In another of our blog posts, Why Your Startup Needs an Accountant, we addressed why startups need to think about hiring an accountant. This blog post will talk about why you also need to think about bookkeeping as part of that. We will dig into what bookkeeping is, the difference between bookkeeping and accounting and why you need to be factoring it into your new business.

Accounting and Bookkeeping, What Is the Difference? 

To most people bookkeeping and accounting are the same. After all, they both deal with the income and expenditure of the business, don’t they?
Accounting deals with your financial records, everything from paying the correct taxes to strategic business decision making. While bookkeeping ensures that all financial records are up to date and complete when needed. The primary job of bookkeeping looks at income and expenses.
Even if you do not hire an accountant, you will still need to do some form of bookkeeping to ensure that the correct financial records are kept for HMRC. You also need to know if your business is making a profit or loss, which can only be achieved if you keep financial records up to date.

Bookkeeping for Startups Everything You Need to Know

Ways Bookkeeping Can Help Your Startup Business

If you are a new business, you are probably very time poor with a million and one things to think about, and that is unlikely to slow down at any point soon! Bookkeeping is perhaps at the end of a long list of tasks you must consider fitting in! However, it is essential to set aside some time at least once a month or think about hiring someone to do this for you.
The key benefits of bookkeeping are:

  • It helps you budget accurately and sees your profit/loss quickly.
  • It keeps you prepared for tax and filing your returns on time.
  • Maintains organised records, which is key to filing returns on time or if you are ever audited.
  • Easier to see business targets and where your business is from month to month.

Keeping strict financial records has implications beyond just dealing with HMRC. It can also impact your ability to raise finance or investments. Banks and lenders will require accurate and correctly formatted financial reports to base lending decisions on the correct information and not just a few figures written on a napkin. If you ever plan to sell your business at any point, having the correct records on hand will also help with this.

Bookkeeping for Startups Made Easy 

Thanks to advances in SaaS businesses in recent years, bookkeeping for business owners has gotten a lot easier thanks to software such as FreeAgent, Xero, and Quickbooks. Online bookkeeping makes things simpler for both the business owner and your accountant. Both can access the required data when required – gone are the days of receipts in shoeboxes or black bin bags!
Online bookkeeping and accounting software speed up the whole process. You sign up, connect your bank account and then tell the software the required information – and hey presto, reports are generated! Online systems are not designed to replace an accountant but complement the process and simplify it for business owners and accountants alike.
Thanks to online systems, most business owners will be able to do some form of simple bookkeeping, spending no more than 1 hour per month thanks to online systems. This not only makes it cheaper for your business but ensures that records are kept for the required timeframes too.

Bookkeeping for Startups Summary

Bookkeeping has benefits for every shape and size of business, but startups more so – as funds can be tight and time even tighter! So knowing where the company is from week to week or month to month has far-reaching benefits both time and money wise! Not to mention the hours saved each time a tax return is due of sorting, filing and recording every expense, income and receipt – as it is all been done!
Of course, if you are looking to outsource your bookkeeping for your business, we don’t just blog about it – we are bookkeepers and accountants! You can check out what we do by checking our services pages or getting in touch. We are on Facebook, Instagram, LinkedIn, Twitter, or you can email us!