A Beginner’s Guide to Small Business Bookkeeping
Part of the accounting cycle, bookkeeping is the act of tracking, managing, and recording all financial transactions for your business. If the thought of bookkeeping is frightening, rest assured, there are a variety of small business accounting software applications on the market today that make the process easy, even if you’ve never recorded a financial transaction before
Overview: What is bookkeeping?
Bookkeeping is the proper recording of all financial transactions for your business. Bookkeeping involves a lot of attention to detail; everything from properly identifying and coding invoices, purchase orders, and vendor bills, to ensuring that bills are paid promptly
What is a bookkeeper responsible for?
Bookkeepers are responsible for accurately recording all financial transactions for a business.
Why your small business needs bookkeeping
It’s next to impossible to manage your business properly without bookkeeping. Imagine trying to run your business without knowing how much you’re spending on expenses each month, or not knowing how much money your customers owe you. Imagine not accounting for those expenses properly and then trying to prepare your tax return the following year.
You need to know how much money you have
Once you start a business, you become responsible for a lot of things. As a business owner, you need to know how much money your customers owe you and how much has been received. You also need to know how much money you need to spend in order to keep your business running smoothly.
How to Choose a (Great) Bookkeeper
Finding a good bookkeeper is an investment in your business
Many small business owners see their bookwork as an obligation to stop the taxman knocking. In fact it’s an integral part of running and managing a successful business. Your accounts, bookwork and transaction history, when accurately recorded, provide an important tool for all planning and decisions you make in your business and without it, you’re running blind
BAS Agent Certification
This is without a doubt the most important thing to look for in a bookkeeper. The Tax Practitioners Board holds a register of all qualified bookkeepers in Australia. Qualified bookkeepers must prove they have sufficient knowledge, qualifications, experience, insurance and ongoing professional development to sufficiently serve their clients. It is illegal to provide BAS services including entering GST transactions, Payroll and bank reconciliations without being registered
Experience
There are some things you just can’t teach and being a good bookkeeper is one of them – a good bookkeeper should have sufficient experience to answer your questions, know their way around accounting software, know where to go to get answers to the tricky questions and know when to refer to your accountant.
Skill Set
What range of business and accounting software can they use? Do they have a sound understanding in more than just the basic MYOB and Reckon (prev. Quickbooks AU). There is a huge range of software available and in many cases these out-dated program’s may not be the most time or cost-effective software for your business. If you’re going to change things up, will your bookkeeper be able to handle it?
Education
All registered BAS agents must hold a bookkeeping or accounting qualification. You should ask a potential bookkeeper what qualifications they hold so you know their level of understanding of the accounting systems. Ensure you have a bookkeeper who understands the important relationships between transactions and Profit & Loss and Balance Sheet. Holding additional or extended qualifications shows they have a varied or higher knowledge base.
How to Choose the Right Accountant for Your Business
Deciding that it is finally time to look for an accountant is a big step for any growing business, but you will have to make sure that your financial information — one of the most important areas in your business — is in the right hands
Certification and Experience
Passing the CPA exam is a difficult process — intentionally so. While all CPAs are accountants, not all accountants are CPAs. Make sure your accountant is trained well enough to meet the expectations and demands of today’s accounting profession. Although they got through some rigorous courses and exams in the past, they should also be taking continuing education and professional development courses to remain certified, licensed and on top of changing rules and regulations within the accounting landscape
Technology
Thanks to the rapid advances in technology, accounting software has become more robust — adding automation and tons of time-saving features — transforming accounting into a fast-paced and dynamic industry. Accounting software, like Xero and QuickBooks Online, helps improve productivity by performing tedious accounting tasks while reducing one’s margin of error with a single click of the mouse
Business Growth
Finding an accountant who has an empathetic ear and can truly connect and understand your business is essential. It is crucial that your business receives all the support it needs and that you are comfortable with the people handling your accounts. Remember that your CPA’s role does not stop at tax planning and preparation — they are your trusted business advisors. They can be your source of light when your business is facing uncertainties and they can help you make the right financial decisions when you need some guidance. Look for an accountant who would treat your business affairs as they would treat their own.
Services
As a business owner, time is money, and choosing the right CPA can buy you more time, allowing you to focus on achieving your goals. Some accountants are willing to do bookkeeping and payroll for example, on top of the usual services they provide. Other accountants stick to the core stuff only, like financial statements and tax filings. You’ll need to evaluate where your strengths and weaknesses are and what your pain points are — so that you can free up your time to run and grow your business.
Security
Although the digital age has opened the gates to faster and more convenient methods of handling information, it also brought along new risks and threats. Find someone who is proactive in taking regular security methods to keep their clients’ sensitive information safe. Do they use encryption software to handle your private information? What are their practices for data integrity and security? It is crucial that your CPA guarantees security that is “airtight” and has a very low risk of facing a security breach.
How to Hire Bookkeeping Help
Is it time to hire a bookkeeping service for your small business? Perhaps your business is growing, or you don’t have time to do it all on your own anymore. Whatever the reason, there are plenty of bookkeepers out there ready to help you keep your books in order.
Why Hire a Bookkeeper?
According to research by Clutch, almost half of small businesses (45%) don’t employ a bookkeeper, and a quarter of small businesses still record their finances on paper instead of a computer. Doing your bookkeeping by yourself isn’t easy. It can be easy to make errors or miss something important. Manual bookkeeping can also put your data at risk from damage or theft.
Hiring a Freelance Bookkeeper
Freelance bookkeepers can benefit your business in many ways. Because they typically work from home, their overheads are low and their fees competitive. Rates can range from $15-$50 per hour depending on the nature and range of work you want them to do—and you only pay for the hours you use. Freelancers are also business owners and stake their reputation on meeting deadlines and taking their work seriously.
Working With a Bookkeeping Firm
Bookkeeping firms may cost more than a freelance bookkeeper but for good reason. They bring a range of experience to the table, access to a larger team of experts, and guaranteed coverage. Unlike a freelance bookkeeper, if your dedicated bookkeeper takes a vacation or is otherwise unavailable, someone else can seamlessly step in
Understand the Difference Between a Bookkeeper and an Accountant
In your search for bookkeeping help, don’t confuse bookkeepers with accountants or CPAs. Many accountants provide bookkeeping services, but they can also prepare detailed financial statements (profit and loss statements, balance sheets, etc.).
What is the best way to find companies needing bookkeeping and accounting services?
To find companies who are need of bookkeeping and accounting services we need to market our company and reach through different mediums of marketing. Those companies who really need bookkeeping and accounting services can contact outsourcing companies, they can search from the internet and other mediums. If you have marketed your company good then there are more possibilities of getting selected. The other fact is that the outsourcing company should be genuine and provide professional services at competitive rates.
It is not an easy decision to take when looking for an accounting or bookkeeping service. You could be facing a dilemma of choosing an offline service over an online one. However, with the shortage of availability of good accounting services offline, it is recommended that you choose online accounting services
Industry Experience and Certified Staff – Make sure you are hiring an accounting and payroll agency with expertise and specialized knowledge of your industry
Cloud or Web-Based Service Architecture – Find an accounting agency that can provide you with immediate access to your own financial data anytime, anywhere using any devices
Metrics for Quality Assurance – The main reason you are hiring a third party accounting outsourcing agency is that they offer core functions that you lack