Keeping accurate and up-to-date records is not only a universal best practice but also an accounting standard. Despite its significance, many businesses struggle with bookkeeping. Accounting software can help keep business records organized and streamlined, but it’s not enough to compensate for the lack of time and resources. Even if your business is small or has low annual revenues, keeping books isn’t something you can put off indefinitely. If you don’t take the time to maintain financial records now, you may have trouble in the future when taxes are due or when you want to apply for financing. And this is one of the many reasons most business owners prefer hiring bookkeeping services. This blog post will help you understand what bookkeeping services are and why they’re important. It will also explain what bookkeeping services your business should be looking for if you need help with your bookkeeping process.
What is Bookkeeping?
Before delving more into the importance and reality of bookkeeping services, it is important to understand what exactly bookkeeping is and what activities are integral to it. Bookkeeping is the financial record-keeping process that keeps track of your business’s financial transactions. The accountant or bookkeeper responsible for bookkeeping will help you organize and manage your business’s financial information, including cash flow, income, and expenses. Bookkeeping is not the same as accounting. Accounting is a broader set of financial activities that include everything from making financial forecasts to preparing income statements and balance sheets. Bookkeeping is just one part of accounting, but it’s critical. When you outsource your bookkeeping, your business accountant will likely do just that: keep track of your financial transactions, receipts, and payments. Bookkeeping services typically include more than just record-keeping.
Why is Good Bookkeeping Important?
A sound bookkeeping system is essential for all types of businesses, large or small. You’ll be able to keep accurate records of your business’s income and expenses, making it easier for you and your bookkeeper to comply with tax rules and prepare financial reports for investors and lenders. You’ll also be able to spot any problems with your books early on by comparing current figures with those from previous years. This can help prevent costly errors such as double-charging customers or overpaying suppliers. Inefficient record-keeping can lead to fines and audits by the federal or state tax agency.
Transparent and accurate bookkeeping allows you to make smart business decisions and plan effectively for the future. The best reason to have good bookkeeping is to understand your business and financial situation. Good financial records will help you track and evaluate your business’s performance, identify areas that need improvement, and forecast future cash flow and income. You’ll be able to figure out when to expect your next revenue or expense payment, reducing the risk of insufficient funds when an invoice comes due.
While hiring a bookkeeping service provider for your business can do wonders for your business’s accounting and bookkeeping process, you need to set some real results that you can expect. Your accounting and bookkeeping process needs much more than a bookkeeper or bookkeeping services. Let us learn about some common expectations that business owners have from their bookkeeping services providers and, in actuality, what bookkeeping services provide.
Bookkeeping Services Expectations and their Reality
- Expectations: The bookkeeping services provider takes care of accounting as well.
Reality:
The different service provider works differently, and while some can provide accounting services over the top of bookkeeping services, it is imperative to understand that accounting services are different from bookkeeping services, just like how accounting and bookkeeping are different. Your bookkeeper is meant to help you streamline your accounting process, not replace it. A good bookkeeper understands the importance of the numbers but not so much about why they are what they are.
- Expectations: Bookkeeping services providers are a partner in solving any financial issues.
Reality:
A good bookkeeper will help you with your financial situation. However, they can’t solve your problems. Your bookkeeping responsibilities will help you be more financially savvy, not solve financial challenges. This expectation can be a reality when you hire a service that provides accounting and bookkeeping services, which also provides accounting services and gives them the capability of handling financial issues.
- Expectations: Bookkeeping service providers can prepare tax returns.
Reality:
This is far from the truth; while your bookkeeping service provider caters to a wider range of bookkeeping needs for you, they do not cater tax services. They can help you prepare the books accurately to help with tax but not exactly file tax until and unless they have a tax accountant in their team who is certified to carry out such activities.
- Expectations: Bookkeeping services are costly
Reality: This adverse expectation is quite common despite how misleading it is. Bookkeeping services are not expensive; what is expensive is a DIY bookkeeping process or inaccurate bookkeeping. Business owner expects that hiring bookkeeping service will be costly; however, with so many service providers in the market, you can always get a service provider who fits your budget perfectly. Also, it is better to have a group of experts working on your books instead of hiring 1 or 2 bookkeepers internally.
Bottom line
The different bookkeeping service provider works differently. A few provide accounting and bookkeeping services, while others only can provide bookkeeping services only. Bookkeeping is critical to business operations, and outsourcing it can help your business run more efficiently. However, you should be aware that many different services fall under the umbrella of bookkeeping, and some are more valuable than others. If you want to ensure that your business gets the most out of its bookkeeping services, make sure to select a provider that can do more than just record transactions.
Keep accurate records -this is the most important thing you can do to keep your business running smoothly. A good bookkeeper will help you keep accurate records and ensure you don’t miss any details. You should also be able to ask your bookkeeper any accounting questions that you have. This is the most important thing that you can do to keep your business running smoothly. A good bookkeeper will help you keep accurate records and make sure that you don’t miss any details. You should also be able to ask your bookkeeper any accounting questions that you have. If you aren’t happy with the level of service that your current bookkeeper is giving you, consider hiring a new bookkeeper. Make sure to hire a service provider with experience working with your industry’s businesses. This will help your bookkeeper understand the specific challenges that you face in running your business, making it easier for them to solve your problems
