Bookkeeping

What Bookkeeping Services Do

A bookkeeping service offers a three-tiered approach to developing and maintaining your company’s overall financial processes and management. The first prong is created by the accounting software specialist. He or she creates your accounting data file so that it’s tailored to the specific needs of you and your business. He or she will ensure that you have access to the software and reports you need. Next is the full-charge bookkeeper. We all know the basic duties of a bookkeeper: to track payables and receivables and keep all your business’s financial transactions documented. Sounds simple enough, but there’s a lot more to this job than meets the eye.

A full-charge bookkeeper can also manage payroll, handle deposits, create and maintain financial reports, manage the ever-changing world of sales taxes as well as quarterly taxes and withholding. Bookkeepers also reconcile bank statements to internal accounts and even help out during an internal or IRS audit. Whether you want to get a business loan, answer an auditor, or simply design next year’s budget and business plan, you need the assistance of a full-charge bookkeeper. They can help ensure that each of these tasks are completed correctly, in a timely manner, and that they are accurate enough to be truly useful.

Between the accounting software specialist and the full-charge bookkeeper, you will have begun to create a set of checks and balances within your business. Individual department spending will be recorded and analyzed by the bookkeeper, accounts receivables and payables reviewed and fulfilled by him or her, and the company’s spending is contrasted with its budget for review and analysis that can help identify inefficiencies and create more accurate future budgets.

In bookkeeping, there are 5 different types of accounts. These are assets, liabilities, revenue, expenses, and equity. Assets are all the resources and cash owned by the company, such as inventory. Liabilities are the debts and obligations owed by the company. Revenue is the money the business takes in. Expenses are cash from the company to pay for items, such as salaries and utilities. Equity is the remaining value after liabilities.

And this is where we bring in the third prong of the bookkeeping service, the controller. The controller increases the company’s overall financial accountability and checks and balances. A controller reviews the bookkeeper’s ledger for accuracy while also maintaining the integrity of the accounting data file in the future so that adjustments can’t be made without approval. Lastly, a controller issues monthly financial reports highlighting any critical issues that you need to understand and possibly address.

The Role of Bookkeepers

Plenty of people believe bookkeepers’ work is primarily centered on taxes. However, bookkeepers are not properly certified to prepare taxes. In fact, bookkeepers cannot even file taxes for businesses or other professionals. Rather, bookkeepers have a narrow focus on maintaining comprehensive and accurate financial information for their employer or for clients of that employer. The bookkeeper’s role is to provide information that can be understood by those who are empowered to make decisions at the business. This professional manages and records the financial details of the company, tracking financial transactions and ensuring records, as well as accounts, are fully complete and accurate.

Rely on a bookkeeper and you will receive an accurate monthly snapshot of your company’s financial picture. The information provided by bookkeepers is a strong indicator of your business’s underlying financial health. These professionals double-check the numbers to ensure the entirety of your organization’s financial data is accurate and all-encompassing. This is the accurate and comprehensive financial information you and your team need to make sound financial decisions and formulate an overarching financial strategy that helps your business reach its true potential.

Bookkeepers reconcile bank accounts for all of a company’s transactions, ensuring there is agreement and balance. These professionals also keep a watchful eye on the money moving into and out of your business, ensuring balances in bank accounts match up with those in accounting software. Bookkeepers also collect information regarding transactions stemming from payroll, payment processing companies, expenses, and so on. Each transaction is identified and properly categorized. The duties of a bookkeeper extend all the way to generating important financial statements for presentation to groups ranging from the IRS to prospective investors and potential business partners.

How A Bookkeeping Service Benefits Your Business

There is a subtext here that we haven’t yet discussed and it’s important that we do. Because while every task the bookkeeping service completes is vital to the financial health of your business, it’s the underlying structure they apply that really makes a difference. You see, bookkeeping services implement—and maintain—a consistent financial process that strengthens the health of your company and helps to create and encourage uniformity in tracking, paying, and reporting. The value of this is immeasurable as it insulates your business from many costly and dangerous risks.

Part of the benefit of the process comes into play when the full-charge bookkeeper coordinates with members of management from other departments in order to approve purchases and gather expense reports. Not only does the activity require extreme organizational, management, and math skills, but a bookkeeper must also have people skills in order to make this work. The team also works to reduce your overall expenses. Not only do they ensure that books are maintained properly to avoid costly mistakes, fees, and penalties, but they can also help alert you to waste and mismanagement of supplies and inventory. All while saving you time since you will no longer need to try and perform these tasks yourself. Not to mention, having access to up-to-date financial statements instantly is a great benefit.

There’s no question that a bookkeeping service saves your business both time and money, but the processes and consistency introduced by one can increase the longevity and efficiency of your business, making you more profitable for decades to come. Before you start your bookkeeping, you have a decision to make. Do you want to do single-entry bookkeeping? Or, do you want to do double-entry bookkeeping? In single-entry bookkeeping, each transaction is only entered once. This method works well if your business is pretty basic. If you don’t work out of your home or if you don’t carry much inventory, single-entry bookkeeping is the way to go. However, most businesses today use the double-entry bookkeeping method. This means that any transaction requires an equal and opposite entry into another individual account. Two entries are made for each transaction.