Facts About Bookkeeping Services for Small Businesses

The maintenance of accurate financial records is essential to the success of any organisation, yet doing so may be laborious and time-consuming. If you are having difficulty keeping up with the everyday responsibilities associated with bookkeeping, the following suggestions may be helpful.

One approach to remain on top of your financial situation without wasting valuable time or becoming overwhelmed is to hire a professional to handle the work for you. Let's take a look at the many positive aspects associated with contracting out your bookkeeping responsibilities.

The importance of bookkeeping services is frequently disregarded by small enterprises. These services, on the other hand, can be quite useful for your company because they free up a significant amount of your time so that you can concentrate on expanding the business rather than wasting it on administrative tasks.

If you are contemplating making use of bookkeeping services for your company, the following information concerning those services is something that you ought to be aware of.

People who operate their own businesses frequently lack previous expertise with accounting procedures, which may cause them to feel uneasy when they first begin keeping track of their accounts using a spreadsheet or some other type of software.

However, learning how to maintain books comes with a number of benefits, some of which include the capacity to save money by estimating tax due and reducing the number of mistakes made while reporting earnings.

Know These Important Bookkeeping Facts, Especially If You Own a Small Business

Bookkeeping is the process of recording, preserving, and retrieving information about monetary transactions for an entity such as a business, a charitable organisation, an individual, etc.

The recording of everyday business and financial activities can be included in bookkeeping.

• remunerating one's vendors
• client billing for services rendered or merchandise supplied to customers
• preserving evidence of payments received from clients
• putting away bills and receipts
• dealing with the payroll of employees
• financial disclosure
• keeping an eye on outstanding invoices
• accounting for the cost of depreciation
• and more

What Distinguishes Bookkeeping From Accounting?

Bookkeeping and accounting are two different processes that are essential to the operation of any organisation, despite the fact that both must be done.

Accounting is the process of evaluating, classifying, analysing, reporting, and summarising financial data, whereas bookkeeping is the recording of financial transactions.

Interpreting and analysing data is part of the accounting process but is not part of the bookkeeping process. A broad perspective: bookkeepers are responsible for the recording component of all accounting operations, while accountants are responsible for all aspects of the accounting process.

The single-entry system and the double-entry system are the two primary formats for maintaining financial records and books of accounts. Single-entry bookkeeping is the method of choice for organisations that handle a low volume of relatively straightforward transactions.

This system keeps track of the cash sales and business expenses that are paid for when they are incurred. A cash sales log, a cash disbursement journal, and bank statements are the components that make up a single-entry bookkeeping system in most cases.

It is not often utilised for businesses that have accounts payable or accounts receivable, as well as those that engage in a great deal of capital transactions. Bookkeeping systems with double entries are utilised by companies that engage in more intricate operations.

The method of bookkeeping known as double entry records each transactions as either a revenue or a cost item. After that, a second entry is made in order to link the transactions to the account that corresponds to them.

Software For Bookkeeping Is Frequently Used By Small Businesses

These days, many small firms use bookkeeping software rather to the more conventional record-keeping methods to handle the majority or all of their accounting needs.

The double-entry methodology is utilised by many popular bookkeeping programmes, such as QuickBooks; however, the user is not required to have extensive knowledge of the double-entry method in order to use the software.

The software is typically made to be simple to use and can assist reduce the number of errors that occur in bookkeeping.

Benefits of bookkeeping software

• can handle the processing of accounts more quickly
• Improve the reliability of your reports
• delivers essential reports for accounting purposes
• simplifies the process of filing the company taxes
• the backup of data
• more benefits of bookkeeping software

The use of bookkeeping software is getting more and more prevalent in the realm of small businesses. It is an efficient means by which owners of small businesses can obtain the financial information that they require.

It would be much simpler for you to submit your tax return if your books are well organised. To begin, you will need to compile all of the financial documents and sort them into the appropriate categories. Accounting software such as Quickbooks makes it possible for small businesses to more easily monitor and organise all of their financial data. During tax season, this can assist to alleviate tension and prevent frantic last-minute rushing.

Even if you engage an accountant to assist you with the bookkeeping, you still need to ensure that all of your paperwork are current.

Since an accountant can only work with the data that is given to them, it is imperative that any mistakes or adjustments be rectified as soon as they are discovered.

