7 Benefits of Getting Someone Else to Do Your Construction Businesses’ Bookkeeping
Bookkeeping – the word so many business owners dread. And undertsandably so. After all, you didn’t get into construction to spend your days staring at a ledger. But what if we told you that outsourcing bookkeeping services could save you a job and improve your business?
Piqued your interest yet?
Throughout this guide, we’re going to cover everything you need to know about outsourcing bookkeeping services – from what it means and which services are available to the many benefits of bookkeeping services outsourcing and how to get started.
So settle in – because we’re about to cover all the reasons why you should start outsourcing bookkeeping services!’
What does it mean to outsource bookkeeping services?
When you outsource your bookkeeping, it simply means you’re delegating your bookkeeping tasks to an external party. So, instead of spending hours recording your financial transactions and reconciling your books and bank statements, you’re paying someone else to do it for you! (Without the cost of hiring them in-house.)
What bookkeeping services can you outsource?
There are several bookkeeping services available for you to outsource. However, because bookkeeping and accounting are two sides of the same coin, there can be some overlap. So we’re limiting this list to services that are (almost) exclusively handled by bookkeepers.
(Of course, you can ask for additional support and services on top of the ones we’ve listed below, but consider these the core responsibilities of a bookkeeper.)
Data entry – recording financial transactions (like sales and expenses) to ensure your accounts are accurate and up-to-date.
Conduct bank reconciliations – cross-referencing your books and bank statements (along with any other relevant documents) to verify the accuracy of your accounts.
Monthly reports – review your finances at the end of each month to create a comprehensive report explaining your current financial position.
Manage invoices – creating and sending invoices to your clients. They will also record when an invoice is paid (as part of managing your accounts receivable and accounts payable).
Manage payroll – processing payments to your contractors (which can be quite a mission when they all work various hours for varying rates).
Generate financial statements – creating balance sheets, income statements, and cash-flow statements to summarise your business’s financial health and performance.
As we mentioned previously, some bookkeepers will offer extra services like tax preparation and end-of-year reporting, but those services will come at an additional cost.
What shouldn’t you expect from a bookkeeper?
To go into a little more detail, we wanted to give a few examples of services that are more aligned with outsourcing accounting services (rather than outsourcing bookkeeping services).
Again, some bookkeepers may offer to take on some of these responsibilities for an additional cost, but generally speaking, you shouldn’t expect them to do so.
Developing business plans – your bookkeeper will report on your business’s financial health, but it is an accountant who will use this information to plan ahead and strategise for the future.
Filing corporate tax returns – your bookkeeper can help with tax preparation, but they aren’t responsible for filing your tax returns.
Creating financial forecasts – whilst your bookkeeper is responsible for collecting and recording your financial data, it falls to your accountant to interpret this information and develop accurate financial forecasts.
What are the benefits of outsourcing bookkeeping services?
Now that we understand what outsourced bookkeeping is and what it entails, it’s time to discuss the benefits. (After all, you’re not going to invest in an external bookkeeper unless they benefit your business.) So here are seven reasons why outsourcing bookkeeping services is a smart idea:
It’s not very often that the owner of a construction company is also a trained bookkeeper. And that’s okay! However, it does mean that the person responsible for your books (whether that’s you, your spouse, or another family member) probably isn’t well-versed in finance or tax legislation. As a result, your business is far more susceptible to costly mistakes. So we strongly recommend outsourcing a bookkeeper to avoid any unnecessary penalties or unwarranted attention from HMRC.
Bookkeeping services outsourcing isn’t just about making your finances more efficient – it’s about improving the efficiency of your entire business. You see, with your books taken care of, you can focus on streamlining your processes, winning new projects, and expanding your company.
Understanding tax legislation is no mean feat. So many business owners spend hours and hours of their time trying to understand the latest legislation and ensure they’re HMRC compliant. However, tax legislation has a tendency to change. So keeping up can be quite a challenge. But with a bookkeeper on board, you can rest assured knowing your construction company is always in line with the latest legislation.
By hiring an external bookkeeper, you not only get to delegate your bookkeeping responsibilities. You also gain direct access to expert advice. (And that’s without hiring them full-time!) In turn, you can better understand your finances and go on to make the best decisions for your business.
As we’ve mentioned previously, opting to outsource a bookkeeper will significantly improve your business’s efficiency. That factor alone can have a huge impact on your bottom line. But that’s not all. By outsourcing a bookkeeper, you can also save a lot of money. Instead of wasting money hiring, onboarding and paying a full-time bookkeeper, you can pay an external party by the hour. In turn, you can significantly reduce your expenses whilst still retaining (or even improving) the quality of your books.
You may have managed your books very successfully up until now. But, if bookkeeping was your passion, you probably would have pursued that as a career instead of starting a construction company. All this to say, you can easily and affordably outsource bookkeeping
services. So don’t waste your valuable time doing a job you could delegate. Invest your time and energy into what you do best – let someone else take care of the finances.
