Latest / The 3Bz Podcast - Building Better Business / EP12 - How Bookkeeping is the Final Piece of the Puzzle

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EP12 - How Bookkeeping is the Final Piece of the Puzzle · The 3Bz Podcast - Building Better Business

• 0:04
  Hi there business owner. Do you want a better
• 0:06
  understanding of business finance, what your numbers
• 0:09
  actually mean, and stories of the highs and lows of business
• 0:12
  where I'll be sharing my tips and tricks every week?
• 0:15
  Then you're in the right place. Welcome to the Three B's podcast
• 0:18
  with Stephanie. Hello, welcome back to another
• 0:26
  episode of the Three B's podcast with Stephanie.
• 0:29
  How are you doing? I'm your host, Stephanie.
• 0:32
  Hope you've had a wonderful week.
• 0:34
  It's been an absolutely crazy week for me here.
• 0:36
  So I'm recording on location because I I'm not in the office
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  and I really want to talk to you this week about the world of
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  bookkeeping. As you know, I started out my
• 0:47
  financial career and my entrepreneurial journey as a
• 0:49
  bookkeeper and accountant. The bookkeeper came first and
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  it's so important that every business has a bookkeeper,
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  whether they are doing it themselves or they're
• 0:59
  outsourcing or they have a member of staff they employ.
• 1:02
  A bookkeeper is absolutely imperative to the success and
• 1:06
  growth of business if you really want to grow and scale.
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  So I'm going to deep dive into it this week and I hope you
• 1:12
  enjoy it. So bookkeeping, what is
• 1:17
  bookkeeping? So bookkeeping really is.
• 1:20
  The deciding factor whether your business succeeds or not,
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  Effective bookkeeping is like having a compass that that
• 1:26
  guides you through the financial landscape of your business.
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  It's not just about the numbers and the spreadsheets and the
• 1:33
  software solutions. It's about getting that clear,
• 1:36
  concise understanding of your business's financial health,
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  enabling you to make informed decisions with real time data to
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  back up those business decisions and staying on top of your
• 1:47
  financial obligations. I'm going to share 5 reasons why
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  excellent bookkeeping is absolutely imperative in your
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  business, and #1 is that accurate records help you
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  understand your business's financial health.
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  Now, the financial health of your business is a bit like a
• 2:01
  jigsaw puzzle. Accurate bookkeeping records are
• 2:04
  those final missing pieces that help you put it all together if
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  by diligently recording every transaction, tracking the
• 2:11
  business' income and expenses. Assets and liabilities.
• 2:16
  You gain a deep understanding of how your business is performing
• 2:18
  financially. So assets are things that the
• 2:22
  business owns. So things that you can have
• 2:25
  current assets or fixed assets. Fixed assets are usually plant
• 2:29
  and machinery, property, things like that.
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  Current assets are cash in the bank stock, Things that change
• 2:36
  hands more more quickly, more frequently within the business.
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  So once you understand the assets, liabilities, income and
• 2:43
  expenses in the business, you can assess your profit margins,
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  identify areas of high expenses or pinpoint opportunities for
• 2:50
  growth and improvement. You've got that data there to
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  see the highs and lows, what's working, what is it?
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  And it really enables you to make those informed decisions
• 2:59
  that are going to help you build your business to the six figures
• 3:02
  and beyond that you're aiming for.
• 3:13
  Now, reason 2 is that your well maintained books and your
• 3:15
  bookkeeping for your business provide valuable insights for
• 3:19
  decision making. Now it's very similar to #1 and
• 3:22
  you're going to understand. You'll see in this podcast that
• 3:25
  all five of these reasons all interlink because it really is
• 3:28
  just the final missing piece of your business.
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  Effective bookkeeping goes beyond simply recording
• 3:34
  financial transactions, your ins and outs.
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  It really is a goldmine of information that can guide your
• 3:39
  decision making process. By reviewing your financial
• 3:42
  records, you can identify trends, patterns and
• 3:45
  opportunities that may otherwise go unnoticed.
• 3:48
  It also helps you to answer critical questions like which
• 3:51
  products or services are the most profitable for me or a
• 3:55
  certain expenses eating into your profit margin are actually
• 3:59
  running at a loss. Now, once you have all that
• 4:01
  valuable data and you're making the decisions, not only does it
• 4:04
  give you clarity and a true understanding of what's working
• 4:07
  and what's not in your business, it also gives you confidence.