A person who keeps a record of the day-to-day financial activities of an organisation is known as a bookkeeper. Bookkeepers are primarily responsible for writing the daybooks that are kept in their departments. The transactions related to sales, receipts, payments, and purchases are all recorded in daybooks. A bookkeeper is responsible for recording whether the transaction was paid for with cash or credit. Bookkeepers are responsible for recording transactions not just in the main ledger but also in the ledgers for customers and suppliers.

Bookkeepers often document financial transactions for small enterprises.

• cash
• accounts receivable
• inventory
• accounts payable
• loans payable
• payroll expenses
• owners’ equity
• retained earnings

Bookkeeping has the potential to become your closest friend and the reason why a firm operates efficiently if these things are recorded in the correct manner.

Important Information About Bookkeeping

Bookkeeping is one of the most critical components of running a company of any size, regardless of whether it is located in the Philippines, in California, or anywhere else in the world. This is true regardless of the size of the firm. Keeping tabs on your finances might seem like an insurmountable task, but the good news is that it doesn't have to be. You may improve your skills as a bookkeeper by paying attention to these five fundamental facts.

What Is Bookkeeping?

The activity of keeping accurate records of a company's, organization's, or an individual's financial activities is referred to as "bookkeeping." This encompasses the total amount of money that enters and leaves the company. It is of assistance to owners of businesses in monitoring whether or not they are making a profit. Bookkeepers are accountable for the recording, categorising, and organising of all of an organization's financial information.

Bookkeeping and accounting are two distinct but related processes that are sometimes misunderstood for one another. While bookkeeping is the process of recording all financial transactions, accounting is the process of using the information provided by the bookkeeper to interpret and analyse financial data and use that information to make strategic decisions. Bookkeeping and accounting are two different processes.

What Is An Account?

An account is a record that is kept in bookkeeping of all of the financial transactions that pertain to a particular category. There are five primary categories of accounts, which are as follows:

• The resources that are owned by a company are referred to as its assets (e.g. Cash, Accounts Receivable, Equipment, Inventory, Real Estate, Supplies, etc.)
• A company's liabilities consist of its outstanding debts and obligations (e.g. Accounts Payable, Loans Payable, Interest Payable, Income Tax Payable, etc.)
• The outflow of cash that occurs as a result of purchasing a good or providing a service is referred to as an expense or an expenditure (e.g. Cost of Goods Sold, Insurance Expense, Utilities Expense, Payroll Expense, etc.)
• The influx of cash that is earned by a company is referred to as its revenues or income (e.g. Sales Income, Service Revenue, Interest Income, Rental Income, etc.)
• as well as Equity, which can be defined as the value of a company's total assets minus the value of its total liabilities (e.g. Retained Earnings, Stock, Dividends, etc.)

Which Two Types Of Bookkeeping Systems Exist?

The single-entry system and the double-entry system are the two primary formats for maintaining financial records and books of account.

The cash book is the only record that is kept in the single-entry system, which only analyses cash coming in and cash going out. As a result, information regarding each transaction would be recorded in just one account within a single cash book. Small firms that do a limited number of straightforward financial transactions may find this approach to be useful.

Single transactions are recorded in the double-entry system as two separate entries: one for the debit side and one for the credit side. After a transaction is recorded in one account, it is afterwards followed by an entry in the opposite account that corresponds to it. Companies that handle more intricate financial dealings make advantage of this technology.

What Other Terms Are Required?

The following is a list of some of the most common bookkeeping phrases that you should be familiar with.

• The balance sheet is a highly significant report that reveals the overall financial health of your company. It may be found in the annual report. It takes into account both the assets and the obligations, as well as the capital or equity, as of a particular point in time.
• Income Statement is another name for this report, which is also known as the Profit and Loss Statement. It solely details the accounts for income (revenue) and expenses, together with their current balances.
• A trial balance is a financial statement that displays all debits and credits associated with a single account. It is necessary to achieve a balance, which indicates that the amounts of credit and debit must be equal.
• A chart of accounts is an exhaustive list of accounts that is utilised to classify the monetary transactions that take place within your company.
• General Ledger – In this primary section of the accounting ledger, each and every transaction involving the company's assets and liabilities is recorded.

What Advice Could Help With Bookkeeping?

Utilise bookkeeping software

An accounting book can be used to keep track of more straightforward financial details. Nevertheless, making use of spreadsheet programmes such as Google Sheets or Microsoft Excel might be an excellent place to begin. You will need to make use of bookkeeping software such as QuickBooks or Xero in order to perform more advanced recording.

