Small business owners wear a variety of hats; however, it’s never wise to take on more responsibilities than you can handle at one time. Bookkeeping duties are a must in order to keep a company afloat. No business can succeed without quality accounting. From a cost standpoint, it could be much more effective to use a professional for your accounting needs.
Most small business owners try to juggle a myriad of responsibilities in addition to their bookkeeping duties, which could prove to be detrimental should a minor detail go overlooked in the accounting. Full service bookkeeping revolves around every aspect of your company’s finances, which is what makes it so complex. Here are 11 reasons why you should hire a professional bookkeeper for your small business.
Clerical and Data Entry Responsibilities
Some of the most important facets of bookkeeping are verifying the accuracy of financial documents, managing company accounts, and the preparation of depreciation tables. Other general tasks include entering data into bookkeeping software or accounting spreadsheets. If the smallest accounting detail is overlooked, it could prove costly later on. Advancements in payment technology, the internet, and smartphones have made significant contributions towards the management and collection of data. Trying to keep your company’s bookkeeping organized is no easy feat. In order to find a solution that works best for your business, the following factors must be taken into consideration: the type of business you have, what industry the business is in, the number of employees who work for your business, and a variety of other factors. A professional bookkeeping service could possibly benefit your business, which would outweigh the costs tenfold.
Searching For Preventable Mistakes
Online bookkeepers are experts at searching for and correcting errors that could be found in your company’s financial records. On the surface, this procedure may seem easy enough. In reality, it can become quite complicated, depending on your company’s sales volumes and the nature of your company in general. You could end up spending extra money or face fines if the IRS finds any mistakes on your tax documents, mandatory payments, or glitches in your accounting software. Your company’s overall success and performance could also become skewed due to accounting errors, which could prove to be detrimental if you decide to take on a new business activity after your business is no longer profitable. Professional accountants can easily pinpoint mismanaged money from sales or ordering supplies and can find areas of your business that need improvement and help prevent future mistakes from occurring. It’s worth your while to invest in a professional bookkeeper – even on a part-time basis – to find and correct these mistakes for you.
Small Business Owners Can Focus on Other Areas
Imagine what it would be like if you didn’t have to spend time and money having to take accounting courses or learning all of the sophisticated facets of bookkeeping, just by hiring your own certified bookkeeper or accountant. Professionals have years of experience managing business finances, which means you’re in good hands, and you’ll have more time to focus on other areas of your business, like expansion or sales. Furthermore, most business owners are not familiar with the basics of bookkeeping, including whether or not you should use cash or accrual-based accounting procedures. While there is software that could assist you with some of the basics of accounting, it’s no substitute for an experienced professional bookkeeper.
Preparing Fiscal Documents
Professional bookkeepers can prepare most of the important financial documents that you need to assess your company’s fiscal health. These documents include a budget, forecasts, cash flow statements, and profit and loss statements or income statements. Balance sheets show the shareholder’s equity, any liabilities the business owner may have, and the assets of the business at any given time. The profit and loss statements or income statements show the profitability of a business during a specific period of time, such as a previous quarter. Cash flow statements show how money and cash equivalents are handled through a business. Bookkeepers can compute these metrics along with the business’s gross margin and the total rate of goods sold.
Preparing Financial Documents for Other Investors and Lenders
If you’re an investor and need to prepare financials for lender approval or to attract other investors to take down larger deals, professional bookkeepers can format your books and prepare your fiscal documents using accurate reporting procedures. There are accounting principles that are generally accepted. Otherwise known as GAAP, these principles can keep businesses organized in the event that a business owner needs to borrow money or seek out investors. Preparing the necessary fiscal documents required to acquire funding is not an easy task, which is why a professional bookkeeper can pay for itself over time. Lenders and investors will need to examine a company’s fiscal documents closely prior to the release of any type of funding. If the documents are missing important information or are incorrectly formatted, you may not be able to acquire the funds you need to grow your business.
Business operations that are efficiently managed have the ability to track fiscal statements as well as follow up on any pending payments from customers or clientele. If a business requires a longer turnaround time for recovery for invoices to be paid, it could negatively impact a business by reducing cash flow. For instance, healthcare organizations typically wait several weeks which gives insurance companies and patients time to make payment arrangements after life-saving procedures are performed. Predicting cash flow is much harder when there are delays in payment.