• 4:10
  Because it's you're not taking a punt at something, you're not
• 4:14
  making a guest taking a stab in the dark.
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  When you're making these business decisions, you're using
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  data which gives you confidence in your decisions, especially if
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  you're a sole director or you're an entrepreneur.
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  You don't have anybody else to often to sense check your ideas
• 4:29
  or your decisions that you're making, So having that backup
• 4:32
  really helps give you confidence in the decisions that you're
• 4:35
  making, enabling you to go full steam ahead rather than just
• 4:38
  dipping your toe in the water. Now #3 is that having organized
• 4:52
  financial data simplifies tax preparation and auditing, so tax
• 4:56
  season can be daunting for many business owners.
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  And what often happens is they leave it to the very last
• 5:01
  minute, which adds even more stress and pressure, which
• 5:03
  really is not necessary. Having effective bookkeeping
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  turns into a much smoother process.
• 5:09
  By maintaining organized financial records throughout the
• 5:12
  tax year, you have all the necessary information at your
• 5:15
  fingertips when it's time to file your accounts.
• 5:17
  Now, if you are a sole trader and it's a personal tax, then
• 5:21
  the minute the 6th of April arrives and you're in the new
• 5:25
  tax year, you should already have 12 months of data.
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  You don't need to be waiting until January the following year
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  stressing out about your tax allowances.
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  It also means that you can easily calculate and report your
• 5:37
  income, claim deductions and comply with tax regulations that
• 5:40
  the HMRC require. Now if you're a limited company
• 5:43
  and have an accountant that prepares your year end.
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  Not only will it be a much smoother process and you won't
• 5:49
  be waiting until the last moment, your fees will be
• 5:51
  drastically reduced because the bookkeeping's already been
• 5:53
  completed to an excellent standard and it's up to date.
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  So the accounts have less work to do in order to bring your
• 5:59
  accounts ready to compile those endofyear accounts and reports.
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  Now #4 is very much like #3, and that is that bookkeeping ensures
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  compliance with the financial regulations that have been set.
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  So every business operates within a framework of financial
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  regulations. So whether it's the HMRC or
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  company's house, effective bookkeeping is your secret
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  weapon for staying compliant and legal.
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  If you're a sole trader, you report your business's accounts
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  on your self-assessment tax return each year to the HM
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  Revenue and Customs or HMRC. However, if you're a director of
• 6:32
  a limited company, you will also need to submit a self-assessment
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  Tax return to HMRC for your personal income.
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  But you will also have to submit annual accounts to company's
• 6:42
  house and the company tax return for corporation tax to the HMRC.
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  By diligently recording financial transactions,
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  categorizing the income and expenses, and keeping a track of
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  financial documentation, you've created a solid foundation for
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  regulatory compliance. This helps you avoid penalties,
• 6:59
  fines, or legal issues that can harm your business's reputation
• 7:02
  and bottom line. And again, if you have an
• 7:07
  accountant or bookkeeper that submits your end of year for
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  you, then your fees will be much less.
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  If the bookkeeping is already to a very high standard and it's
• 7:16
  already accurate and you have all the financial documentation
• 7:19
  that is required, you also have to think about VAT.
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  So if you turn over more than £85,000 in a 12 month rolling
• 7:27
  period, you will be required to register for VAT value added
• 7:31
  tax. And that means that you will
• 7:32
  then need to add 20% VAT or whatever the current rate is at
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  that time, in case the government change it.
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  At the moment it's 20% to your invoices and pay the amount to
• 7:42
  the HMRC. Now the other side of VAT is
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  that you can reclaim VAT on business purchases made.
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  So you need to keep hold of those financial documentation,
• 7:52
  those invoice purchase invoices for the things you buy for the
• 7:55
  business. Because as an allowable expense,
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  you can reclaim that VAT and those VAT returns need to be
• 8:00
  submitted quarterly via software using them under the Making
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  Digital regulations. If you don't understand this or
• 8:08
  need any help, then do get in touch with us at Abcsuk.
• 8:12
  I will link in the show notes but the e-mail address is W.