Keep track of all financial transactions

It is of the utmost significance to ensure that each and every one of your financial dealings are recorded. It would be of great assistance to you in this endeavour if you stored your documents and receipts in a safe place.

Follow a schedule

Make it a top point to keep track of all of your transactions and to frequently close out your books. Developing a routine of regularly updating your records might become second nature if you commit to following a timetable.

When it comes to running a company, keeping accurate books can be an extremely tough endeavour. You might find that the helpful information provided here is an excellent beginning to begin doing it on your own. On the other hand, when your company expands, the accompanying volume of bookkeeping work will inevitably increase as well. Therefore, it is essential to be aware of when it is necessary to seek the assistance of a professional for bookkeeping and accounting services.

Activities That Bookkeepers Perform for the Benefit of Small Businesses

Creating invoices, following up on payments, helping you get ready for tax deadlines, and processing payroll are all tasks that are included. These are just some of the many tasks that bookkeepers take on for companies of this size. You can learn more by reading this blog.

• Day to Day Management of Accounts
• Upkeep of Current Records
• Keep Companies Compliant with Laws
• Keep Your Taxes Prepared
• Control Bank Feeds
• Handle Accounts Payable
• Sending Out Invoices and Keeping Track of Outstanding Payments
• Get Financial Statements Ready
• Perform Payroll
• Deal with Exchange of Foreign Currency
• Conduct a Stocktake
• Pay Attention to Cash Flow
• Preparing the Books For an Accountant
• Is a Bookkeeper Necessary For My Small Business?

Management of Accounts on a Day-to-Day Basis

A bookkeeper is someone who can monitor the financial records of your company on a regular basis and keep track of all the transactions. It is considerably simpler for them to monitor your cash flow because they keep detailed records of each sale and buy and use software to manage all of these transactions. In addition, it reduces the amount of time spent entering data.

Keep Current and Accurate Records

Hiring a bookkeeper can ensure that all of the records for your company are accurate and up to date. In addition to this, it will be their responsibility to point out any discrepancies that exist between the books and the accounts of your company and to ensure that any issues are resolved as soon as possible.

Keep Companies Compliant with Laws

Tax is a potentially contentious topic. With just one slip-up, the dreaded letter from the ATO might soon be on its way to you. Bookkeepers come in handy at this point because they are able to assist in ensuring that your company continues to comply with the applicable legislation. Keep in mind that they are just intended to be of assistance and not to contribute to more serious issues.

Maintain Your Preparedness For The Taxes

In the same manner as the laws and regulations, the deadlines for paying taxes are extremely stringent. Unfortunately, keeping up with the books is typically never a priority for most small firms, which means that important deadlines can easily be overlooked. A bookkeeper will ensure that your records are accurate so that you are always prepared for tax time. This will ensure that the tax collector is pleased with you and prevent you from having to pay any additional fines.

Control Bank Feeds

Bookkeepers are responsible for managing transactions that come in via software, such as an app, at the most fundamental level. The bank feeds that connect the programme to the bank account you use for your company make it possible for you to view each transaction as it happens in real time.

Accounts Payable Management

Bookkeepers are the individuals who will typically be responsible for making payments on behalf of your small business. This might encompass everything from the payment of invoices to suppliers to the handling of petty cash and costs.

Sending Out Invoices and Keeping Track of Outstanding Payments

Bookkeepers have a number of responsibilities, one of the most significant of which is preparing invoices and delivering them to customers in a timely manner so that businesses can be paid on time. It is highly possible that a bookkeeper will be responsible for managing the accounts receivable ledger as well as pursuing overdue payments in order to ensure that your records are always accurate.

Get Financial Statements Ready

Bookkeepers will also be accountable for the preparation of important financial statements for smaller companies. Statements of profit and loss, balance sheet, and cash flow are examples of what can fall under this category.

These financial reports detail the bottom line and operating expenses of a company, in addition to the balance of assets and liabilities, cash flowing into and out of the company, and the overall assets and liabilities of the company.

Perform Payroll

There is no standard set of services that all bookkeepers provide. Some, for instance, are able to handle payroll and other human resource functions on behalf of small enterprises. This may include supporting firms with the processing of employee paychecks and tax payments.

