All businesses, including startups and small-scale businesses, require a bookkeeper and an accountant. Besides managing your business’s day-to-day finances, these professionals help you track cash flow and improve your businesses’ financial health. Read along for more information on bookkeeping and accounting services for small businesses.
What Can Bookkeepers and Accountants Do for a Small Business?
What are bookkeepers’ duties? What do accountants do? Like most small business owners, you probably find it tricky to differentiate between accounting and bookkeeping. Yet you need to allocate your limited resources and assign duties wisely.
While both bookkeepers and accountants track and manage your finances to streamline your tax reporting process, there are still some significant differences between the two.
Typically, bookkeepers are responsible for your business’ day-to-day record keeping. This can include recording transactions, maintaining a balance sheet, processing payroll, generating invoices, and merging accounts.
On the other hand, accountants analyse and process the data the bookkeepers put together. Accountants can use this data to create more complex financial reports or lodge the business’ taxes.
An accountant and bookkeeper can work side by side for a streamlined accounting process. For instance, when the bookkeeper records your financial details, the accountant counter checks the data and eliminates mistakes. Simply put, having both professionals ensures that your business remains compliant with tax requirements, offers a reliable cross-checking system, and strengthens your company’s financial picture.
How to Choose the Best Bookkeeping Service
Bookkeeping services are an integral part of every business. Bookkeepers can either break or make your organisation. Choosing the right professionals for this crucial role is vital.
So, what should you consider when looking to hire the best bookkeeping service?
Which Accounting Method Does Your Business Use?
There are numerous bookkeepers within Australia. However, not all of them have the expertise and experience to handle your business’s financial needs. In this case, when looking for a service, you need to consider your business’s unique bookkeeping needs, including the accounting method that you use.
Does the Bookkeeping Service Work With Your Accounting Software?
When blended with bookkeeping expertise and experience, technology helps to generate better financial insights. You need to evaluate the technology expertise of the bookkeeping firm.
If your business already uses specific accounting software, confirm that the bookkeepers have relevant experience in the same software.
Does the Bookkeeping Service Have Experience in Your Industry?
Hiring bookkeeping services involves bringing the right team to the table. In addition to expertise, the bookkeepers should have experience in your specific industry. Remember, bookkeeping, and accounting mistakes can cost your business big time. Don’t try to cut corners when choosing bookkeeping services for your company.
Why Is Bookkeeping Important for Your Small Businesses?
Bookkeeping can be the difference between a business’ financial health and bankruptcy. Every small business needs this service to maintain accurate financial records. Generally, bookkeeping allows businesses to organise, keep, and analyse financial data to determine their financial health.
By now, you understand that basic accounting and bookkeeping for small businesses is key in managing finances. Check out reasons why you should invest in bookkeeping services.
You’ll Be More Prepared to Lodge Your Taxes
Business tax filing can be time-consuming, challenging, and stressful for business owners, particularly those without an accounting background. Fortunately, bookkeepers prepare all necessary documents and keep accurate records throughout the financial year.
Without proper bookkeeping, it can be impossible to file an accurate tax return, meaning you might overpay the government, which could cause financial problems in your business. On the other hand, underpays can result in heavy fines and payments with high interests.
Besides filling your tax returns, the tax laws require you to keep accurate business records that the Australian Tax Office (ATO) can use in the event of an audit. However, only a tiny percentage of small businesses are audited.
Appropriate bookkeeping offers relevant justification if the ATO wishes to look at your business financial records. You can answer all questions regarding profits, costs, losses, tax returns and tax deductions.
Save Time to Focus on Your Business
Every choice a business owner makes has an opportunity cost that can either be the opportunities you won’t take advantage of or duties that you won’t handle. Meaning before settling for DIY bookkeeping, you should consider the cost of spending a percentage of your time on financial books. Remember, “time is money.”
Every minute you spend creating ledgers, preparing invoices, reconciling your accounts and other bookkeepers’ duties, you will be missing out on a chance to focus on other essential aspects of your business.
While bookkeeping is an integral part of running a successful business, it might not bring in new clients, improve your products, or directly boost business growth.
Luckily, you can hire a bookkeeper to manage your books, while you direct your time and efforts to growing and expanding your business.
Bookkeepers Can Identify Opportunities for Minimising Expenses
Tracking your business expenses and earnings is critical. Bookkeepers and accountants can quickly examine your costs and adjust your budget when necessary.
But how? They identify the services and products that boost your profits and pick out unnecessary investments for your business. For instance, some forms of marketing like newspaper advertising were previously a crucial part of small business marketing strategy- however, in today’s business environment, the investment might not be worthwhile. Therefore, you can lower your marketing budget and direct the finances to other areas.
Bookkeepers can help you analyse how things unfolded during your current year and make informed decisions when drawing up your next year’s budget.
Keep All of Your Financial Records Organised
Like most business owners, you are a pro in your profession, but you probably don’t know much about bookkeeping. While you might be financially savvy with some knowledge of QuickBooks and Excel, your level of expertise is incomparable to a professional bookkeeper’s knowledge.
Bookkeepers know and constantly learn new ways and processes for maintaining organised financial records. In addition, you may have a lot of duties that require your attention. With so much to handle, it’s easy to ignore some details here and there when managing your records. Unfortunately, in bookkeeping, a minor mistake can be costly.
Bookkeeping and accounting services ensure that you keep accurate and organised financial books and eliminate the likelihood of mistakes.
You might argue that an in-house bookkeeper can offer all the benefits discussed above. However, having a full-time in-house bookkeeper or accountant could cost you more than hiring a third-party service.
Bookkeeping firms can charge fixed prices for a combination of services or a specific service; others offer monthly subscriptions, while others charge by the hour. You can choose the price point that best suits your businesses’s needs and bookkeeping and accounting service budget.
The importance of bookkeeping and accounting services for small businesses cannot be overstated. Learn about Visory’s Bookkeeping Services.