Access to advanced technology
You’ve probably heard of Making Tax Digital (MTD) by now. So you already know that the future of tax returns is all online. However, moving your books online can be a daunting and time-consuming task – unless you invest in outsourcing a bookkeeper. When you hire an external bookkeeper, you can also gain access to impressive accounting technology that has the ability to totally transform your business whilst ensuring you are ahead of the MTD curb (if you so choose).
When is the right time to hire a bookkeeper?
Bookkeeping services outsourcing isn’t a necessity for everyone. So, how do you know whether or not it’s the right decision for you and your construction company?
To help you answer that question, here are five signs its time to start outsourcing your bookkeeping needs:
1. You have no time
There are only so many hours in a day. And as a business owner, you can’t afford to waste any time. So, if you find yourself working ridiculously long hours attempting to manage your books (on top of all your other responsibilities), it may be time to outsource some help.
2. You can’t keep up
If your books aren’t up to date, you won’t have an accurate understanding of your business’s performance or finances which can be hugely detrimental to your progress. So do yourself and your business a favour by finding someone else to manage your books.
3. Your tax returns are a total nightmare
If filling your tax returns is a total nightmare, you probably need some support. Your bookkeeper can help with tax preparation, so all your financial information is neatly organized, HMRC compliant, and ready to be filed for your tax return.
4. You’re making mistakes
Human error is inevitable. But if you find you’re making a lot of mistakes, you’re better off biting the bullet and outsourcing a bookkeeper. After all, wouldn’t you rather pay someone else to take care of your books than spend your hard-earned money on penalties?
5. You’re struggling to grow your business
Your bookkeeper may not be able to create financial forecasts or growth strategies. But their reports and data organization can help you identify inefficiencies or unnecessary expenses within your business. As a result, you can address any issues as they occur or redistribute your money for the benefit of your business.
How do you switch to a new bookkeeper?
If you’ve decided that you’re ready to outsource your bookkeeping, you may want some advice about how to do so. Thankfully, we’ve broken the entire process down into small, manageable steps! So you can start outsourcing bookkeeping services with relative ease and efficiency.
1. Do your research
Countless companies specialize in bookkeeping services outsourcing, so you want to start by identifying the front runners. You can do so by reading reviews, visiting websites, or talking to industry connections to see if they have any recommendations.
2. Find the best fit for your company
With so many bookkeepers to choose from, you want to ensure you’re finding the best fit for your business. But how do you do that?
Firstly, you need to assess your needs. So ask yourself:
● How much support do I need?
● What services do I require?
● Are there any additional services I would pay extra for?
Secondly, you need to establish your budget. Whilst outsourcing bookkeeping services can be an incredibly cost-effective option – it is still an investment. Therefore, you need to determine how much you can afford to spend each month.
Finally, talk to prospective bookkeepers. Why? Because you’re going to be working closely with this person for the foreseeable future. So you want to ensure you get along. Otherwise, you’re in for an uphill battle (regardless of how talented they are).
3. Send over your information
Once you have found the right bookkeeper for your construction company, established their responsibilities, and agreed on a price, you’ll need to start the onboarding process.
(Needless to say, you must do your due diligence before handing over any sensitive information.)
The onboarding process requires you to share your business’s financial information with your bookkeeper. For example, they will likely ask for things like your:
● Business Profile (a summary of your business and the services you provide)
● Bank information
● Tax documents
● Payroll system
During this process, you will also grant them access to any accounting software you use. However, if you’re yet to take advantage of accounting software, your bookkeeper may offer to introduce you to said software.
4. Establish your lines of communication
Now that you’ve handed over your bookkeeping responsibilities, you no longer look at your ledger week in and week out. Therefore, you need to develop a strong line of communication with your bookkeeper so that:
a) you can provide them with any of the necessary information they need
b) to ensure you have a clear understanding of your finances at all times
So, make sure you establish your preferred lines of communication. (You can also take this time to state how often you would like to check in with your bookkeeper and when you would like to receive/format your financial reports.)
5. Rest assured your books are taken care of
Once your bookkeeper has all the resources they need, you’re free to focus on other aspects of your business. So enjoy it! And take advantage of the time you, your spouse, or family members have gained by delegating your books to someone else!
Pass the baton
So there you have it! Everything you need to know about outsourcing bookkeeping services!
Time is a precious commodity – especially when you’re a business owner. So don’t waste yours on bookkeeping. Instead, let the experts handle it, so you can focus on what you do best. We promise you won’t regret it! (Seriously – just wait until you see the return on your investment!)
Accurox are Specialist Construction Accountants who can save you time and resources with their industry expertise and experience. If you would like to discuss your business requirements, get in touch; we’d love to talk about how we can partner with you