In order for finances to be managed appropriately, opportunities must be identified to increase cash flow by streamlining invoices and executing a shorter wait time for payments. Professional bookkeepers can review invoices regularly, and follow up on late payments or take necessary steps to write the bad debt off.
A treasure trove of information regarding your business could be revealed through a professional bookkeeper so long as the information is prepared and analyzed properly. They can come up with forecasts and projections, and report historical company data and existing financial statements.
They can assist business owners with the areas they need to improve or locate possible cash flow drains. Data evaluations could also expose occurrences of employee negligence or theft. If you are new to the business world, you should definitely consider consulting with a professional CPA or bookkeeper. They can help you figure out what type of business structure may work best for your business, and organize your business’s finances strategically.
Depreciation Schedule Preparation and Asset Tracking
Tracking business assets is another valuable service professional bookkeepers or accountants provide. They maintain lists of assets along with where they are located and their current overall value. They also use depreciation schedules to track and allocate asset costs over their lifetime.
Determining and assessing depreciation is complicated. There are numerous ways depreciation can be determined. One process could influence your ability to utilize another process later on. Depreciation can be claimed on a variety of business assets, including HVAC equipment, computers, vehicles, and more. Depreciation can be claimed on your business’s taxes, but some limitations have been instituted since the recent tax reform. Businesses can claim additional depreciation on assets that are currently in service; however, it’s recommended that you discuss this with a tax attorney to make sure this procedure is done properly.
Business tax rules are constantly changing, which can make tax preparation an extremely daunting task. Properly filing income and other taxes can be difficult, depending on your current personal tax situation. The IRS requires business owners to pay an assortment of taxes such as excise taxes, sales taxes, employment taxes, estimated taxes, or self-employment taxes. Projected quarterly payments from people who do not have taxes withheld from their income (like people with rental income, investors, freelancers, or business owners) must be sent to the IRS. Otherwise, daily compounding interest and expensive penalties could be incurred. Business taxes change each year. The corporate tax rate under recent tax reforms was lowered, while a new deduction was allowed for businesses, along with several other changes. Business owners sometimes have a tough time trying to stay on top of the tax laws since they have so many other things they are trying to focus on in their business.
Professional accountants can help business owners prepare tax returns for local, state, and federal governments each year, in addition to making payroll taxes, excise payments, or estimated tax payments. Calculating depreciation values to claim on business assets is not an easy feat during tax season. It’s easier to use a tax attorney instead of trying to figure out the changing Tax Code on your own. Professional bookkeepers can save you lots of money and valuable time by reducing your year-end liabilities.
Implementing and instituting financial controls makes your company more accountable, which can be very important if your business has equal partners or has several people involved. There are countless steps that must be taken whenever a business owner obtains business credit cards or establishes bank accounts.
The responsibilities of the people who have been given access to these accounts as well as any associated policies should be drafted. An established set of controls that determine how and when people can withdraw money at any given time, which employees have access to company credit cards, and which employees can make big purchases, should be put into place to keep track of your business’s spending activities. A business accountant can provide invaluable input and monitor all of these expenses for you.
Hiring a Professional Bookkeeper Can Help Your Company
Professional bookkeepers can help your company in so many ways. Bookkeeping is so multifaceted because it entails numerous aspects of finances and business, including accounting and taxation standards. Successful accountants know how to manage each facet of your business cycle, including paying employees, sales, and inputting information into accounting software or accounting spreadsheets. When you outsource this work to a bookkeeper, it can save your money and time. Bookkeepers can establish a system that monitors and collects your information and analyzes data for you. This gives business owners time to focus their attention on other aspects of their business, including building relationships with clientele, manufacturing oversight, or increased sales.
There are also a variety of financial documents that a company needs to have if considering future funding. These documents provide an accurate view of your business’s current financial state to potential lenders, investors, or business partners. Professional bookkeepers can keep a company’s cash flow streamlined, track and make necessary payments, and offer business insights for owners or managers. They can also help a business owner prepare their business taxes. Partners, single-member LLC owners, or sole proprietors (otherwise known as pass-through business owners) can claim some of their business taxes on their individual tax return. Bookkeepers can implement controls to make sure your business expenses are authorized properly. There are a variety of other ways that professional accountants can save a business owner money and time. Our team of professional bookkeepers at Anderson Advisors can help. Speak with a specialist today to see how our accounting services can help grow your business.