If you’re new to running a business or a small business owner, keeping track of your finances is essential to making accurate business decisions. Aside from handling your bookkeeping tasks on your own and hiring an in-house bookkeeper, there’s another option for you: relying on bookkeeping services. If you’re wondering what bookkeeping services include and how your business can benefit from a bookkeeping service, check this article for the answer!
What do bookkeeping services include?
Bookkeeping services include keeping records and tracking your company’s financial activities. Like an in-house bookkeeper, bookkeeping services are obliged to detail your company’s operations in financial statements regularly. These reports indicate your company’s financial situation as well as its progress. Bookkeeping services provide precise, up-to-date accounting transactions so that your accountant can compile annual financial statements and tax filings for your company.
However, it is crucial to note that a bookkeeping service is different from accounting. Bookkeeping relates to maintaining day-to-day financial records, while accounting refers to preparing, reporting, analyzing, and summarizing financial data collected by bookkeepers.
Besides maintaining financial records, bookkeeping services include the following tasks:
Data entry is simply recording financial transactions or keeping track of what enters and goes from your business. It is the basis of accounting and finance services since reliable economic data is required for business accounting.
An accurate data entry process provides business owners and other stakeholders with an accurate and fair picture of how your company works.
Bank reconciliation is the process of comparing financial activities in your books of accounts to the transactions reported in your bank statements. This process aims to ensure that the financial activities documented in your accounting records equal those reported in your bank statements.
Bank reconciliation is important for any business since it assists in identifying and correcting data entry errors or ignored activities.
Accounts receivable, accounts payable, and payroll
Bookkeeping services guarantee that your clients are invoiced, and your payments are collected on time, avoiding delivery delays or supplier credit holdbacks.
Besides handling accounts payable and receivable, a bookkeeper is also in charge of payroll services. This includes calculating employee salaries, adjusting deductions, and ensuring that the net salaries are paid to the employees on the required due date.
Monthly financial reports
Each month, a bookkeeper must prepare financial information to track your company’s performance. These financial reports include:
- Balance sheet – a statement that represents your company’s current finances.
- Profit and loss – a statement that tracks income and expenditure and indicates whether your company makes money or not.
- Cash flow statement – a statement that documents all money transfers and displays the amount of cash
- Accounts receivable – a report that shows the creditors or the money due to customers and when these debts are overdue.
- Accounts payable – a word that shows the debtors or the amount owed to suppliers and when this bill is due.
These reports show whether your company is making a profit and whether it has enough money to cover its day-to-day activities. Failure to maintain such records correctly might influence your business estimates, client terms of payment, and corporate investment.
You might also be interested in:
- Accounting Vs. Bookkeeping: What Are The Differences?
- All You Need to Know About Outsourced Accounting Services
How can your business benefit from a bookkeeping service?
Deciding whether to hire a bookkeeping service might be difficult for a small business owner. You might consider some outstanding advantages of using bookkeeping services:
Concentrating on core operations
As a small business owner, you have to deal with essential functions such as marketing, manufacturing, and customer service. As a result, you might be unable to spend more time controlling spending, processing payments, and collecting payments on schedule.
On the other hand, hiring a bookkeeping service can handle all of these tasks, giving you more time to focus on growing your business.
Compliance with regulatory and statutory laws
A bookkeeping professional guarantees that you always conform to accounting laws. Additionally, they will verify that your finances and records are up to date if the regulations alter. You will save time because you will not have to dive into the minutiae of learning the laws on your own.
Access to accounting and bookkeeping software
Instead of subscribing to multiple accounting and bookkeeping software or hiring a bookkeeper, bookkeeping services often offer small business owners access to various accounting and bookkeeping software.
You can easily access your business’s fundamental financial statements, such as income statements, profit and loss, cash flow, and bank reconciliation. Moreover, the bookkeeping service will ensure that the input information is correct so that you’ll see well-organized documents and trustworthy information instead of figuring out everything on your own.
Get ready for tax season
If your accounting records are up-to-date, you won’t have to worry about collecting your invoices and receipts and filing your tax returns. A bookkeeper is responsible for maintaining income reports and a trial balance. It also means you’ll save more money and get the most out of your tax breaks.
Get a clear view of your finances
Well-maintained accounting information is essential since they help you understand your money and help you take a loan out when necessary. For example, basic financial statements, such as profit and loss statements, balance sheets, and spending reports, provide a clear and accurate picture of your company’s health.
The bottom line
If you’re a small business owner, you know that you have to keep track of the endless bookkeeping tasks. While focusing too much on one aspect, you might lose focus on other important aspects, such as the business’s core value, strategy, or customer relations. Hiring an in-house bookkeeper or bookkeeping services is ultimately up to you and the demands of your business.
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