Starting your own business is an exciting time, but also requires you to track and manage a number of administrative tasks, including tracking your finances. But for most business owners, managing the financials is not easy. After all, you went into business with the goal of developing a product, reaching an audience, and creating a steady income stream. Yet, to achieve a profitable and successful business, you need to know your numbers. That is where a bookkeeper comes in. Let’s dive into what bookkeepers are, the benefits of hiring one, and the different bookkeeping services that will free up your time to focus on other aspects of your business.
What Are Bookkeepers?
Bookkeepers are the financial organizers of your business. They record and categorize every financial transaction, be it an expense or income. Their goal is to make sure that every aspect of your financials is accurate by making sure the transactions are recorded accurately. That being said, your bookkeeper can also take on a number of other tasks, depending on what you need them to take on. Some bookkeepers assist in gathering data for your tax accountant, while others assist with payroll. Clearly, there are plenty of ways that your bookkeeper can contribute to your business, thus giving you the freedom to grow and expand the business through product development, sales, and marketing.
What Are the Benefits of Having A Bookkeeper?
There are multiple benefits to having a bookkeeper. The first is that it removes part of the workload from your plate, and if you opt to hire them for their bookkeeping services, then it can be done at a fraction of the price of hiring a person in-house. Secondly, having a bookkeeper focused on your transactions can keep your financials accurate and up-to-date. They are also keeping an eye out for potential errors, thus their work can end up saving you thousands of dollars in terms of fees and penalties. Plus they are trained to make fewer errors, so they also are more likely to spot problems and get them addressed before it becomes a bigger issue. Third, every transaction will be categorized, and that can be a big job when there are thousands of transactions every month. Now you will have the knowledge to make strategic decisions for your company because your transactions are categorized properly. Finally, your bookkeeper’s work will give you insights into the financial health of your business, helping you to make adjustments in your inventory, determine what product lines to expand, and whether you have the capital to expand operations. With all these benefits, it is also important to have a deeper understanding of what your bookkeeper can handle as a part of your team.
What Do Bookkeepers Do? Bookkeeping Services List
Bookkeepers handle a variety of tasks specifically related to your financials, which can be divided into several categories. Let’s discuss each of those categories and what it entails.
Daily Bookkeeping Tasks
Typically, a bookkeeper has tasks that need to be handled daily, weekly, and monthly. Additionally, some of these tasks can be associated with tax preparation, compliance, and more.
1. Recording Financial Transactions
At a fundamental level, this is the primary task of your bookkeeper. They will record and categorize every transaction, thus giving you the accurate data necessary to determine the financial health of your business.
2. Bank Reconciliation
Once your transactions are recorded, your bookkeeper will reconcile those transactions with your bank and credit card statements to verify that every expense and income is accounted for. If any errors are found, then they can be corrected.
3. Accounts Payable and Receivable Management
Accounts payable and receivable management involves the processes necessary to maintain your financial records. With accounts payable, your bookkeeper tracks the money going out to vendors and suppliers, and with accounts receivable, they track the money coming in from your customers via sales.
4. Payroll Processing
Your bookkeeper can handle payroll processing, which includes verifying and inputting the hours for each employee, calculating total wage earnings, withholding deductions, filing payroll taxes, and delivering payment.
5. Expense Tracking and Management
By having the right data in place, your bookkeeper has the ability to track and manage expenses, letting you know whether your business is tracking with its budget or not. It can also help you to identify areas where you may need to spend more or cut costs.
6. Invoice Generation and Management
Success in your business involves making sales to generate income, but without proper invoice management, that income will not be realized. Your bookkeeper can generate invoices for customers, confirm payments, and notify you about invoices that are past due. This information allows you to make smart decisions about future sales to specific customers, including whether they should receive a discount or not.
Financial Reporting and Analysis
The long-term success of your business depends on whether you know your financials and have a clear idea of whether your business is doing well or not. Here are a few of the tasks your bookkeeper can handle as part of the financial reporting and analysis.
7. Preparation of Financial Statements
Financial statements are usually prepared at least once a month, allowing you to see the current status of your business on a fiscal level. These statements should also be used to demonstrate your financial health for investors and banking institutions.
8. Balance Sheet Management
The process of planning, analyzing, and controlling the structure and composition of your balance sheet falls to your bookkeeper. They can assist you in managing the risks associated with your balance sheet, including liquidity and interest rate risks.
9. Income Statement Analysis
As part of the bookkeeper’s duties, they analyze your income statement, checking the accuracy of the math to find the bottom line while also comparing different line items, such as revenue, expenses, and earnings. Additionally, your bookkeeper can compare line items over multiple periods, thus identifying trends and changes that could signal shifts in your business.
10. Cash Flow Management
According to a U.S. Bank study, 82% of businesses fail due to poor cash flow management. Your bookkeeper can assist you in identifying the trends necessary to understand your cash flow while also tackling issues before they escalate and cause long-term financial problems.
11. Financial Ratios and Analysis
With accurate information from your bookkeeper, you have the data to complete financial ratios and analysis, thus ensuring your business is healthy. Your analysis can also determine potential issues, including that your business might be carrying too much debt.