Deal with Exchange of Foreign Currency

Bookkeepers are also responsible for ensuring the accuracy of foreign currency accounts by making use of the most recent exchange rates. Using suitable digital bookkeeping tools that can rapidly analyse currency rates without wasting much time will make this process significantly simpler and more efficient.

Conduct a Stocktake

Bookkeepers are also responsible for producing inventory reports for small enterprises by counting the things in stock. They report back to the company if there are any inconsistencies in order to ensure that you are able to address issues as soon as possible.

It is typically done at the conclusion of a company's fiscal year, with the results appearing in reports such as profit and loss statements. This is the most usual time for it to be carried out.

Maintain Vigilance Regarding Cash Flow

Making certain that the company has sufficient funds for day-to-day operations is one of the bookkeeper's most important responsibilities for a company that is relatively small. They are able to accomplish this by keeping a close eye on the ratio of revenues to expenses and providing additional counsel in the event that the company requires more cash on hand to continue operations.

Getting Ready for an Accountant's Books

When an accountant requires access to the accounts, it is the responsibility of the bookkeeper to ensure that they are accurate and up to date. This affords the accountant the opportunity to apply their expertise in the form of business recommendations and the completion of any tax returns.

Does My Small Business Require the Services of a Bookkeeper?

In a few words, yeah. However, despite all we've discussed above, it doesn't always follow that you need to hire an expert to help you out with this. When you are familiar with the process, despite the fact that it may sound like a lot of labour, it is actually fairly simple.

You can get a good idea of how simple it is to keep the books for your company if you conduct some research on the subject, participate in some bookkeeping-related events that are offered for free, such as workshops and webinars, or even practise using a digital bookkeeping application.

Tools for Accounting & Bookkeeping That Small Businesses Love

Accounting is an integral part of the operations of any small business; nevertheless, most small firms lack the resources necessary to justify the engagement of an accountant. Therefore, in many situations, the responsibility falls on them to figure out that aspect of the situation on their own, which leads many of them to investigate accounting software. However, the environment for those solutions is crowded, and it can be challenging to figure out where to begin looking for them.

Intuit QuickBooks Online

Pricing: Starts at $12.50/month

Intuit Quickbooks

When you hear the words "small company accounting software," it's possible that this particular resource is the first one that springs to mind for a good reason. Receipt capture and round-the-clock online help are only two of the ways that this programme distinguishes itself from competitors in addition to its impressive array of features.

Additionally, interfaces with Shopify and PayPal as well as Square are included. Quickbooks is a small business accounting software that is well-liked by many people due, in part, to the inclusion of these features as well as several others.

You are able to monitor your income and expenses, generate reports, provide estimates, monitor your sales and taxes, record and organise receipts, and send invoices and accept payments if you subscribe to any of our programmes. You can even manage full-service payroll with some of the more expensive plans, which also give you the ability to track inventory and time.

Best for Businesses Seeking a Method That Has Been Used Successfully Before

Quickbooks by Intuit is widely considered to be among the most popular accounting programmes for smaller companies, if not the most popular. It has been around for a sufficient amount of time for you to have a good understanding of what you're getting when you invest in it — a solution that is readily available, reasonably priced, and tried and true, and that can accommodate an organisation of practically any size. Consequently, if you are looking for a risk-free option that combines great usability with dependable performance, you should think about investigating Intuit Quickbooks.

FreshBooks

Pricing: Starts at $4.50/month

FreshBooks is a clear solution that takes pride in improving the efficiency of accounting for small businesses. The software that FreshBooks provides can reportedly assist users save up to 46 hours per year when it comes to the process of paying their taxes.

The platform interfaces with a wide variety of business software and gives you access to a centralised dashboard from which you can handle your accounting and financial matters. Consistent and safe backups are offered, and a mobile app gives you the ability to monitor your company whenever and wherever you are.

Businesses that have subscription models or send out recurring invoices will benefit the most from this feature.

FreshBooks may be the perfect solution for your company if you need the capacity to log time, send out regular invoices, or operate a firm that is based on a subscription model. Its comprehensive set of resources makes it an attractive option for businesses that meet those criteria.

It even has a function that enables you to view the precise point at which a customer saw your invoice, so allowing you to avoid those annoying excuses such as "I never got it." It is undoubtedly something to take into consideration because it offers reasonably priced solutions that can suit enterprises of practically every size.