Bookkeeping
What Are Bookkeeping Services, Exactly?
Small Business Bookkeeping
Important Facts About Bookkeeping Small Businesses Should Know In 2020. Small Business Bookkeeping. Bookkeeping is essential for any business. Through bookkeeping, an owner can identify if a business is generating profits or losses.
Bookkeeping is the recording, storing, and retrieving of financial transactions for a company, nonprofit organization, individual person, etc.
Bookkeeping can include common financial transactions, paying suppliers, billing for services provided or goods sold to clients, documenting receipts from customers, recording invoices, processing employees’ payroll, financial reporting, monitoring accounts receivable, recording depreciation, and more.
Both bookkeeping and accounting are necessary for any business, but they aren’t the same thing.
Bookkeeping is the recording of financial transactions, whereas accounting is the interpreting, classifying, analyzing, reporting, and summarizing of financial data.
In accounting there is interpreting and analyzing data, in bookkeeping there is not.
Big picture outlook: Bookkeepers handle the recording aspect of all accounting processes, accountants handle all parts of the accounting process.
The 2 main types of bookkeeping systems are the single-entry system and the double-entry system.
Single-entry bookkeeping is used for companies that have few or uncomplicated transactions.
This system records business expenses and cash sales that are paid when incurred.
Single-entry bookkeeping typically consists of a cash sales journal, a cash disbursement journal, and bank statements.
It is not typically used for a company that has accounts payable, accounts receivable, or a lot of capital transactions.
Businesses that have more complex transactions use double-entry bookkeeping systems.
The double-entry bookkeeping system posts single transactions as an income or expense item. Then a second entry is created to trace the transactions to a corresponding account.
Nowadays, many small businesses do most or all of their bookkeeping using bookkeeping software, instead of traditional systems.
Popular bookkeeping software, such as QuickBooks, use the double-entry system, but the user doesn’t need to be well versed in the method to be able to use the software.
The software is usually designed to be user-friendly and can help reduce bookkeeping mistakes.
Benefits of bookkeeping software can process accounts quickerincrease reporting accuracyprovides necessary accounting reportsstreamlines filing your business taxesdata is backed upmore benefits of bookkeeping software
Bookkeeping software is becoming increasingly popular among small businesses.
It is an effective way small business owners can access the financial information they need.
The more organized your books are, the easier it is to file your taxes.
You will need to gather all financial records and organize them by category.
Accounting software, like Quickbooks, helps small businesses keep track of all their financial information.
This can help reduce stress and last-minute scrambling during tax time.
Even if you hire an accountant to help with bookkeeping, make sure all files are up-to-date.
An accountant only uses the information handed to them, so any errors or changes need to be addressed as soon as they are realized.
A bookkeeper is someone who records the day-to-day financial transactions of a business.
The main responsibility of a bookkeeper is to write the daybooks.
Daybooks contain records of sales, receipts, payments, and purchases.
A bookkeeper records if the transaction was cash or credit.
Bookkeepers also record things in a supplier’s ledger, customer ledger, and general ledge.
Bookkeeping is essential for any business.
Bookkeepers for small business will typically record cash, accounts receivable, inventory, accounts payable, loans payable, payroll expenses, owners’ equity, retained earnings.
If these items are recorded correctly, bookkeeping can be your best friend and the reason a business runs effectively.
If handling your accounting department on your own is starting to get overwhelming, there are many benefits to connecting your accounting department with an outside bookkeeping service.
Many bookkeeping services provide additional manpower, accounting software resou
rces, and expert advice.
They help with time sheet monitoring, payroll processing, financial consulting, and can help with accounting technology questions that goes beyond your IT department.
Small businesses do have options when it comes to bookkeeping.
The first option is to do it yourself.
If you are going to take on the tasks of being your own bookkeeper, know that bookkeeping can be time-consuming but can’t be forgotten.
Another option is to hire an accountant or an accounting firm.
When hiring an accountant to do your bookkeeping, you’ll be privy to expert advice and not have to stress about it.
A third option is to use a DIY software.
Software can be extremely helpful, but as with all things, it does have a downside.
Using a good piece of software, doesn’t typically educate a user about US tax code, requirements, or regulations.
The last option is a fully automated bookkeeping service, like the one mentioned above.
It’s important to find the bookkeeping service that works well for your company.
What worked for your family friend, or competitor, may not work for you.
You can always talk to a consulting and accounting firm to get a better idea of what would meet your needs.
No matter what type of bookkeeping system you use, consistency is vital.
Have daily, weekly, monthly, and annual tasks that you check in on.
