Prime Blog

January 2012

Why businesses startup and what they do about their bookkeeping

Why does someone start up in business?

• good at something so tries selling service to someone else e.g. painting and decorating
• working for a company and thinks, "I can do this for myself" e.g. electrician
• comes up with a new idea that no-one else is doing/selling
• made redundant and wants to invest money into a business which also gives them a job
• can't find a job so tries self-employment
• Always aspired to own their own business
• natural entrepreneur that is buying and selling while still at school
• what they do is naturally self-employment e.g. musician

So the business is up and running, what happens about the bookkeeping?

• ignore it
• friend or partner or parents help out
• try doing it themselves
• leave it until end of year and give everything to accountant e.g. receipts, bank statements
• only do it every 3 months when VAT return is due
• use a self-employed bookkeeper who turns up one day a week
• employs a bookkeeper full time

What's the problem with ignoring it or only doing the minimum when necessary?

• no idea how business is doing
• no idea what tax bills will be
• no idea when required to register for VAT
• can't plan to grow the business because don't have any information
• can't borrow money from Bank to expand as don't have the information to give them
• will probably pay too much tax as won't have the right business structure
• will risk being hit for lots of fines and penalties for not complying with statutory responsibilities
• can't sell the business as don't have the historical information to show it's worth

What's wrong with doing it yourself?

• if your business is doing well you won't have time
• you don't have the knowledge of experience
• your time should be best spent doing what you are good at - running and growing the business
• you will leave it until the last minute
• you won't have any decent information to help you make decisions

What's wrong with using a self-employed bookkeeper (proactive ones are the ones that are more likely to read this and are the exception)?

• how do you know a good one from a bad one?
• you will fit into their systems and timescale
• you will use their choice of accounting system rather than the right one
• you are unlikely to get much management information
• you don't know where your data is or whether it is backed up
• what happens if they are ill
• what happens when they go on holiday
• you may still raise sales invoices and then pay for them to enter them into their accounts system
• still going to get an annual bill from your accountant

What's wrong with employing a bookkeeper?

• how do you know a good one from a bad one?
• you have to provide office space
• you pay national insurance on their salary
• you have to buy accounts software and pay an annual maintenance fee
• your choice of software is to suit them
• what happens if they are ill or on holiday?
• do you know how up to date and accurate they are?
• do you know whether they are backing everything up?
• you probably won't get much accurate management information
• if your business grows or shrinks you cant have one and half bookkeepers or three-quarters of a bookkeeper

So why should you outsource this and use Prime's Virtual Accounts Office (VAO)?

• Fully bespoke
• Using the cloud you raise sales invoices while we enter supplier invoices and bank transactions
• Constant access to full uptodate real time information about your business even on holiday
• Fully scaleable
• Managed by qualified practising accountants
• Access to up to date technical knowledge
• Use of the right accounts software and systems for that business
• Access to years of business experience
• Technology allows it to be efficient and cost-effective
• Known fixed cost
• No need to purchase software and pay annual maintenance fees
• No concerns about illness or holidays
• No worries about data not being backed up
• Proper accurate management information provided
• Access to other services such as payment of suppliers by BACS 
• One of the few firms of accountants that is also a registered BACS Bureau
• Professional payroll service available when required
• Credit control
• Dedicated phone line for your suppliers and customers accounts queries
• No more expensive than the alternative - get a lot more for the same cost

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