3 Things You’ve Always Wanted To Know About Small Business Bookkeeping

By Anita Jaynes on 15 February, 2021

Post sponsored by Purple Lime

As a business owner, you’re probably a master of doing what it is your business does. Most small business owners and startups are. But being able to deliver an amazing service and run a team aren’t the only elements to running a business. One of the key skills any business owner in any industry needs is bookkeeping. 

When it comes to small business bookkeeping, it can all feel like a whirlwind of numbers if you aren’t used to it. There is a lot involved in keeping a business’s financial records running smoothly, which is why so many businesses choose to employ an outsourced bookkeeping service instead. But if you’re a bit unsure, then you might have a few questions – which is why today we’re going to answer some of the most commonly asked questions about bookkeeping that we get asked.

What’s The Difference Between a Bookkeeper and an Accountant?

At first glance it might seem like an accountant and a bookkeeper have very similar jobs – especially if you’ve only got one person trying to do all of it. But there are some key differences, which can impact who you choose to help you.

Bookkeeping: is the activity of keeping financial records for a business. A bookkeeper’s duties usually involve storing and recording any and all financial transactions that a business makes. This means that they are closely involved in finance (if an internal bookkeeper) or have frequent meetings or conversations with the business they are keeping records for (if using an outsourced bookkeeping service).

Accounting: is a process, in which an accountant would accumulate a business’s financial information and report back to them about their financial position and cash flow. The information that an accountant can provide is used to help the business figure out how to manage themselves in an efficient way, and to give them advice on possible investments or lending money to others. 

Often businesses will choose to outsource one or both of these functions to a finance professional. Outsourced bookkeeping services are very popular and can be the perfect tool to help small businesses to understand their financial position more thoroughly. At Purple Lime, we specialise in both small business bookkeeping and accounting services.

Is There A ‘Right’ Bookkeeping Software?

There are a huge number of different software solutions available for your small business bookkeeping. How you choose which one is right for you will depend on things like:

  • Cost
  • Features
  • Usability
  • Accountant integration
  • Cloud vs local access

So while there is no ‘right’ option, at Purple Lime, our top pick is definitely Xero. Xero is widely acknowledged as one of the top pieces of accounting and bookkeeping software – especially if you’re working on a Mac. Xero is great if you’re just starting out, or if you need your accounting to be simple and straightforward every month. We like that it’s affordable, easy to use, offers a ton of features and integrates with hundreds of third-party business solutions, many of which you probably already use. There is also a 24-hour email and live chat support function, so there’s always someone there to help you.

How Do You Know When to Outsource?

One of the most common questions we get asked as professional bookkeepers is ‘when is the right time to outsource?’ And we’ll be honest, usually the answer is, the sooner the better! Using an outsourced bookkeeping service gives you the time, skill and flexibility you need to run your business efficiently and effectively, without having to spend a lot of your own time doing it. But if you’re not sure, a few key indicators that it might be time to outsource your bookkeeping include:

  • The numbers don’t make sense: If you’re not sure what the numbers in your business mean, how you’re supposed to use them to grow, or what your accountant has asked you to change, then a bookkeeper can help you.
  • The software is getting confusing: Odds are the software itself isn’t changing, but what you need to be able to do with it is. Whether that’s making the leap from excel to actual accounting software, or just starting to use new functions within the software you’ve been using for years, suddenly not being sure what’s going on isn’t a great feeling – and a bookkeeper can help you navigate this.
  • You’re registering for VAT: If you’re near the VAT threshold and have finally decided to bite the bullet, it’s worth getting a bookkeeper on side now. They can help guide you through the set-up process and make sure you get it all right, and then keep accurate records for you from the get-go.

And above all, if you’re choosing to use an outsourced bookkeeping service, it’s important to find a company you get on with. Business bookkeeping is all about trust, attention to detail, and really understanding your business and where you want to go. 

At Purple Lime, we are experienced in business bookkeeping, accounts and financial management, meaning we can do everything an in-house finance department can do at a fraction of the price. Our experts can handle every element of your business finances, from keeping your bookkeeping up to date and filing your accounts, to helping you understand what your business numbers mean and what to do with them next. If you would like to know more, please just get in touch by emailing hello@purplelime.uk.com or calling 01249 691 360 to chat to one of our team.

To find out more about Purple Lime visit: www.purplelime.uk.com