1 Nov 2023
Introduction
Are you using artificial intelligence? As we see artificial intelligence (AI) more and more in daily life, we’re also hearing debates and speculations about its potential to replace traditional professions, including bookkeepers and accountants. While AI is indeed transforming the finance industry, the question remains: will it do finance professionals (like me!) out of a job? In this blog post, I’ll discuss the impact of AI on accounting, discuss the ways in which AI can help bookkeepers and accountants, and give you my view of the future of these professions.
AI for bookkeepers and accountants
AI is hot on the agenda at every accounting event right now. We’re seeing changes behind the scenes with the software we use, with numerous tasks being automated and much better real-time insights into financial data. Here are some ways AI is reshaping the accounting profession:
Data entry
The biggest change right now is the potential for AI-driven software to simplify data entry by automating processes, reducing, or even removing the need for manual data input. This saves time for bookkeepers like me and minimises the risk of human error.
Improved accuracy
AI tools can identify discrepancies and inconsistencies and spot patterns in data – including financial data. AI has the potential to maintain and even improve levels of accuracy, giving us even better insight into your numbers and more opportunity to talk about what matters to you – reaching your goals, and the power of your numbers to allow you to do that, which leads us to…
Real-time insights
When we spend less time fussing with accuracy because AI is doing that for us, we can quickly get stuck into the insights you need into your company’s financial health. This allows you to make informed decisions promptly.
Time efficiency
Automation of routine tasks frees up time for accountants and bookkeepers to focus on more complex financial analysis, scenario and strategic planning.
So, will it replace us?
You’ll notice that the role of AI as we see it is focused on speeding up and improving the accuracy of what a bookkeeper or accountant would traditionally spend the majority of their time doing. And this is important to remember. I see AI as a valuable assistant, not a replacement. While AI is a transformative force in accounting, it is not poised to replace bookkeepers and accountants. Here’s why:
Human judgment
Accounting and bookkeeping often involves subjective decisions and judgment calls that AI simply cannot make. Human professionals will always be important for interpreting financial data, understanding the context within the specific business, and having real conversations with you, the business owner.
Relationships
At InterTax, earning your trust through real communication and relationships matters to us. When it comes to finances, you need somebody on your team to run queries past, and AI can’t replicate that. Data is data, but we’re here to address your concerns, know your goals and help you reach for them.
Adaptability
As humans, we can adapt quickly to unpredictable scenarios… if you remember everything the country went through during 2020, you’ll remember just how quickly we were able to interpret, respond to and implement every update from the Chancellor. AI may struggle to adapt to rapidly changing financial landscapes and handle unique, complex situations.
Security and ethical considerations
And this is the big one for me.
As a professional bookkeeper, ensuring compliance with financial regulations, security of data, and maintaining ethical standards is crucial. We would never put your data at risk and we’re keeping a constant view of developments of the software we’re using and how they incorporate AI.
AI-based accounting software, when properly developed and implemented, can be highly secure. These accounting software’s often use encryption and other security measures to protect financial data. However, the level of security can vary depending on the software provider and the software configuration. We see this as a risk, and for this reason, only work with reputable software providers.
This topic is high on the agenda of every accounting and bookkeeping event, it’s an area that is moving fast and which we’re watching closely.
Conclusion
While AI is reshaping the accounting profession by enabling software to automate some tasks and provide better insights into patterns and inaccuracies, AI is not poised to replace bookkeepers and accountants. AI should instead be seen as an assistant that will enhance services in the future allowing us to give you better data and insights, but the vital human touch is still crucial.
The future of accounting and bookkeeping is certainly a relationship between human expertise and AI innovation, bringing the best of both worlds, but you can rest assured, that I’ll always be here.
If you’d like to speak to us about how we can support you with your accounting and bookkeeping needs, book a free consultation here.
5 Oct 2023
As a small business owner, you may be used to taking the DIY approach. After all, you’re most likely a marketer, financial director, HR manager and payroll administrator, to name but a few of your many responsibilities. However, although your business may be small, there’s one area that really does call for professional help – and that’s filing your tax return. Let’s take a look at four of the main reasons you shouldn’t do your taxes yourself this season.
1. You’re Not a Numbers Person
We’d all like to believe that we’re good at absolutely everything, but the truth is that not everyone is good with numbers. If you don’t have an affinity for mathematics then doing your taxes yourself is probably not the best idea.
Even if you’re competent enough at everyday calculations, taxes are a whole different ball game. Calculating your taxes is a very complex process; there’s a reason that chartered accountants have to spend so many years in training.
A simple mistake on your tax return can cause you to pay the wrong amount of tax and even result in harsh penalties that can seriously threaten your small business. It really isn’t worth the risk.
