Last week we looked at two cases for Entrepreneur Relief claims. One case would get it and the other not. In case you missed it See here. This week we are going to look at bookkeeping. Why a good bookkeeping function is an investment in your business and what does it look like.
What are you?
You are the owner, the sales director, the HR director, procurement, and various other roles. You are responsible for the finance function too, but numbers don’t float your boat. After a 12 hour day, you don’t say to yourself “I can wait to get stuck into that Vat return after dinner”. You are so busy working to grow the business, but you know Revenue will be after you if you don’t get it in. Maybe you are allergic so you know you need help. You decide to get Mary [wife, sister, cousin, from down the road] to look after your numbers because it can’t be that hard! When interviewing for this vital role in your business, if Mary can explain;
- Postponed accounting for Vat
- Reverse charge
- Intra EU acquisitions
- Vat RTD
- Reclaiming Vat on Lease or Hire Purchase
You will know that she knows her stuff. If she can’t then you must decide if she is the person to look after your money. But it’s not only the money. The bookkeeping function impacts a lot of other relationships that you need to help you grow. Banks, Revenue, State agencies, and regulatory bodies play a vital role in your journey. They need you but you need them more.
As the owner, you need to surround yourself with great people. A great bookkeeper or a great bookkeeping function is worth its weight in gold. Gold will help you grow, hire more great people and give you the freedom to enjoy success with those that you love. Numbers, Revenue, ROS, envelopes with Harps on them stress you out. A brown envelope with a Harp is akin to approaching a garda checkpoint. A feeling of dread and automatic guilt, even when completely innocent! If we get stressed, we lose focus and energy, are less productive and our businesses can suffer. The negatives are many;
- Not knowing your numbers
- Late with Revenue
- No Tax clearance
- Revenue debt
- Waiting on accounts for the bank for loan approval
- Late for the CRO
- Interest, fines, and penalties
I am getting stressed even writing this and will have to have a coffee! That’s the downside and what many business owners are going through. Remember the famous quote
“Insanity is doing the same thing over and over again and expecting different results”
And the upside is the opposite of the above. No stress, confidence, feeling of control, and doing more of what you love doing because you are good at it.
- You know your numbers and have up to date figures during the year
- Tax returns and payments are on time, every time
- Tax clearance is in place, so you can get grants, get tax refunds paid, and is a requirement for Government supports
- No Revenue debt and not waiting for Revenue to knock on your door
- You pay what you have to pay when you have to pay it, but no more. So, no interest, fines, or late penalties
- Bank finance is easier. They see that you have cash in the bank, your numbers are up to date, and they have confidence that you can repay them.
- Your accountant is happier. They can help you more. Work on budgets, forecasts, and cash flow to ensure that your business grows more
More cash in the bank means more cash for you. Plan for your personal finances. Company pension, salary increase, and bonus become a possibility. That dream holiday in Portlaoise is no longer a pipe dream!
Business Growth Journey
Before we can afford that bucket list holiday, we must get the right structures in place. We start out as one or two and now we have a team of staff. Like a family, you are growing, and you are relying on each team member to nudge the business along. You have more customers, more suppliers, more staff, and more bills, but more sales too.
You are in control and the decisions you make will result in how successful your business is. Putting Mary or Paddy in charge of your finances is not a wise move. And if Paddy says to you “sure I’ll give that a go, there can’t be that much in it” you know you have made a very bad decision. You might not admit it, but you know! As I have said many times before you wouldn’t pull out a Black and Decker and go at your teeth.
The finance function is one of the key foundations of your business growth journey. It’s up to you to make sure that is in place. You need an experienced bookkeeper or a bookkeeping team in place. When I say team, a team can have different skillsets. One can be excellent at payroll while the other would be more skilled in other areas such as
- Vat returns
- Bank reconciliations
- Projections and budgeting
- Management accounts
Business Growth Post Pandemic
During the pandemic, the payroll function has never been so important. First, we had TWSS and that became the EWSS. These wage support schemes became the lifeblood of many businesses. A quality payroll function ensured that you could claim all the subsidies for your staff. The payroll person was the go-between for the business owner with Revenue. And they are now involved in the reconciliation of the TWSS.
This is to ensure that Revenue gets the correct refund, but no more. I take my hat off to all the payroll providers and quality payroll professionals out there. You have done an amazing job and have had to learn so much in a very short time. A good payroll person will spot a simple thing like the correct PRSI class for a company director. An owner-director, who owns more than 50% of the company, should be on Class S, not Class A. A proper payroll function can help keep staff happy. A happy staff is a more productive staff.
Have a look at our business growth journey and see where your business fits in click here
We have never seen such a change in technology and work practices in such a short time. Some businesses thrived during the pandemic. Others closed or had to operate at very reduced capacity. This was lucky for many and misfortune for a lot. Most will survive but who will thrive? We all need to adapt and change. If you don’t move with the times, you are dead in the water. It is the survival of the fittest out there. You will need money to invest and grow. If you do this, you will have more money in your pocket. Think carefully about who you trust to mind your money and invest well.
Stay tuned for next week when we will explore what a quality bookkeeping function can look like for you.
Interested in finding out more about how our bookkeeping can help you? Call Deirdre on 051 396703 or start here. Tell us about you and how we can help.