available to do so. Your bookkeeper will be able to let you know if you have any bills coming up that could impact that. You may not have as much money at your disposal as you think.
Your bookkeeper can tell you and you avoid spending money that then has an impact on the business.
Reason Number 6 – Staff Being Paid Incorrectly
One of the biggest issues with doing your own books is when payroll goes wrong. Not paying staff or paying them incorrectly can have all manner of consequences:
- Staff get demotivated
- Rumours start about the health of the business
- Staff start to look for other work
You can also find yourself in trouble with Fair Work, if someone makes a complaint you will be inviting them into your business. Not the best move!
Reason Number 7 – Making Money Becomes Easier
Imagine being able to look at your numbers and know exactly what work brings you the best profits. The jobs that help you to keep more of the revenue in the business. Having accurate, up-to-date records means that is exactly what you can do.
A good bookkeeper will be able to produce regular records for you that show profit margins and break down the income. That means that if you are serious about growing your business you can get more strategic about it. That helps with planning, recruitment, ordering, and a whole host of aspects of your business.
Final thoughts
The information and insight a bookkeeper provides goes a long way to helping you make smart business decisions. Not having a bookkeeper adds unnecessary work to your load. It increases your stress and further increases the chances of errors that cost you.
Bookkeepers regularly update their knowledge about changing laws relating to tax and compliance. For BAS registered Agents, it is part of their compliance that they undertake a certain number of hours of training every year. They help your company stay on top of these changes. This knowledge means that they will ensure that your business does not get any unwelcome attention from the ATO.
There are other reasons, but we thought that 7 was enough to get you thinking seriously about this area of your business. At Tradies Advantage, we work hard to help our clients make the right business decisions for them. Decisions that mean they can achieve their business and their personal goals.
If you would like to speak to us to explore what that might look like for you please, get in touch with us. We can help make running your business easier.
If you need any support to set up your bookkeeping and accounting systems effectively just give us a call at 07 3399 8844. We will be happy to help you with a FREE Business Systems Review Session to get you going.