One of the most common questions we get asked is “what do bookkeepers do?”. So in this article, we highlight why sole traders and small businesses should consider hiring a qualified bookkeeper to manage their day-to-day finances.

According to figures from the Federation of Small Businesses (FSB), there were 5.5 million small businesses (up to 49 employees) operating at the beginning of 2024. Amazingly, these smaller companies make up more than 99% of the UK’s total business population, employ 13 million people (47% of the total) and have a combined turnover of £1.8 trillion (36%).

While there are many benefits to running your own business, handling the financial side can quickly become overwhelming. Whether you’re a self-employed tradesperson, freelance consultant or own a busy coffee shop – let’s explore why hiring a qualified bookkeeper is well worth the investment…

When you ask ‘what do bookkeepers do?’, organisation is one of the most obvious tasks. The DIY approach to accounting can involve a lot of time and stress, so many businesses turn to an experienced bookkeeper who can take care of the everyday finances, including:

• Recording income and expenses
• Reconciling bank statements
• Tracking invoices and payments
• Managing receipts and petty cash.

When these tasks are done consistently and accurately, it means less stress for you and a clearer picture of your company’s financial health. Say goodbye to late-night spreadsheet sessions or searching for missing receipts.

If your business is VAT-registered, you will be required to submit quarterly VAT returns to HMRC. It is vital that your trading accounts match your VAT return, as mistakes could lead to a VAT inspection and costly penalties.

So what do bookkeepers do?

• Check that VAT is calculated correctly
• Reclaim what you’re entitled to
• Submit VAT returns on time
• Stay compliant with HMRC rules

Bookkeepers can also help you understand which VAT scheme (standard, flat rate, cash accounting) best suits your business, and update you on changes such as Making Tax Digital (MTD).

As a sole trader, you are personally responsible for filing your self-assessment tax return each year. A qualified bookkeeper helps by keeping your income and expenses clearly categorised, noting allowable expenses and deductions and preparing organised records for your accountant or HMRC. Bookkeepers can reduce the risk of errors and penalties, while potentially helping you pay less tax.

Cash flow is the lifeblood of any business. A good bookkeeper can help you devise and implement a cash flow strategy to improve the state of your finances, avoiding those dreaded peaks and troughs. Benefits include spotting unpaid invoices quickly, accurate income and expenditure forecasts and reducing the risk of running out of cash. With your finger on the pulse of your finances, you can make informed decisions on hiring staff or investing in new equipment.

Imagine the time you can save by not having to deal with spreadsheets or chase invoices. A bookkeeper gives you that time back, so you can concentrate on your customers, win new business and improve your products or services. When you ask ‘what do bookkeepers do?’, the time saved often more than covers the cost of their services.

Having organised finances is crucial for those big business decisions, including applying for a loan, attracting investors, hiring new employees and acquiring new premises. By maintaining clear and accurate financial records, a bookkeeper will ensure you’re always ready with the numbers when opportunity knocks.

Hopefully, now you understand that hiring a qualified bookkeeper isn’t just about staying organised – it’s about building a solid financial foundation for your business. Whether you’re just starting out, or you’ve been trading for years, a professional bookkeeper can help you take your business to the next level.

To learn more, contact Gazelle Bookkeeping today.