Various Services of a Bookkeeper

Bookkeeping functions and accounting services are many and different. They are scaled to meet several needs of their client businesses. It is important for business owners to know these functions and services. They can then choose the functions that fit their needs and come up with a mix of financial services that suits their business needs.

The basic duties of a bookkeeper are to

·        track receivables and payables

·        Document all financial transactions.

These two duties spin off a tide of work.

A bookkeeper will also

• Ø  manage payroll,
• Ø  handle cash and bank deposits,
• Ø  create and maintain monthly financial reports,
• Ø  produce often impromptu management reports,
• Ø  compute, manage and remit taxes to the appropriate government bodies,
• Ø  reconcile bank statements to the cash book and
• Ø  interface with auditors during an internal or tax audit.

A bookkeeper’s service is also indispensable for obtaining a bank loan, acquiring new partners or shareholders. A bookkeeper will also advise on accounting software suitable for the business.

The business receives a system of checks and balances that ensure the financial health, success and power of a business – a system implemented and maintained by a bookkeeping service like True Numbers. We create and encourage uniformity in tracking, paying and reporting. The value of doing so is immense and insulate your business from many costly and dangerous risks. Waste and mismanagement of supplies and inventory is easily spotted.

If you have been keeping your own books, you want to change your tactic. It will take time but a good bookkeeper will be able to undo the damage already done. If you will let a bookkeeper manage your books going forward, you will see a return on investment. You will also have more time to run the business instead of working for the business.

There’s no question that a bookkeeping service saves you time and money. Even so, the processes and consistency introduced by a bookkeeping service can increase the longevity and efficiency of your business, making you more organised and profitable for decades to come.

Tax Tips for Business Owners

Want to avoid paying more than you should come tax time? Or a frantic last minute
search for missing financial records?
New business owners have a lot on their plate, and can easily lose track of an
approaching tax deadline or financial data needed to submit their return.

Organization is key when preparing for tax time. As is taking advantage of the many
tools and resources out there to support new entrepreneurs.
Set yourself up for success by following these four pillars of painless tax prep.

1. Commit to clean bookkeeping from day one

Year-round, effective bookkeeping is the best way new business owners can minimize
tax season stress. With the wide range of accounting software out there, there’s no
reason to rely on time consuming manual methods that leave room for error.
All-in-one options like Xero, KashFlow and QuickBooks automate your most important
bookkeeping processes, including:

·         Tracking expenses;

·         Tracking sales and income;

·         Creating and sending invoices and

·         Managing inventory.

With your financial records all in one place and up-to-date, you’re better positioned to
maximize your refund, while avoiding penalties associated with incorrect or incomplete
tax returns.

2. Capture every business expense

Each year, 21% of small business owners claim less than half of their business expenses,
largely because they don’t have a reliable system for documenting expenditures while
on the go.
Without carefully logged receipts, entrepreneurs must forfeit valuable tax deductions,
sacrificing cash they could be funneling back into their business.

Cash in on claimable expenses by using a mobile app to record receipt data, track
mileage and generate expense reports. As an added bonus, many of these tools sync
with your all-in-one accounting software.

3. Separate business from personal

Right from day one, small business owners should clearly divide their personal and
business expenses. Differentiating between the two will make it much easier to claim
deductions on your tax return – and support those claims in case of an audit.

Recommended steps to separate your business and personal finances include:

·         Create a separate bank account for your business, and designate a credit card
solely for business purposes (this will help you track expenditures while building
up your credit and borrowing power);

·         Never combine business and personal expenses (for example, if you buy printer
ink for your home and your business at the same time, ask for two separate
receipts);

·         Pay yourself a set salary from your business checking account each month (this
will help you determine how your income, as well as the business, will be taxed).

4. Always consult with an accountant

Not sure exactly what you can claim as a business expense? Wondering which
accounting software to use or how to interpret local tax regulations?
Consult with an accounting professional to put your mind at ease – well before the filing
deadline! In addition to managing the nuts and bolts of tax preparation, regular
meetings with an accountant will help you continuously improve bookkeeping practices
and better understand the financial workings of your small business.
Those organizational strategies you commit to now will promote positive relations with
your local tax authorities – and the long-term financial health of your company.

