Bookkeeping is an integral part of tracking and maintaining any business, but around 60% of small business owners feel they are not knowledgeable enough about accounting and finances in general. Yet, bookkeeping is critical because staying organized and knowing where your money is coming from and how you are spending it will help you optimize your profits and reduce unnecessary spending.
Bookkeeping Is No Longer a Lost Art
Bookkeeping is a lot more streamlined than it used to be. The advent of paperless technology allows businesses of all sizes to keep track of records, transactions, and documents without needing a lot of space. Instead of searching through records to find a specific document, you can pull it out of your archive with the click of a button, and you can automatically add records and transactions to spreadsheets using software and other helpful tools.
Small Business Bookkeeping Services & The Necessary Cost
Here are some small business bookkeeping services your business might need. A professional bookkeeper can help with all this and more.
Transaction and Spending Records
A small business bookkeeping service can track your spending and transactions, so you know exactly how much money you are spending on which investments. That can help you figure out how and where to cut costs.
Cash Flow Analysis
Cash flow is vital for the success of any business. However, figuring out whether you have a good cash flow requires meticulous bookkeeping. A professional small business bookkeeping service can help you learn how much cash is entering vs. leaving, which can help you figure out how to break even and forecast your future cash flow based on different variables.
Balance Your Budget
Balancing your budget is not always easy. A professional bookkeeping service will know hidden bookkeeping secrets to analyze profit vs. loss and figure out where money is “leaking” and how to maintain a constant profit. A bookkeeper can also manage and track your debt as well as take care of bank reconciliations.
Payroll and Invoicing
It is essential to keep track of your payrolls and invoices and keep records of them. It will be important when doing your taxes and is also necessary for ensuring you maintain a good cash flow. You will need the right software to generate the required documents and organize them.
A bookkeeper can also manage accounts receivable and accounts payable. In other words, they can ensure customers or clients are paying you on time and ensure you are paying on time as well.
Are you wondering how to file business taxes or how to get a business tax ID? Are you confused about how long you should keep small business tax records? Getting your taxes right is critical so you can figure out how much you owe and avoid paying extra to the IRS.
Submitting small business taxes properly allows you to get the maximum discount and helps you avoid unnecessary and intrusive IRS audits. In addition, by keeping track of your data and records, you will be able to submit correct tax information.
Backing Up Your Records
Once you go paperless, it is still important to back up your records instead of just storing them on a hard drive, as hard drives can get compromised or damaged. Physical documents can, of course, get damaged as well due to floods or natural disasters. A professional bookkeeping service can help with backing up your record and help you figure out how long to keep business tax records.
Bookkeeping Vs. Accounting: What Is the Difference?
Bookkeeping and accounting are two terms that people sometimes use interchangeably, and many people confuse and conflate the two. The truth is that bookkeeping and accounting are two very different things.
Bookkeeping is more transactional in nature. It involves keeping track of your daily records and receipts, including purchases, invoices, transactions, payments, and so on. It’s about maintaining your data and records.
Accounting is a little more subjective. It overlaps with bookkeeping at times, but it is primarily a way of looking at what all that data means for your business. Through proper bookkeeping, you can generate insights and forecasts about the financial health of your business based on the data bookkeeping provided. Likewise, accounting involves reports and information according to the data bookkeepers collect.
However, many small business bookkeeping services can provide expert accounting services as well, depending on your needs. The exact cost of bookkeeping will depend on your needs, as you will read about in the next section.
Preparing Your Business for Bookkeeping & Getting Started
Before getting started with a bookkeeping service, and to understand your small business bookkeeping cost, it is crucial to know your bookkeeping needs. For example, do you need a bookkeeper to handle your day-to-day transactions, including invoices, incoming payments, expenditures, and so on? Or do you need a bookkeeper to organize your records once a week or so?
You also need to figure out how complex your records and data are. The more transactions of any kind you complete daily, the more complex your needs will be.
Bookkeeping for Small Business Hidden Secrets
There is a reason bookkeeping jobs are always in high demand, and that is because bookkeeping is so important for small businesses. Here are some bookkeeping basics and hidden secrets to know about:
- There are different types of bookkeeping. For example, there is single-entry bookkeeping and double-entry bookkeeping. A bookkeeper will know which one is right for your company.
- Keep personal finances separate, even if you are the sole proprietor of your business. Remember to give yourself a salary.
- A good bookkeeper and a good bookkeeping software are both crucial to bookkeeping success.
- Make sure everything adds up at the end of each week or month. That will help you spot mistakes.
- Automate as much as possible to reduce human errors.
The Hidden Secret: Keeping Detailed Records For Your Business
The hidden secret of business success often boils down to simply keeping detailed records of your business. It will help you maintain a profit, ensure you always have cash on hand for your necessary expenditures, avoid unnecessary spending, prepare you for tax season, and ensure clients pay you on time.
A good bookkeeper can help you gain insights about your business you didn’t realize before. For example, you can discover problems preventing you from realizing a profit, whether that is customers not paying you or unnecessary expenditures that are not bringing back a positive ROI.
A good bookkeeper will allow you to focus on more critical parts of your business. For example, instead of worrying about small stuff like recording a payment in a spreadsheet manually, a bookkeeper can do that for you and upload all your data into a bookkeeping software so you can access it on the fly. While you can always take a bookkeeping for a small business course, a professional bookkeeper will help you save time.
At ROK, we can help not only with bookkeeping but with a wide range of financial services designed to take your business to the next level. For example, we can help you understand how to pay small business taxes. We can also help you get top financing options, regardless of your credit score. We can also help with SMART business planning, including analyzing your competition and coming up with a foolproof plan for success.
About the Author, James Webster
James Webster, founder and CEO of ROK Financial has almost two decades of experience within the financial services industry. His passion for helping small business owners and his innovative way of thinking, has allowed him to run multiple successful businesses including National Business Capital & Services. Under the National name, the team was able to help secure over $1 Billion in financing for small businesses nationwide.