Bookkeeping is a fundamental part of your business. Everything that Hive can offer is rooted in good bookkeeping. Without it, we (and of course, you) won’t know key details such as your practice’s value and your profit and loss – and we can’t tax plan if we don’t have up-to-date numbers.

You may be thinking, ‘I already pay for accounts, and you have access to my bank balance, so why should I have to do bookkeeping too?’ Put simply, because they’re very different things, and you really do need both. Think of it as being like a check-up and a hygiene appointment – both symbiotically form the core of good dental health.

Nothing can replace well-done bookkeeping. A bank statement can’t – sure, you can see what’s in the account, but cash doesn’t equal profit. End of year accounts are also no replacement, as these will always be historical data. This means that if something went wrong at the start of the previous year, you wouldn’t know about it for perhaps 18 months. Needless to say, an awful lot can happen in such an extensive period of time.

You don’t necessarily have to engage a third-party to take care of your bookkeeping. You can absolutely do it yourself, but it needs to be done to the right level. Data should be available quickly, but it should also be right – otherwise, you may as well not do it at all. Alternatively, we can work with you to make your bookkeeping what it should be.

With Making Tax Digital being rolled out to dentists (and other sole traders from April 2024), up-to-date digital bookkeeping will become the norm, with submissions made on a quarterly basis. While this is sending some traditional accountants into a spin, we’re already embracing this approach for the benefits it brings to our clients. Using Xero, the online bookkeeping software, Hive clients are able to update and access their figures whenever they need to. And in this instance, knowledge is power.

If you don’t have your data to hand, your options and ability to plan will always be limited. One example is incorporation. If you have no idea what your profits are, how can you know if you’ll save tax by incorporating? The tax savings can be significant, but if you incorporate unnecessarily, you’ll only lose time and money, without saving a penny. You can only know if the circumstances are right by looking at up-to-date numbers.

This also applies to any kind of future planning. One of our clients is currently considering whether to expand, sell, or buy out a partner in order to go it alone. If the value is right, selling could be a strong option – but her latest figures are over a year old. In this situation, it’s impossible for us to advise on the best course of action.

If you’re thinking of selling, it’s critical to have the latest figures (and accurate ones, at that) at your fingertips. Without decent data, you can’t have an up-to-date valuation in the first place. On top of this, your buyer – especially if it’s a large corporate – will be gifted a green light to hack at your numbers. During the due diligence process, bookkeeping errors can be seriously costly. Any issues are amplified by the industry’s valuation methodology, meaning that a £10,000 error in your numbers can amount to a £100,000 hit on your sale price.

Let’s say that you’re an associate wanting to declare a dividend. You can’t pay dividends unless you have profits, and you also can’t plan if you don’t know what these profits are. If you pay too much, you can run into tax issues. Or, you may actually leave some on the table and cause yourself inadvertent hardship, simply because your numbers aren’t current and you don’t know.

If you’ve got your bookkeeping in hand, you’re in a position of strength; and you’ll never know what you might have lost by failing to do so. If you choose to sell, you’ll capture the maximum value of your practice, with nothing being eroded from the sale price. If you’re considering buying a second practice, your latest data can be used to carry out modelling to see how it’ll fit in with your first. You’ll have answers and solutions to hand, regardless of where you are in your business journey.

If you’d like to know more about establishing good bookkeeping, or preparing for Making Tax Digital, get in touch.