BOOKKEEPING AND GREAT BUSINESS CONCEPTS 2

Different specialisations available in the field of finance means different finance professionals bring different skill sets to the table. This gives rise to varying degrees in rank, expertise and service fees. Start-ups have to choose the right skill set for the job at each point in time. Business owners should consider team composition to be flexible. It is normal for the business team to change, evolve, and grow as the business itself does. Yet in the face of change some things will stay the same. The accounting function will always be required.

Bookkeeping, often called record keeping, is that branch of accounting that records transactions and business events in the accounting system. This accounting system can be manual as in paper records or electronic as in an accounting program like Quickbooks, Xero, etc.

Bookkeepers generally have a good understanding of GAAP and are responsible for dealing with a company’s daily financial details. Accountants rely on the meticulous records maintained by bookkeepers. This means bookkeeping is the foundation of accounting. Bookkeepers often have to exercise judgment calls and analytical skills when recording transactions since they are the major source of accounting information in the business.

Accountants use their knowledge to establish the procedures a company needs to follow for accurate financial record keeping. Once the needed information has been collected (by bookkeepers), they analyse it to provide valuable business information. The accountant can reveal the business’ strengths and weaknesses, create strategies for improvement, identify or prevent fraud, plan wisely for tax season, and prepare for future growth.

Large companies will employ both. Smaller businesses will usually have bookkeepers for reasons of cost and complexity of transactions. Accountants are more expensive to retain full time and small businesses do not normally have very complex transactions. Since bookkeepers are all about the details while accountants focus on the big picture, the smart move for small businesses is to retain a bookkeeper and have accountants consult on bigger issues like business growth and improvement strategies.

Even so, professionals from both fields play vital roles in maintaining the financial health of any organisation, whether big or small.

BOOKKEEPING AND GREAT BUSINESS CONCEPTS

Every great business begins with a winning idea. A good entrepreneur is one person with such an idea and the skill and will to make a success of it. However, there are several steps between conception and success. Rarely will one individual have all that is required to see that great business concept through. It will more likely take a team, each member with a distinct skill, set to achieve success.

This well-known fact so often only gets verbal affirmation from entrepreneurs. So many owner operated businesses stay stunted not for a lack of capital or a sound business idea but from the inability to assemble a great team. At the bottom of this attitude is a fear of letting go. The owner fears losing control and so the potential of the business is limited to what its founder can do - pretty much by himself.

Stagnation is the best results obtainable in such a scenario. This result is unacceptable because if the business is not growing, it is dying. Businesses must move with the times and seasons of their industries if they are to remain competitive. Vesting a measure of control in verified professionals is not a choice but a necessity.

Since this is the case, the owner must investigate the modalities of choosing business partners, peers and contemporaries with an eye on the success of their original business idea. A finance professional is indispensable to a good business team. Business owners with scant financial background that do their own accounts miss out on the expertise a trained professional provides.

The question few know to ask: Do I need an accountant or a bookkeeper? This is the question I will be discussing in my next post.

FIVE REASONS TO RETAIN A BOOKKEEPER

FIVE REASONS TO RETAIN A BOOKKEEPER

Understanding a company’s financial position and net income or loss is critical in running a business. Without this information, it’s virtually impossible for stakeholders in a business to make informed decisions about strategy and day-to-day operations. This is merely one reason of many, bookkeeping is key to efficient and effective business operations.

Accurate Financial Reports

Financial reports such as the balance sheet, income statement and statement of cash flows are critical for ownership and executive leadership. The balance sheet illustrates assets, liabilities and capital structure, while the income statement details revenue, expenses and net income. The cash flow statement delineates operational, investing and financing cash inflows and outflows. All of this information comes from the general ledger system, which is updated by the bookkeeping process.

Accurate financial reports allow business owners to make strategic decisions in a confident manner, and they also help keep a business alive. If there isn't enough money to make payroll or meet the obligations the business faces, business owners must know and take the appropriate steps to correct the situation. Without accurate reporting, a business can become off course and management won’t know until it's too late. This is especially true when it comes to capital structure and cash flow. Too much debt and high payments can spell disaster for business. Bookkeepers are essential for tracking issues.

