What comes into your mind upon hearing the word bookkeeping? COMPLEX? BORING? TEDIOUS? Most often, most of us would think of these three. But for us, we find bookkeeping a critical tool for the success of one’s business. YES! You’ve red that right, key tool for success.
This topic might be a little daunting, thus, let me walk you through the basics of bookkeeping: what is bookkeeping, when should you do it, why it matters, and how can you start adapting it in your business!
WHAT is bookkeeping?
In its simplest term, bookkeeping is a process of how we record, and track every financial transaction and accurately categorizing those transactions in an organized manner. Usually, these financial transactions are entered into a company’s accounting software or a physical set of “books”. Because of bookkeeping, businesses are able to exactly locate where your money went, where your business is spending, where does your revenue come from, and/or which tax related deductions or exceptions you’ll be able to claim.
WHEN should bookkeeping be done?
Bookkeeping should be done REGULARLY, and by regularly – I suggest weekly at a minimum. However, it also depends on the operations of the business, if your business can accumulate financial transactions up to a month, then you can do bookkeeping monthly. Doing bookkeeping at a regular basis will help lessen the occurrence of accumulated transactions. And accumulated transactions are to be avoided because it can be really tedious, and it can be very overwhelming.
WHY does bookkeeping matters?
Along with the many reasons of why this topic matters, the main goal of bookkeeping is to produce the best financial information that can serve as a basis for the business to come up with the most effective and smart decisions. And of course, we all know about this, smart business decisions lead to a more successful business.
In addition to the former, according to Peter Daisyme, here are 10 reasons why hiring a bookkeeper matters the most in your business:
1. Keep your focus on core business needs.
Let’s admit the fact that managing a business can accumulate all your time. Hence, this precious time should be focused on creating strategies, marketing techniques, and other key areas that require your focus over the daily operational tasks of the entity. This can be achieved when you have the right bookkeeper or team of bookkeepers that handles and simplifies the complexity of your business’ financial transactions.
2. Stay out of what you don’t really know or understand.
Having a person who has the appropriate knowledge and skills – a great bookkeeper, makes the business’ jobs easily. Less complications, and mistakes will be less likely to occur, as well as the issues that could cost you more money. Remember, if you miss a bill or forget to pay something important, this will significantly impact your business credit.
3. Calibrate a work-life balance.
While you could focus on core business needs and handle everything else in your business, the problem is you’ll have no time left at the end of the day or week for yourself or your loved ones. Thus, you’ll be missing that balance every person needs in order to stay healthy and not burn out on what you are doing.
4. Get a different perspective on the business.
It a big help to have another pair of eyes on this. Your bookkeeper can put the financials in order and run reports showing how you are doing each month, where the funds are going and how your efforts are paying off (or might need improving upon). He or she will give you that "big picture" through the numbers being crunched.
5. Escape the tedious aspects of business.
It’s hard to imagine that the financial aspects of your business make you excited. You likely have no passionate feelings about tallying up payroll or writing checks to pay the bills. However, your bookkeeper may enjoy those tasks, so it makes sense to hand over these areas to someone who does them -- and does them well -- because of that motivation.
6. Make sure everything is paid on time.
You don’t want your credit impacted by late or forgotten payments, so put a bookkeeper in charge to give you the confidence that everything has been handled on time.
7. Ensure correct tax filings.
The last thing you want is to get audited or have the taxman after you just because you forgot those quarterly or annual tax filings. It’s ideal to find a bookkeeper who can handle taxes a well as payroll and other financial issues.
8. Maintain cash flow.
Because you are so busy, you may not realize that there are outstanding payments from your client base. Any late payments here could infringe upon the cash flow you need to keep your startup humming along. With a bookkeeper working for you, he or she can stay on top of this and send out reminders to make sure your cash flow remains optimal.
9. Resolve conflicts of interest with any business partners.
With more than one founding partner, issues could arise where each partner has some idea of how the money should be spent and how to easily access it. Otherwise, conflict could arise that could impede the progress of your startup. That's why a bookkeeper should be the gatekeeper of the money, creating the necessary approval processes that stop partners from just withdrawing money.
10. Reduce the cost of financial obligations.
Although you may think you save money by doing everything yourself, the fact is that a professional bookkeeper actually saves you more. That’s because there is a reduced level of risk for human error, lack of knowledge, missed payments and tax obligation due dates and delayed accounts receivable. Plus, your time is money that you could be using toward getting your new business running and bringing in the revenue to move to the next level.
HOW can you start adapting it in your business?
1. Being able to understand this aspect of your business is the primary step to incorporating appropriate bookkeeping into your business. You must learn its basics so you can communicate with your bookkeeper later. 2. Be familiar with cloud-based accounting software that can be used for bookkeeping. There are a lot of friendly user applications that are accessible in the market, you just have to know the right one for your business. 3. Hire a bookkeeper! Of course, you can do your own bookkeeping if you have the knowledge and proper skills to do so, if otherwise, I highly suggest to start looking for your partner bookkeeper. Furthermore, learning the basic process of bookkeeping can be really challenging, and we all know it requires time and concentration. Hence, you may not be able to focus more on other important key aspects in your business.
There you have it! I hope these ideas enabled you to be interested more about bookkeeping. If you’re ready to stay on top of your bookkeeping and transform your business into another level, then you have landed on the right platform! Here in AV Bookkeeping & Freelance services, we provide services that are fit for your business! Tell me more about your bookkeeping services!
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