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Here's 10 reasons why you ought to:
1. Cost saving
Expect to see a small cost saving outsourcing, but don?t make this the primary goal. The saving is likely to be 10% to 20% of the base wage of an in-house bookkeeper. Your primary motivation for outsourcing should be getting better financial reporting and advice. One piece of advice now could save you tens of thousands of dollars later.
2. Manage less
Most business owners can only effectively manage a handful of staff. Hire the most number of people you can manage to carry out revenue-making tasks, and outsource every other function including bookkeeping. The entire cycle for one person in one year can be up to 100 hours of a manager?s time in training, directing, salary negotiations, firing and hiring. Outsource and the 100 hours can be reinvested elsewhere. A professional bookkeeping company will shoulder the responsibility of replacing bookkeepers who leave, and conduct necessary training.
3. Own less
The things you own, own you. Every additional computer or software license you own is one more you need to track and manage and pay for! Apart from the upfront cost of purchase, troubleshooting these systems will add expense and require the business to learn new non-essential competencies. Outsource bookkeeping and you outsource ownership.
No PAYG taxes, government contributions or other benefits . You save more than salary by outsourcing - factor in super contributions, worker’s compensation, holiday pay and long service leave benefits.
4. Increase effectiveness
Counting money won’t make more money. If you have spare time to build in-house accounting teams, inject it into the areas of the business which make money like your sales team. Outsourcing is not a perfect system, but compared to the alternatives its far more effective.
5. Do what you love
Not enough emphasis can be placed on this. No client I’ve ever spoken to went into business for the love of administration (other than myself!) There’s nothing worse than an unmotivated leader to bring down the morale of the whole crew.
If you are still doing the books each month, stop today. Maintain your passion and do what you love most. You will excel at what you love most and are more likely to remain motivated.
6. Value creation
By engaging an outsource bookkeeper, you physically restrict the number of hours you are exposed to bookkeeping per month. For most service businesses, one or two days per month is adequate. Tasks take as long as the time allotted to them. A full-time bookkeeper will occupy part of your day, every day. Outsource and instead focus adding value to your client?s business.
Rent constitutes one of the largest fixed costs for businesses. You want to maximise every dollar of this expense item and ensure this space is occupied by sales teams or producers, who directly contribute to the revenue. If you pay $20 per sq metre, how much do you make per sq metre?
You may want to keep the books confidential. One of the most outsourced financial functions is payroll. This is because payroll is complicated and many firms do not want to share salary details with internal stakeholders. By outsourcing bookkeeping, the accounts are one step removed from your staff.
9. Unbias advice
In times of financial crisis, tough decisions need to be made. An outsourced bookkeeper will be more impartial than an in-house person, and will probably give you unbias advice.
10. Improved control
Despite how it may appear, an outsourced bookkeeping company should provide you more control. Choose the software you want to use, the date each month the service is performed, the location and how reports are accessed.
When choosing a bookkeeping company, look for value in their advice and practices. Hiring one of the big accounting firms to do your monthly books is an over-kill. However, I still recommend hiring a big firm to perform an audit and certify your financial statements once a year.
If you are considering outsourcing your bookkeeping needs to a professional, it is important to have a firm understanding of what you should look for before making a hire. There are key skill sets, and characteristics that every bookkeeper should possess.
First, the bookkeeper should have at least basic knowledge of your industry. If your company falls within a specialised industry, such as franchises, restaurants, medicine, sports, etc., there are bookkeeping firms that work with just those industries. If your company is not as specific, any type of professional bookkeeper should suffice, but should have a basic understanding of what you do.
Next, you should verify that the bookkeeper or bookkeeping services firm you will be using is utilizing the latest technology. All bookkeeping tasks today should be done through using software such as Xero or MYOB or other similar systems. The company or professional should be highly skilled at using these applications.
Then, you should verify that the professional has a firm understanding of the requirements you are seeking for your business. A good bookkeeper will become a partner of sorts, that will help the business, and provide detailed financial information to assist with the decision making process. Your books should always be maintained the right way, the first time.
Finally, the bookkeeper you hire should have a great deal of experience working with small businesses. Errors made on the books of small businesses can be extremely costly, and can even cause a business to fail. You need to ensure the professional you choose can provide you with evidence that he or she has a successful track record with small businesses, and that references are provided.
When you take the time to locate a firm or independent bookkeeper that meets all of the criteria mentioned above, you will gain great peace of mind. This person will be there for you with every financial need you may have, and will become a valuable asset to your company.
When running any type of business it is important to understand basic accounting methods as well as the associated accounting statements. Perhaps one of the most important statements is profit and loss. Without a firm understanding of this document, you will not be able to completely track the progress of your company.
The technical definition of a profit and loss statement is as follows: a document that is created by a company that illustrates all income, expenses, and net profit. This statement is then used to calculate net income by subtracting the total expenses from the total income. A profit and loss statement depicts all transactions that take place over a particular period of time, such as a quarter or a year.
In order to get the most out of a profit and lost statement it is always a good idea to compare your current data to data that was collected for previous years. This helps to give you an idea as to how your decisions are affecting the business as a whole. You will be able to quickly see if you are making less money or more money, and if further changes need to be made.
A profit and loss statement can also be handy to present to other people who may have an interest in your business. For example, you may need to present certain reports, such as this, to the bank in an effort to obtain funding. The bank can then quickly look to see how well the business is doing, and make an assessment as to if the investment would be wise. This document essentially informs the bank as to whether or not the business is profitable, as well as if the business has potential.
An ideal profit and loss statement should show a consistent amount of growth and a steady stream of income. If the statement does not show this, or if the numbers do not appear to be headed in the right direction, a business owner many be faced with difficult choices. The owner may decide to put off a planned expansion for the time being in order to better increase the bottom line. The business owner may also look for areas to increase profits, such as reducing a product line that is not selling well, or cutting back on positions that may be costing too much to fund.
The profit and loss statement is an essential tool that can be used in a wide variety of ways. From keeping tabs on the overall monetary health of a company, and predicting growth potential, to finding areas to cut overspending and reduce costs, this statement should be considered a lifeline for any type of business.
Assets & Depreciation - Changes for Small Business
Check with your Tax Agent if you are included.
- No more ? long life? pool for small business
- Write off assets immediately if they cost less than $6500 excl GST
- Motor Vehicles have a $5000 write off in the year acquired plus 15% depreciation in the first year. 2nd year onwards, Motor Vehicles then have 30% depreciation
Angelique offers professional service with peace of mind. As a qualified and registered BAS agent, Angelique provides quality services combined with honesty and integrity, confidence, competence and lawful independence.