Managing Receivables

Keeping on top of money owed to a business is extremely important, especially if the company is short on cash. Bookkeepers can generate accounts receivable reports that detail the ageing of accounts receivable. These reports can help managers gauge cash inflows, along with the potential for collect-ability. Without bookkeeping and the deposit of checks in banks, and the closing of receivables in the general ledger system, it would be very difficult to track receivables.

Managing Payables

Similar to accounts receivable, bookkeepers can create accounts payable reports that illustrate the money a business owes to third-parties. If a company doesn't have enough money to pay its payables in a timely manner, it’s possible that the business may need debt financing or other sources of capital. Payables must be managed in such a way that a business doesn't run out of working capital, while at the same time not missing critical obligations that can impact he long term success of the business.

Payment of Taxes

When bookkeepers update the general ledger and financial statements are prepared, it becomes possible to pay estimated tax payments. It also becomes possible to fill out year-end tax returns. Estimated tax payments are based on net income, while tax returns itemize the gross revenue and expenses to arrive at net income. Without bookkeeping, state and federal agencies would not get the proper amount of tax due. Tax troubles could ensue, if accounting records fail to illustrate the activities of a business accurately.

Payment of Employees

Bookkeeping also helps facilitate the payment of employees through accurate record-keeping, bank reconciliation and communication with the payroll function. If there isn't enough money to make payroll or pay the appropriate business entities, then bookkeepers can assist management with determining how much money is needed, and when it needs to be sent to the appropriate parties. Without having an effective bookkeeping and payroll process in place, a business will fail to survive.

Bookkeeping is a critical process that can make or break a business, which is why it’s important to understand the accounting cycle, how financial consolidation works, and document retention standards. There is no reason to let a great concept fizzle or a fledgling business shut down, because financial reporting and record keeping isn't sufficient. 

Successful Bookkeeping for Successful Business

 Tracking sales, expenses, and purchases is basically smart thinking for the overall health and sustainability of your business. Effective bookkeeping helps you evaluate your current practices, foresee challenges, and create attainable goals.

Even so, many business owners dread and avoid accounting tasks. In fact, some entrepreneurs claim that bookkeeping is one the worst parts of running a business! Is it really worth the aggravation?

Here are four reminders of how effective bookkeeping is the cornerstone of small business success.

Reimbursable expenses

A reliable system for tracking reimbursable expenses ensures you reap all the benefits you’re entitled to when filing your taxes. Expenditures sorted into categories, such as “food”, “travel”, and “office supplies,” can be catalogued quite simply with web based bookkeeping software.

Using a dedicated credit card for business expenses, and updating your records on a monthly basis, will put money back in your pocket come tax season.

Profitability and strategic planning

In order to grow your business, you must be able to track and compare its finances from one year to the next.

In addition to reconciling the books and bank statements every month, effective bookkeeping generates records you can use to gain a comprehensive overview of your business. This data can help you:

·         Measure year over year profits;

·         Identify opportunities to cut costs;

·         Plan for major expenses (such as new office space, equipment, or staff); and

·         Develop data-based strategies for expansion.

Preparing for tax season

Few things are more stressful for business owners than scrambling to get poorly maintained financial records ready for tax season. In addition to the panic of last-minute filing, inaccurate or incomplete documentation can lead to serious penalties, fines, and even an audit. In the United States alone, 40% of small businesses pay an average penalty of $845 per year for late or incorrect filings!

Save money and get peace of mind with sound bookkeeping. You’ll be assured of compliance with regulations, and will receive a reliable estimate of amounts owing long before your tax bill is due.

Final tip: ask for help

Most entrepreneurs are passionate about developing new business ideas – not crunching numbers. Employing a professional bookkeeper, even on a part-time or as-needed basis, can help optimize your accounting and increase overall profitability.

There’s a good reason 71% of small businesses outsource at least one accounting function to help manage tasks like payroll, closing the books each month, and managing accounts receivable.

It’s well worth it. Invest in effective bookkeeping and you’ll build a solid foundation for a resilient, forward-moving small business.