Bookkeeping is one of the biggest challenges for all businesses irrespective of the size and nature of the business. Initially, bookkeeping might seem like a simple task where you can keep track of all business activities and transactions. However, soon business owners realize that opening consumes a lot of time that could be otherwise used for expanding and promoting the business. Errors in bookkeeping can only aggravate the situation and therefore it is important that you look for small business bookkeeping services to help you keep your records clean.
What is a Bookkeeper?
A bookkeeper is a person or a team in a company that records all the financial transactions and activities of the business. In general terminology, accounting clerk is the bookkeeper for the firm. He or she is liable for keeping the accurate financial and business transactions of the company.
Tasks of a Bookkeeper
While it might be easier to say that business owners can do their own bookkeeping, but bookkeepers play an important role in a business entity. In fact, every business small and large would need a bookkeeper to ensure the business is smooth and all the transactions are recorded accurately.
Let’s take a quick look at the roles and responsibilities of a bookkeeper in any organization.
- To accumulate, identify, analyze and file documents with regards to business transactions and activities
- To record all genuine business transactions and activities in a chronological order
- To double check that the records of business and financial transactions are genuine and valid
- To provide summary reports of the business and financial transactions and help accountants in preparing financial statements
- To make financial records available while preparing and filing tax returns of the company
- To help internal auditors, tax auditors, and even external auditors during the time of audit and answer their queries
Why Do You Need One?
The competitive business world does not offer any room for error. Hence, it is not easy to manage the competition and earn profits at the same time. Hence, the first thing that businesses do to earn a profit is to cut cost. However, as the business grows the need for bookkeeping becomes much more important as you cannot look into all aspects of the business.
One of the reasons why you need professional bookkeeping services is to ensure that you make a profit. Hiring a bookkeeper allows you to know how much profit your business has earned. Bookkeepers’ record and store genuine business and financial transactions allowing you to gauge the true position of your company. With the accurate financial information, you can see your inflow vs. outflow to determine how much profit you make.
As a small business company, you would think of hiring an in-house bookkeeper that would look into your business and financial transactions. However, the cost of training a bookkeeper is certainly higher than hiring a small business bookkeeping services and accounting services.
When you hire a professional bookkeeping company you can delegate certain responsibilities to the bookkeeper. Companies that offer services for bookkeeping to small business can handle financial data backup, compliance-related issues, updating bookkeeping programs and software and indemnity insurance-related issues.
Accounting bookkeeping services can also offer you guidance in planning a well-formulated budget to help you save expenditure and increase income. They can also help you with handling your tax related issues.
A professional bookkeeper would also assist you with various other issues related to financing, IT, pricing, marketing and other financial advice and suggestions.
When to Hire One?
At times, it might seem confusing if your business really needs a bookkeeper. However, here are some scenarios which would clearly indicate that it is time you need to hire a bookkeeper for small business that can help you record your business and financial transactions.
- When Your Business Demands Your Attention: Even a small company or a start-up requires a lot of attention and hard work and that is the time when you should hire a bookkeeper to handle certain roles and responsibilities while you focus on strategy, marketing and funding for your business.
- You Have No Clue About Finance: Not all entrepreneurs and business owners have a strong financial knowledge and that is completely normal. You can hire a bookkeeper for small business to help you out with maintaining the business and financial records while you focus on your core skills and talent to boost your business. This way you can reduce your errors and mistakes which could have cost you more money.
- Want a Different Perspective: Hiring a small business bookkeeper firm will allow you to have an extra pair of eyes on your business and financial transactions. Bookkeepers do provide you with financial assistance, recommendations and suggestions to help you manage your tax related issues and managing your capital wisely.
- If You Feel Bookkeeping is Boring Stuff: For many entrepreneurs bookkeeping might not be the best thing to do and that is when you need to hire a bookkeeper. You can hire someone who has a passion for bookkeeping while you can focus on tasks that you enjoy the most. Online bookkeeping services company for small businesses might be an ideal option, to begin with.
- Want to Get Rid of the Confusion: Clarity is important for any business and therefore it is important that you have clarity over the business and financial transactions and have a chronological record of it. This way you can pay your business bills and salaries on time and get rid of the confusion. They can also help you maintain your cash flow and resolve conflicts with business partners.
- Ensure Correct Tax Filing: Getting axed by the taxman is the last thing you would want. Online bookkeeping services ensure that you do not forget those quarterly or annual tax filings and payroll related issues. Hence, they help you reduce the cost of financial obligations.
What Do They Actually Do?
Bookkeepers are good at collecting, identifying, analyzing and filing documents, receipts, invoices and other transaction details. They normally use the same methods as accountants recording all the data in accounting software. Bookkeepers are also responsible for data reconciliation – ensuring records match business cash transactions and bank statements.
Professional accounting services companies manage business repayments, produce invoices, allocate funds for corporate tax, calculate investments and interests, and monitor purchase orders and maintain a journal of asset depreciation.
What is the Difference between a Bookkeeper and an Accountant?
Most people who come from the non-financial background cannot differentiate between a bookkeeper and an accountant. While both the job positions are related to accounting the role of the bookkeeper initiates the entire accounting process.
Let’s take a quick look at key differences between a bookkeeper and an accountant.
- Job Role: Bookkeepers are usually hired for collecting, identifying, classifying and filing financial transactions. Accountants, on the other hand, are required to interpret and communicate those financial transactions.
- Decision Making: While bookkeepers do make certain decisions these decisions are not made purely based on the bookkeeping records. Accountants do have the power to make final decisions based on their records.
- Role in the Management: Top management of the company usually do not involve in the daily process of a bookkeeper. However, they do interact with accountants to make future decisions based on the information provided by the accountant.
- Financial Statement: Bookkeepers are more involved in filing information and therefore they do create a financial statement. This is a part of the accounting process and done by the accountant.
- Skills: Bookkeepers usually must have mechanical skills to collect, identify and file documents while accountants must have analytical skills to interpret and summarize financial transactions.
When to Hire an Accountant or Bookkeeper?
Most businesses are unsure about when they should hire an accountant or a bookkeeper, or that they should hire both. The answer would depend on what kind of company you have and how quickly your business transactions are growing. Bookkeepers are ideal for small businesses that require regular but not-so-much attention to their accounting records.
These bookkeepers are ideal for managing small business expenses. However, if you have a complex organization you would want to hire an accountant that would support the bookkeepers and ensure fewer errors in accounting. Having an accountant also means you have someone that can have an analytical mind on how you manage your business. This ensures that your business records are clean and there are low chances of financial fraud and theft.
How FinForce Helps You in Bookkeeping?
FinForce offers accounting, finance and bookkeeping services in India allowing businesses to focus on their core business areas. Our team of professional bookkeepers collect, identify, analyze, classify and file documents of business and financial transactions. Over the years, we have helped many accounting firms, entrepreneurs and small and large business owners to create a better functional financial strategy.
Contact us right away to know more about how our bookkeeping expertise can add value to your business