Many small business owners are not confident about their finance and accounting. This leads to financial instability during slow stretches and even periods of growth. A clear understanding of cash flow and how operations affect your bottom line is essential.
Signs You Need Bookkeeping
- Budgeting – You need help with long and short-term cash flow. You don’t know how to balance the budget.
- Tax Preparation – You fret about what the IRS will think about your books.
- Order – Your books are out-of-order and you can make any sense of data to make better decisions.
- Data Analysis – You have the data but you need help understanding what it means.
- Growth – You have plans for growth but you don’t have clear financial track in how to get there.
- Cash Flow – You aspire to get more equipment, hire top talent, and expand but you don’t have a good handle on cash flow.
- Time and Energy – You know your time is better spent focused on the business and not the books
Reasons Why You Need Bookkeeping
- You’re too busy with other things related to your small business
- You don’t have someone in-house with interest, experience, or accounting knowledge
- You’re often behind in sending invoices or reconciling payments
- You don’t have a clear understanding of cash flow (which is different from revenue and profit)
- You’re spending more than a few hours per month on your own accounting
- You’re reading this article so you must have some doubt about your current bookkeeping
A bookkeeper makes sense of data. They “read” the numbers. The bookkeeper enters data but also makes sense of it.
Management of Accounts
There’s a need for daily management of accounts and transactions. This is facilitated by POS solutions, accounting software, apps, and a bookkeeper. Want to keep an eye on cash flow? Then, you need a bookkeeper.
Maintaining Accurate and Up-to-Date Records
A bookkeeper ensures your business is compliant come tax season and that at any moment you have the accurate data you need to make better business decisions.
Preparation for Tax Season
Tax season can be stressful. If you’re a small business owner who puts tax preparation off, a bookkeeper can ensure all things are aligned for easy transfer to your accountant.
Managing Bank Accounts
Some small business owners mix personal and business accounts at first and then need someone to sort how transactions come and go out of accounts. A bookkeeper can monitor bank accounts through connected software such as QuickBooks as well as provide advice related to apps, other financial tools, etc.
Addressing Accounts Payable
Some activities, such as bookkeeping for nonprofits, may require keeping track of petty cash and expenses, while other clients may require a bookkeeper to help them with equipment setup so they can receive payments on time. Overseeing proper payment from vendors as well as late payments is an added plus.
Creating Invoices and Overseeing Accounts Receivable
A bookkeeper can prepare invoices so your business operates smoothly with less guessing when it comes to guessing and the ability to introduce more strategy to your small business.
Preparing Financial Statements
A bookkeeper can prepare a number of statements to illuminate points of the business for an owner. A bookkeeper prepare profit and loss statements, cash flow statements, balance sheets, etc.
General Bookkeeping Duties:
- Manage all accounts via QuickBooks or other data entry method
- Ensure data entries reflect real-time business operations
- Keep business aligned with all local, state, and federal laws
- Prepare all tax information (making it seamless for an accountant)
- Oversee business-related software, apps, etc. related to bank feeds
- Handle accounts payable
- Prepare invoices
- Produce inventory reports
- Analyze revenues/expenses
Bookkeeper or Accountant?
Both professionals help a small business maintain and regulate finances. However, the important distinction is how a bookkeeper or accountant serves you. Responsibilities differ depending on the size of your small business, for larger manufacturing business may have an accountant and several bookkeepers on staff while a smaller non-profit may maintain ongoing relations with a bookkeeper but rarely use the services of an accountant.
An accountant supervises a bookkeeper’s overall process. Furthermore, an accountant reviews financial statements and generates tax returns. Smaller entities are likely to interact with an accountant once per year — during tax season. Otherwise, a bookkeeper is your regular financial expert.
Do I Need a Bookkeeper If I Have QuickBooks?
The answer depends on the nature of your small business and your familiarity with QuickBooks. You may know how to enter data into QuickBooks but are you using the software to its fullest potential?
Can you win a regatta if provided with the ‘fastest’ craft? Probably not — unless you’re an experienced sailor, one who knows how to use the craft to its fullest potential and can maneuver through open waters with confidence.
Similarly, the real value of QuickBooks is related to how well you can use it to gain business insight. A bookkeeper knows how to use financial software, but more importantly, extracts insight from the data to facilitate better business decisions.
Small businesses without bookkeepers often enter incomplete and inaccurate information into QuickBooks. This leads to poor decision making, and even harder to interpret results. The better question is: How experienced and confident are you in using QuickBooks? For example, experts use the best QuickBooks apps and tools to optimize the software.
How Often Do I Have Contact with a Bookkeeper?
That really depends on the needs of the client. A client with ten retail stores will require more help than one with a small website that needs some help regarding QuickBooks setup and training. Ideally, you want regular contact with your bookkeeper (at least once a month) so that your business remains agile.
One of the benefits of having a bookkeeper at hand is the ability to make informed business decisions based on what the numbers say. What are the numbers telling you? Ask your bookkeeper. You may want a bookkeeper who acts more like a CFO than someone who just keeps books in order.
Staff Accountant or Bookkeeper?
Whether you need in-house help depends. For example, a nonprofit is not likely to have someone designated who does the books for them. It’s probably going to be a volunteer or someone who may not be formally educated in accounting or bookkeeping. That’s fine but it’s not optimal. And, a bookkeeper can help.
Larger, commercial businesses may have a finance person or CFO on staff who informs the business on how to operate but doesn’t have the time to keep an eye on the books, prepare things for tax season, generate reports, etc. This is another scenario where a bookkeeper can be a great addition in supplementing an existing position while filling a void.
Local or Remote Bookkeeper?
That could be more a matter of preference than need. Some owners like the ability to meet with their financial experts. However, in today’s business world, getting on a remote call or communicating using an array of apps is incredibly easy and efficient. Most of time, there is little to no need to live in the physical area of your bookkeeping service. However, that ultimate decision is left to personal preference and the ability of a given bookkeeper to accommodate your specific needs.
Bookkeeping FAQ
Clients have a lot of specific questions to ask a bookkeeper before deciding to hire one. Here are a few common questions and concerns:
- I just started payroll and need to know how to set it up in QuickBooks.
- How do I set up a 1099 worker in QuickBooks?
- Some clients want direct deposit. Do I need a separate bank account?
- How do I separate personal and business expenses in QuickBooks?
- My bank is incompatible with my financial software so what can I do?
- What is the best way to track my receipts?
- I need to make sure my chart of accounts is correct, can you review?
- I work in two states, what do I do?
- What are the steps to close out my books each month?
- How do I set-up quarterly taxes in QuickBooks?
Bookkeeping Checklist for New Clients
Onboarding
- Related software systems
- Prior income tax returns
- Personnel size
- Market type
- Sales channels
- Trial balance
Payroll
- Setup
- Employee detail
Cash and Bank
- Reconciliation (relevant bank and credit card statements, cash receipts, etc.)
- Direct deposit
- Business vs personal expenses
- Integration
Inventory and Sales
- Invoicing
- Details of advanced payment
- Software and app integration
- A list of inventory items
- Chart of accounts
Other
- Track revenue by referral and state
- Regular maintenance
- Quarterly reports
At MISSION offer an extended network of specialists with rich experience who address and solve issues. Our team has an elite background in accounting system design, software engineering, data integration, financial modeling, and business consulting.
