Forty percent of small business owners say bookkeeping and taxes are the worst part of owning a business. With that being said, ever wonder what a bookkeeper could really do for your business? Bookkeepers are in charge of organizing and entering your financial transactions. They keep track of all your accounts and create reports that help you make better decisions about the future of your small business. Bookkeepers also ensure your documents are well maintained and compliant for your accountant. Having a bookkeeper around can be very handy as your business grows. So let’s take a look at some of the things a bookkeeper could do to keep your business running smoothly!
Bookkeepers are most well known for their help around tax season. They organize your documents, forms, ledgers, and receipts to prepare your tax return. Additionally, they help you record and balance all your financial transactions. Finally, they then hand over a neat package to your accountant and you are done! Which in turn saves you a lot of money as the hourly rate for an accountant is much higher than a bookkeeper.
The bulk of what a bookkeeper does is handle the day-to-day financial transactions of your business. They do things like balancing your books, make payments on time, reconcile your accounts, create invoices, and input everything in your records. Usually, this is in the form of a single-entry system or double-entry system.
- Single-entry systems are typically used for small businesses. They tend to focus on the results of the income statement.
- A double-entry system is the most popular and involves more complicated transactions. They also accommodate a much wider range of transactions.
For businesses that have many employees, payroll is better handled by a bookkeeper. Since there are so many legal factors to think about in payroll, including criminal and civil law violations, it is essential to make sure everything is done correctly. Payroll can also entail things like timesheets, allocating commission, payroll taxes, and pensions. Additionally, bookkeepers are also in charge of maintaining employee records/bank account information and a system for issuing payments.
Bookkeepers produce reports to keep you informed about the performance of your business. They are helpful if you are trying to decide on starting a new expensive project for example. Reports give you a detailed analysis so that you can make your business more productive in the long run. The three main types of reports are income statements, balance sheets, and cash flow statements. These are all tools you can use to understand where your money came from, where it went, and where it is now.
- An Income statement tells you your revenue, costs, and expenses. It is used to show you your bottom line, or how profitable your business is (or isn’t).
- Balance sheets show a snapshot of your business’ liabilities, assets, and equity at a given time. This report displays your business’ over health.
- A cash flow statement shows your transactions, in and out, over a period of time. It tells you exactly what happened to your all your money during that time.
Bookkeepers are also in charge of keeping your financial information safe and protecting your business from theft. Anything that involves banking transactions is considered to be a risky process. A good bookkeeper will make sure your business’ security is a top priority. Many utilize modern software and methods to prevent and alert you in the event of a security breach. Bookkeepers will notice fraudulent or suspicious transactions and send you alerts, before you will. They can also draw your attention to any suspected employee theft since they have an intimate knowledge of your books and ledgers.