Compliance and Tax Services
Keeping your business financially stable also involves making sure it remains compliant. There are several ways that your bookkeeper assists with this process, including the following:
12. Sales Tax Reporting and Filing
With accurate numbers, you can file your sales tax and pay the correct amount, thus avoiding penalties and fees.
13. Payroll Tax Reporting and Filing
Your bookkeeper, as part of payroll management, will gather the information necessary for your payroll reporting and filing, thus ensuring that all the appropriate taxes are paid in a timely fashion.
14. Financial Compliance and Documentation
Although every state has different regulations, having updated financial statements is key to meeting compliance and documentation requirements. With the right bookkeeper in place, you have that documentation at your fingertips.
15. Liaising with Tax Professionals
Your accountant is charging your business based upon the amount of work they have to accomplish. When your bookkeeper has everything prepared and categorized, your accountant can complete their work in a timely fashion, saving you both time and money.
Software and Technology Utilization
Bookkeeping can be completed online, with a variety of software options available. You can even utilize a bookkeeping service to work with you remotely, using various software options effectively. With your bookkeeper in place, you can be sure that all of this information is handled securely and efficiently.
16. Bookkeeping Software Setup and Management
Today, bookkeeping services charge a setup and management fee to get your business caught up and ready to use their software. However, bookkeeping software makes it easier to do analysis and determine if potential errors have crept into your financials.
17. Cloud-Based Accounting Systems
Cloud-based accounting systems allow you to take advantage of quality bookkeeping services around the world, not just the local bookkeepers in your area. You can connect with the right expert, a bookkeeper who is familiar with your industry, regardless of your location. Plus, today’s cloud-based services provide additional layers of security to protect your data.
18. Automation and Integration
With a bookkeeping service, you can tie your bank and credit cards right to your software, allowing your bookkeeper to see transactions in real-time and automate categorization where appropriate. This level of integration is key to keeping your financials updated and accurate.
Financial Advisory and Support
Your bookkeeper is a critical part of your financial team, providing the data necessary for you to make critical strategic decisions regarding where you will invest capital in your company and what opportunities you will explore.
19. Budgeting and Forecasting
With the right data in place, your bookkeeper can work with you to determine the right budget for each area of your business based on historical spending data, as well as forecast where investment might be necessary, such as replacing or upgrading machinery. With the right bookkeeper in place, you have accurate data to make critical financial decisions for the longevity of your business and to assist you in making decisions that will benefit the future value of your company.
20. Cash Flow Analysis and Management
Cash flow analysis involves understanding how your business makes and spends money during a given period of time. Your bookkeeper can help you to gather this information and thus manage your cash flow effectively. The process helps you identify how much capital will be available in the future for expansion. It also helps you to understand how much cash you need to operate your business, such as paying employees, purchasing supplies, and managing debt.
21. Financial Consultation and Guidance
To get the best financial consultation and guidance, it is important to have accurate data. Your bookkeeper assists in ensuring your data is accurate, while also offering insights based upon their expertise in the financial world and in your specific industry.
Hiring a bookkeeper can be the best move for your business and its long-term financial health. However, to know whether to hire a bookkeeper in-house or choose a bookkeeping service, it is important to be clear about what you want your bookkeeper to handle for your business. Once you understand what your bookkeeper is capable of, then you can see how it will benefit your business in the long-term.
Frequently Asked Questions
1. Can I do my own bookkeeping?
Yes, you can, but as your business grows, the amount of work will grow with it. Additionally, you need to be aware that you might not have the expertise necessary as your business thrives.
2. Where can I find reliable bookkeepers?
Bookkeeping websites provide a number of options for reliable bookkeepers, by showcasing their expertise, education, and experience. However, you can also opt to use a bookkeeping service who vets their bookkeepers before assigning them to your business.
3. Can I hire overseas bookkeepers?
Yes, but they may not be familiar with your country’s financial laws and regulations, which could potentially lead to compliance issues.
4. What’s the difference between a bookkeeper and accountant?
A bookkeeper records and categorizes transactions, while an accountant interprets and presents the financial data, as well as providing tax advice, and conducts audits. The bookkeeper is focused on providing accurate data, while accountants provide financial advice and analysis.
What Is AccountsBalance?
AccountsBalance is a monthly bookkeeping service specialized for agencies & SAAS companies.
We take monthly bookkeeping off your plate and deliver you your financial statements by the 15th or 20th of each month.
You’ll have your Profit and Loss Statement, Balance Sheet, and Cash Flow Statement ready for analysis each month so you and your business partners can make better business decisions.
Interested in learning more? Schedule a call with our CEO, Nathan Hirsch.
And here’s some free resources:
Final Thoughts on Bookkeeping Services
Hiring a bookkeeper is a critical part of the growth of your business. With hiring bookkeepers, you can free up your time to focus on growth and expansion for your team. If you are considering hiring a bookkeeper, consider utilizing bookkeeping services that can provide multiple options for your business as part of your financial team.