• 8:15
  Website address is www.abcsuk.co.uk or the e-mail
• 8:21
  address is info@abcsuk.co.uk. And finally, having proper
• 8:38
  documentation helps you track your business's growth over
• 8:41
  time. Your entrepreneurial or business
• 8:43
  journey is a story of growth, and effective bookkeeping helps
• 8:46
  you write that story. By documenting your business's
• 8:49
  financial transactions, milestones, and achievements,
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  you create a historical record that showcases your progress and
• 8:55
  provides insights into your business's trajectory.
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  Who knows, you could even turn that into a book someday for an
• 9:00
  additional stream of revenue. The historical perspective
• 9:03
  allows you to identify patterns, learn from past successes and
• 9:06
  challenges, and make informed projections for the future.
• 9:10
  For example, if you run a gym or fitness studio and don't need
• 9:13
  diligently tracked, your revenue, expenses and how your
• 9:16
  membership grow grows. Over time, You'll be able to see
• 9:19
  how your business has evolved. And as business owners and
• 9:21
  entrepreneurs, we often forget how far we've come.
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  So not only is this great for understanding your business's
• 9:28
  growth over time, not only is it great for.
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  Potentially turning this your journey into a book and becoming
• 9:33
  an author and using that as an additional stream of revenue.
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  Sometimes when you're in that pit of despair or that low
• 9:39
  moment in your business because it is a roller coaster, you have
• 9:42
  something to refer back to and realize just how far you've
• 9:45
  come. You might also notice that your
• 9:49
  revenue has steadily increased as you've introduced new fitness
• 9:51
  programs or expanded your class schedule in the gym.
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  So arming yourself as information enables you to make
• 9:56
  data-driven decisions to further fuel your growth.
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  You can invest in additional equipment or hire more
• 10:01
  instructors to meet the increasing demand and only put
• 10:05
  on the classes that are the most attended or the ones that are
• 10:08
  the most profitable for you. My top tip of the week this
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  week, if you do nothing else, is to start tracking your
• 10:26
  business's journey. Please make a note of the highs
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  and make a note of the lows. Give yourself some actual data
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  to look back on and realize just how far you've come.
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  If you're an entrepreneur or a director of a limited company,
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  you're already amazing. You're already doing the work.
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  You're already on that journey and there will be somebody that
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  is one or two sets behind you who would love to be where you
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  are. So please.
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  Start making a note if you're not already.
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  If you are already making notes and keeping a track of your
• 10:55
  journey, then go back and just see how far you've come.
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  Celebrate yourself because you are amazing.
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  So in summary, investing time and effort into maintaining
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  effective bookkeeping practices is key to running a successful
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  business. Remember, it's not just about
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  compliance, the hate, the HMRC compliance, the VAT, the
• 11:16
  payroll, the corporation tax. It's about harnessing the power
• 11:20
  of your financial data to drive informed decision making,
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  maximize your profits, and propel your business towards
• 11:26
  long term success. If you do not understand
• 11:29
  bookkeeping or need any help getting your financial records
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  in ship shape, then. Please do get in touch with us
• 11:36
  at Abcsuk. We're bookkeeps and accountants
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  who are multi award-winning and we really do care about your
• 11:41
  business. We'd love to have a chat and see
• 11:43
  if we can support you and what software and solutions we can
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  help provide to make your life easier if you want to complete
• 11:51
  the bookkeeping yourself or if you want us to complete the
• 11:53
  bookkeeping for you. Again, the e-mail address is
• 11:56
  info.info@abcsuk.co.uk or the website is www dot.
• 12:04
  Abcsuk.co.uk You'll also find us on Instagram, LinkedIn or
• 12:09
  Facebook. Abcsuk accountancy, bookkeeping,
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  communication and support. I really hope you've enjoyed
• 12:16
  this week's episode and I really look forward to speaking to you
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  next week. And that brings us to the end of
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  another week of the Three B's podcast with Stephanie, thank
• 12:30
  you so much for listening. I'd really appreciate it if you
• 12:33
  could like, subscribe, rate and reviews podcasts wherever you
• 12:36
  are listening to it so that I can reach more business owners
• 12:39
  and help them build better businesses.
• 12:42
  See you next week for the next episode.