When bookkeeping goes wrong
>> It can cost you an arm and a leg to put right <<
There are four types of bookkeeper:
The organised small business owner who does the bookkeeping themselves. They're happy and able to keep an eye on running the business while remaining on top of the finances.
The unorganised small business owner who does the bookkeeping themselves, but who only has half an eye on it. It's the admin they may devote half an hour here, half an hour there to, resulting in them falling behind and losing control of the business finances.
The accountant who does bookkeeping as a small portion of their overall accountancy work. It doesn't interest them greatly as it doesn't bring in much work, or money. But you'll be charged their usual accountancy fees.
The bookkeeper, company or individual. Typically bookkeeping is their bread and butter. Their fees are generally good, and the service more personal.
There are caveats to all of these but that's a good general rule of thumb.
The problem is, almost anyone can call themselves a bookkeeper if they know how to record income and expenses, but if mistakes are made you could end up paying too much or even getting fined by HMRC.
A few years ago we started working with a restaurant owner who was bookkeeper number 2.
They'd been doing their own books for over two and a half years, manually.
Because they hadn't been using bookkeeping software, to say things were a little messy would be an understatement.
And because things were in such a state, HMRC were fining them monthly.
It was the most extreme case we'd seen and it took months to sort. Lord knows how much money they'd paid out in fines. Doesn't bear thinking about.
If you're bookkeeper number 1, good on you. Our advice is that while you can continue to balance the running of your business with having full control and sight of your books, keep going.
However, if it gets to the point where you're working late into the evenings to keep things balanced, and getting behind with managing the business, move to bookkeeper 4.
Bookkeeper 3 is a good option if you want to keep everything in one place, but you'll pay for the privilege.
Just don't leave things until they pile up on top of you.