In the age of rapid advancements within online accounting software such as Sage One, Xero and QuickBooks, to streamline and simplify accounting processes, there has been an increased drive from accountants for companies to do their own bookkeeping and accounting submissions. This will involve an accountant setting up a licence and providing some limited training to the owners so they can manage their books and records themselves, whilst providing a checking/verification process before the VAT returns and accounts are produced. But are accountants becoming lazy by getting clients to complete their own bookkeeping?
Whilst this can be an attractive option often leading to reduced accountancy costs, it does mean however that the director may be left with the short straw of completing the work themselves.
Below are the reasons why recruitment owners should not consider completing their own bookkeeping: –
RECRUITERS ARE NOT ACCOUNTANTS
Most recruiters are fantastic at generating clients, registering candidates and making placements but their understanding of finance and accounts may be lacking as it is not their forte. Giving a recruitment director a licence for an accounting package and limited training may lead to mistakes or result in the books and records not being kept up to date as this is not seen as a priority compared to making the next placement.
ACCOUNTING SOFTWARE DOES NOT TEACH HMRC LEGISLATION
Although accounting software has developed immensely in recent years to allow certain parts of the process to be done via bank feeds, receipt capture and simplifying the bookkeeping process, the software does not replace an accountant and the knowledge they hold. The fact that the person inputting the data must decide if a transaction has VAT or not or if it is allowable without the software taking into consideration HMRC legislation, can mean that costly mistakes could be made.
DIRECTORS SHOULD BE SPENDING TIME ON THEIR BUSINESS
If a recruitment director is spending time completing bookkeeping and invoicing tasks instead of making those all-important placements or directing their staff and company forward, then this is not a good use of their time. Accountancy firms should be looking at ways of improving their client’s profitability via more sales instead of reducing costs by getting the agency to complete the work they could be doing.
WHOSE RESPONSIBILITY IS IT IF THERE IS A HMRC INVESTIGATION?
Where an accountancy firm allows the agency to complete the bookkeeping, there are often clauses in the contract regarding where the responsibility for the data stops. Some firms will say that they will check some of the data before submissions of accounts or VAT returns, but these checks may not be as rigorous as they could be and could lead to a costly HMRC investigation.
MAYACHI Ltd works with several recruitment-specific back-office and accountancy providers who complete all administration tasks for the agency directors to allow them to concentrate on growing their business. By working in partnership with these providers, we can ensure that the numbers produced are correct and reflect the true financial position of the company. By ensuring high quality of the work, there is minimal chance that there will be HMRC investigations and liabilities.