2. It’s a Waste of Your Time
Taxes are notoriously time-consuming and as a busy business owner, your time is a precious resource that you can ill-afford to waste. After all, the time that you spend doing your taxes is time you can’t spend growing your business. It’s important to sit down and think about how much your time is actually worth before you squander it all trying to figure out your taxes. Think of time in the same way as you think of money, and learn to invest it wisely.
3. Tax Laws Change Constantly
Tax laws change all the time and it can be incredibly difficult to stay on top of all the latest rules and regulations – especially when you already have a business to run. When tax season rolls around, the chances are you won’t know about all of the latest changes which could lead to you making mistakes on your tax return or missing out on new opportunities to save money.
It’s an accountant’s job to keep up to date on any changes and then take advantage of these opportunities to save you money, so that you pocket as much of your income as possible. Remember that a quality accountant will always save you more than their wages.
4. The Internet is Full of Misinformation
In this day and age, the DIY approach to any task usually involves several Google searches. The problem is that although the internet is a wonderful resource, it’s full of incorrect or outdated information. As discussed, tax laws and deductions change all the time, so the article you’re reading may no longer be accurate. Furthermore, tax rules vary hugely from country to country, so you might end up making a mistake because you read advice that doesn’t apply to your business.
Sifting through all of this information and checking for veracity is a hugely time-consuming task, so you’re far better off working with a tax professional who has relevant experience within your specific industry. That way, you can have your questions immediately answered by someone who knows what they’re talking about and won’t have to waste time falling down Google rabbit holes.
Summary
The needs of every business are different, but if the above issues resonate with you then you should consider hiring an accountant when tax season rolls around. A great accountant is an investment in the financial health of your business, and will undoubtedly save you a significant amount of time, money and stress in the long run.
2 Oct 2023
For small business owners, tax season can be a stressful and daunting time of year. It makes sense that you’d rather not think about it, but as a bookkeeper, every year I see business owners feeling stressed as the season approaches because they know deep down that rushing things and leaving it to the last minute can lead to mistakes and penalties. That’s why it makes sense to get ready for tax season right now. In this blog post, we’ll explore why now is the time to get your self-assessment tax return done, instead of waiting until the deadline of January 31st. We’ll offer tips on how to outsource your bookkeeping, why the deadline is not a target, and how it’s crucial to know your numbers to help motivate you to complete your tax return.
You don’t want to be doing your tax return over the holidays.*
It’s no secret that the holidays are a busy time of year – especially for small business owners. With the added pressure of balancing work and family commitments, it’s easy to put off sending your tax return until January. However, with the deadline of January 31st fast-approaching, don’t let yourself end up cramming your tax return in over the holiday period. Instead, tackle it now and enjoy a stress-free break.
The deadline is a deadline, not a target.
Many small business owners falsely believe that the filing deadline of January 31st is a “target” rather than a firm deadline. This could not be further from the truth. The HM Revenue and Customs (HMRC) takes non-compliance very seriously, and failing to submit your tax return by the deadline could result in a fine. Get it done and off of the list as soon as you can.
Outsource your bookkeeping so you don’t need to do it.
One of the best ways to get your tax return completed now is to outsource your bookkeeping. If you don’t have the time or expertise to handle this task in-house, think about getting the help of a professional bookkeeper or accountant. Outsourcing your bookkeeping can not only save you time and energy, but it can also help you stay organised and ensure your tax filings are completed accurately and on time.
Here’s the unexpected benefit
Many small businesses see the tax return as the ultimate goal, but at InterTax we know that the most important reason to get your tax return completed now rather than later is to know your numbers. It gives you time to save for your tax bill if you haven’t already (talk to me about this, I can help), and it is key to knowing your numbers.
Your tax position reflects your business performance for a certain frame of time, and we expect you want to know how you’re performing in as near to real time as possible. Understanding your financial situation is vital in running a successful small business. By knowing your financial figures in-depth, you can make informed decisions for your business, plan for the future, and stay on top of your finances.
Conclusion
Getting your tax return done as early as possible is crucial. Of course, this avoids unnecessary added stress, mistakes and penalties, but it means you have feedback on how your business is doing. At InterTax we encourage our clients to file their tax returns as early as possible and we’d love to chat to you about how we can help you with yours. You can reach out to us by clicking https://intertax.co.uk/book-consultation/
So why wait? Let’s get your tax return sorted now so you can move on to more exciting things.
15 Sep 2023
Pricing your services correctly is one of the most difficult parts of being a small business owner. On the one hand, you understandably want to price yourself competitively, but you don’t want to sell yourself short, either. Profit, cash flow and confidence are all important considerations when pricing your services, so here are five key steps to help you get it right.
Step 1: Calculate Your Costs
Even if you have a very capital light business, there are always costs associated with running your own business. There are two types of costs: direct and indirect.
Direct costs are the costs that go directly towards providing services for your clients, such as project materials or project-specific software, employee wages and your own wage.
