You have a small business and you want to keep costs low including book keeping and accountancy fees. But gradually those pesky invoices and receipts begin to take up your evenings and weekends.
So we asked Jonathan Amponsah CTA FCCA, of The Tax Guys, to reveal how you can save time and money on preparing and submitting your annual company accounts.
Book keeping isn’t your favourite job. You don’t have time to spend hours on the books. Neither do you have lots of spare cash to pay high hourly rates for accountants – and getting them to sort through the shoe box of receipts is certainly not a good way to spend your money.
So how do you strike a balance and prepare your books correctly in order to reduce your accountancy bills, without it eating into your weekends?
1. Ask Your Accountant For Free…
This might sound like asking a barber whether you need a haircut, but the first thing to do before you dive into preparing your books is to ask your accountant what you can do to lower your accountancy fees.
The aim is not to take on more work at the expense of your weekends or family life. Most accountants do offer packages and it might be that you can get the year-end accounts and tax return work at half price.
Or, they could simply take over all your paperwork chores, produce regular management accounts and handle your VAT and payroll requirements. In return you get your end of year accounts done and filed for free.
Why free? Well if the bulk of the work is completed and there are no additional complications or work at the year end, then I see no reason why the accounts cannot be filed at no cost to you.
2. Agree a Format
If the above doesn’t work and you’re happy to do the books, then do agree with your accountant what format to keep the books and how they want it done;
- Do they want you to simply keep record of income and expenses on excel?
- Do they want you to use a particular software?
- Would you match, cross reference and analyse the transactions or would they do it?
- Do they want you to keep a cash book, list of your sales and purchase invoices?
- Do they want you to reconcile the books by applying what is called “Double Entry” book keeping?
Unless you are a professional book keeper or a member of the Institute of Certified Book keepers, please do not attempt to do double entry book keeping. You may end up paying for the accountant to rectify errors. You may even end up with some tax issues.
3. Use a Book Keeper
Another way to prepare the books and reduce your accountancy fees is to use a professional book keeper to help you. Their rates are certainly cheaper than that of an accountant. But do choose carefully. Shortlist a few and involve your accountant in the process if possible.
What you want to avoid is a situation where you end up paying for the same work twice because the format and quality of the book keeping is not at a level to enable the accountant to produce the accounts at a cheaper rate. Or the book keeper and the accountants use different systems and speak different languages.
4. Streamline Your Records
Whether you use an accountant, a book keeper or do it yourself, avoid complicated record keeping and try to streamline your transactions.
Things you can do to simplify your accounts include;
- Having a dedicated business account,
- Using the bank for most transactions,
- Avoid using the business bank account for personal expenses,
- Avoid multiple bank accounts or credit cards, and
- Having all your records in once place (preferably in a digital format rather than a shoebox of receipts).
5. Consider an HMRC or Other Free Workshop
If you are registered for VAT and you prepare your own VAT returns, do spend some time to attend HMRC webinars on VAT, book keeping and others or watch other free videos from reputable accountancy firms.
VAT rules can be a minefield, so it’s easy to get things wrong. Read 21 Costly VAT Mistakes businesses make on their VAT Returns to ensure that you’re not making errors that could cost you more in the long run.
Make sure you give your accountant copies of the returns that were submitted, together with your workings showing how all the figures on the returns were calculated.
If you use an online book-keeping system, (see 7 below) they can automatically calculate the figures for your VAT return, which as well as saving time and money, can cut the chances of making an expensive mistake.
6. Use Receipt Capture System
It can be time consuming for you to collate and record all those invoices and receipts. And if you send them to your accountant in a shoebox, they will spend additional time reviewing and sorting them – which means more costs.
There are some good apps including Auto Entry and Receipt Bank that allow you to capture these receipts on the go and send them directly to your accountant.
You can even ask your suppliers to send their invoices to the app to free up your inbox a bit. And this will also reduce your accountancy bill because accountants are not chasing you for records or sifting through a pile of invoices.
7. Use a Cloud Book Keeping Platform
Gone are the days when book keeping software was written in complicated language that only accountants could use or understand.
The likes of FreeAgent, QuickBooks and Xero have truly transformed the way book keeping is done. And if you’re going to do your own book keeping, then do use one of these platforms to save time and accountancy fees. Read How to Choose the Best Online Accounting Software for Your Business to help find the best option for your business.
Plus some accountancy firms would even cover the cost of the platform for you or include it within their packaged services. Again, do agree with your accountant where your book keeping duties would end.
8. Automate Transactions
Open banking and artificial intelligence is taking away most of the heavy lifting when it comes to receiving your bank statements and analysing what the transactions are for.
You can authorise your bank to send bank transaction to a cloud book keeping platform avoiding the need to spend time downloading them and keying them into, say, a spreadsheet. You can also set a rule to say that if a direct debit payment goes to, say Aviva, then this should be analysed as insurance so next time you don’t have to analyse it manually.
Imagine how much time and fees you can save by doing this. However, don’t assume that you can ignore it completely – it’s very important that someone check though to ensure that the robots are behaving the way you intended.
9. Agree a Date to Send in Records and Avoid Peak Times
Did you know you can ask for a lower accountancy fee if you prepare your books for your accountants at their quietest times? Yes, you can. Accountants have peak times with many businesses having December & March year-ends, plus the Tax Return deadline
in January. So, avoid these time and ask your accountant “if I get my books all done in the format we have agreed and send them to you by say July/August, would I get a discount?”
And try not to ask your accountant to do things at the last minute. Many will charge a premium for putting you to the front of the pile.
10. Consider Industry Apps that Integrate
If you run a retail or restaurant business and you’re using a cloud book keeping platform, then why not go a step further and get an EPOS (Electronic Point of Sale) and inventory system that integrates with your chosen cloud platform and helps you keep track of stock?
Platforms such us Vend, Izettle and others should be considered. A key area that often causes issues with the accounting process is the value of your stock. Where you or your accountant spends less time on this area, you can both save time and costs.
So, if you think your accountancy bills are creeping up due to records and book keeping issues, you can certainly negotiate a good fee with the above tips. But also remember that costs should not be the only factor in choosing an accountant.
Aim to get more value from the relationship because accountants can and do add a lot of value to businesses. The last thing you want them to do is spend more time on book keeping and less on business advisory and tax planning.
About the author
This guide has been written exclusively for ByteStart by Jonathan Amponsah CTA FCCA, an award-winning chartered tax adviser and accountant who advises business owners on entrepreneurial tax reliefs. Jonathan is the founder and CEO of The Tax Guys.
More help on tax and money matters
For more information and guidance to help you deal with the thorny subjects of tax, accounting and finance try some of our popular guides;
- 10 Tax-Saving Ideas for Small Business Owners
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- 10 Things Savvy Entrepreneurs Do to Reduce Their Tax Bills