Indirect costs are more general costs that are necessary to run your business, such as:
● Rent
● Internet
● Phone Contract
● Devices
● Marketing costs
● Website
● Accounting services
● Legal services
● Insurance
You need to make sure that you charge your customers enough to cover all of the above expenses and make a profit on top of that.
Step 2: Identify Your USP
Your unique selling point (USP) will help you to price your services appropriately. If you’re competing based on price, then affordability will be the name of the game. However, if your USP is based around quality service or your specific expertise, you will be able to charge significantly more. If your clients are investing in you because you’ll add value to their business, then they will be much less likely to question you on price.
Step 3: Market Research
It’s important to know how much your competitors are charging, because this will tell you how much prospective clients are willing to pay. Seek out your competitors via Google as well as marketplaces such as UpWork and Fiverr. Remember, however, that the latter sites often feature many providers willing to sell themselves short in order to get started. Pay attention to their target customers, level of experience and location.
Remember that if you’re providing something that your competitors lack, you will be able to charge more than they do, so long as you are able to properly articulate this added value.
It’s also a good idea to try and get some feedback from your network or even conduct a focus group to gain insight around pricing.
Step 4: Consider Hourly vs Flat Fees
Some small business owners charge by the hour whilst others prefer flat fees. The correct path often depends on your industry and also your level of experience. If you know exactly how much time a certain project will take you, then a flat fee might be best, whilst if you’re unsure then it may be better to go down the hourly route.
If you’re just starting out, then you may get faster at your work as time goes on. In this case, flat fees make sure that you’re not punished for becoming more efficient!
In order to calculate an hourly rate, consider the amount of hours you want to work per week and multiply that by 52. Then, subtract holiday and sick time to calculate the amount of hours you’ll actually work.
After that, calculate your billable hours – i.e., the amount of hours that directly generate revenue. Billable hours represent time spent on client work, whereas non-billable hours are the ones spent on admin, marketing, paperwork, and the like.
Next, divide your total expenses by your billable hours. This will give you a break-even hourly rate. Then, multiply this figure by your desired profit margin to find out how much to charge per hour.
Conclusion
After reading this blog post, you should be able to calculate the cost of your services and figure out whether hourly or flat fees make the most sense for your small business. Remember that good quality clients will be willing to pay a fair price for a great service, so be confident about the value that your small business adds and don’t sell yourself short.
If you’d like to speak to us about how we can help you, book a free consultation here.
29 Aug 2023
Running a small business is rewarding, but it comes with various challenges, finances being one of them – especially when the geopolitical landscape has gone wild and numbers simply aren’t your thing.
Whether you’re an entrepreneur struggling to keep your small business afloat or a seasoned business owner trying to navigate unpredictable economic times, handling finances for your business is crucial but can feel daunting. In this blog post, we will share our tips on how you can manage your finances during periods of economic uncertainty.
Create a Financial Plan
One of the most effective ways to navigate any kind of uncertainty is by creating a plan. A financial plan helps you forecast your business’s income and expenses and make decisions influenced by the right information. Knowing your short and long term goals is a helpful place to start, from there you can evaluable your current financial position, and identify any risks your business might be up against.
Most accountancy software will allow you to run reports and track your performance, helping you make decisions at every stage. You’ll see where you have opportunities to reduce costs and maximise your best income streams.
Have Financial Reserves
It is always good to set aside a portion of your revenue to create financial reserves in anticipation of uncertain times. Having a financial reserve can help you cover sudden expenses, unexpected costs, or a downturn in business. I recommend aiming to have three to six months’ worth of expenses set aside as a reserve.
Stress-Test Your Business
Stress-testing your business means developing a set of scenarios and projecting what the impact would be on your business. Consider how your sales, cash flow, and stocks would be impacted. This can help you prepare for potential financial challenges and make appropriate adjustments to your budget, stock, and marketing strategies.
Maintain Relationships
Relationships matter, no more so than in uncertain times. Doing what you can to keep in favour with your bank and suppliers will help you if you face an unforeseen situation. Banks are more willing to lend money to businesses with good credit scores. Similarly, good relationships with suppliers can help you negotiate better payment terms, discounts, and extended repayment plans to help you manage your cash flow better.
Stay Up To Date
Finally, staying up-to-date on regulations and laws relevant to your business is essential at all times, but avoid costly mistakes might seem even more important when the economy feels more difficult. A great bookkeeper or accountant will always keep you up to date on anything that will impact your business finances.
Conclusion
Managing finances during uncertain times can be challenging, but it is not impossible. By creating a financial plan, establishing financial reserves, stress-testing your business, maintaining good relationships with your banker and suppliers, and getting the support of an expert bookkeeper or accountant, you have the best chance of navigating financial uncertainty and taking care of your financial health. Preparing for the future is always more advantageous than reacting to it, so start planning your business’s financial future today.
If you’d like to talk to me about how we work with small businesses like you book a free consultation with us.
