Most entrepreneurs try and do everything themselves when they start out so that they don’t have to pay someone unless they have no other choice. That is why many small business owners struggle to justify paying for the help with the financial side of their business. But this is one instance where hiring outside assistance actually saves money, both in the long and the short term.
To put it simply, numbers is a huge part of business. All financial transactions need to be properly documented and maintained, with all money coming in and going out of any business accounts accounted for. Most business owners are unsurprisingly far more passionate about running their business than they are about keeping accurate records.
Some may feel they can adequately handle this themselves, others struggle to find time, while a lot of people are unsure if what they are doing is correct. Generally, it really depends on the volume of transactions, and the amount of time available. Transactions can all too easily to go unrecorded, meaning time is wasted working out why totals don’t match, or they are put aside until the end of the financial period. Mistakes are so easy to make, with important details becoming lost or simply forgotten. That’s when Bookkeepers can help.
What Do Bookkeepers Do?
Bookkeepers ensure the day-to-day financial records of your business are kept up to date so they can regularly balance the books. Having this accurate, complete, and timely financial information is critical to the smooth operation and long-term survival of your business. It also lightens your workload, which in turn allows you more time to concentrate on actually running and growing your business.
Bookkeepers accurately record all transactions for the business including expenditures, sales receipts, accounts payable, and accounts receivable. This allows for a wide range of financial statements and other reports to be generated as required, such as monthly sales totals or profit and loss statements. In addition, Bookkeepers can also prepare bank deposits, handle payroll, create invoices, make purchases, send statements, as well as look after any overdue accounts.
But there’s more to it than simply recording your daily transactions. A good bookkeeper should be almost as invested in keeping everything running smoothly as you are. Not only are bookkeepers available to provide daily business support, but they can also streamline your workflow. This usually comes in the form of various add-on solutions such as accounting software training, simplified payroll services, point-of-sale tools, and bookkeeping rescue work caused by mistakes or lost details.
Bookkeepers use proper accounting methods to accurately enter all relevant data into the appropriate accounting software. Plus, bookkeepers have been trained to use the same financial recording procedures as accountants, so communication between the two usually allows for everything to be processed fast and efficiently.
Even if you are just starting your business and only feel the need for occasional consultations, it’s never too early to bring in the external help of a bookkeeper. In fact, many small business owners feel they should have hired a bookkeeper sooner, so that their records were accurate well before the task became insurmountable.
Are Bookkeepers & Accountants the Same?
These two services are quite often compared because the services they provide are complementary, they both work with numbers, and they are both able to provide a range of business advisory services.
Bookkeepers are experts whose main focus is ensuring accurate records are kept for your business’s day-to-day financial transactions. If required, they can also provide advice on things like cash flow issues or creditor payments. All of the information that has been compiled and recorded by bookkeepers is then given to your accountant whenever necessary.
Accountants are qualified professionals who utilize the data in the financial records to prepare and file all the official reports on behalf of the business, including BAS statements and tax returns.
They are also available to provide advice on issues like legal entity, company structure, as well as giving out all kinds of business and financial advice.
While there are big differences between accountants and bookkeepers, their combined work provides a vital service to many. The majority of successful businesses, both small and large, will ideally require the services of both to run smoothly.
Here’s How We Can Help You
Accurate Financial Data
Some business owners may start out recording every financial transaction in their accounting software themselves. Then as businesses grow, most people find this daily task doesn’t leave enough time to focus on the original goal of running a successful business.
People who own a business regularly make important business decisions, which are often time-sensitive, so they need to be made fast. Making informed decisions that aim for a desired outcome will always be much easier with access to current and accurate financial information for your business.
Bookkeeping mistakes will also happen at least occasionally, caused by anything from errors in data entry to the incorrect categorization of income or expenses. No matter how they occur, searching for and correcting the mistakes always result in extra time lost. Bookkeepers have the skills and training required to minimize these types of errors, which is why it’s always best to let the professionals look after your financials.
Save Time & Money
Documenting all of your financial data yourself will understandably seem like you are cutting costs, but it may actually make things worse, and even cost you more in the long term. A bookkeeper will make sense of all your financial data as they enter it into your accounting software, and they know how every transaction should be handled, ensuring accurate financial reports.
Hiring a professional can save money because you won’t get charged penalties for filling tax incorrectly. Plus, your bills will be paid on time, which avoids any extra interest or late payment fee. Accurate and current financial records can also assist with obtaining credit from banks or other lenders. It also means that your accountant will have more time to analyse your finances, and better insights into recommendations which could help your business grow.
If your accountant is currently managing all of your daily transactions, you should find out how much a professional bookkeeper would cost as they are ultimately more cost-effective than accountants. This is because bookkeepers charge less per hour and they provide the same outcome, only faster because this is their specialty.
Financial Strategy & Information
Bookkeepers work with your business every day which gives them insight into your company’s finances. This means they have the best chance of discovering any possible future financial issues in time for something to be done about them, which helps keep your business out of the red. They can also tell you details about a late payment, tell you why the EOM books don’t balance, and can even provide insight when the accountant asks about things like gross profit margins or revenue collection.
A professional accountant provides an indication of the overall financial health of your business by running specific long-term reports, monthly reconciliation figures, and computation of tax. Whereas bookkeepers can quickly provide you with financial figures for shorter periods like a certain week, or even a few of hours in a particular day, without wasting your time scanning through reports yourself.
Cash Flow Managemental Strategy & Information
To ensure your liquidity remains in check while growing your business, you need to refer to your cash flow statement, which shows the flow of cash both coming in and also going out. A bookkeeper can closely watch all aspects of your cash flow to guarantee that there is no way that your business can suddenly run out of money.
Problems with cash flow is actually one of the most common reasons that businesses fail, and the best way to ensure it doesn’t happen to you is to regularly track your funds. That means everything, including your net income, inventory, accounts receivable, and accounts payable. Your bookkeeper can assist with your plan for growth by staying on top of cash outlays, while increasing available cash by speeding up the processing of accounts receivable.
While your business grows, the amount of paperwork to be filled grows with it. So, to ensure it doesn’t get away from you, business owners need to know that all of their payments and receipts are always accurate and up to date. No business should ever be updating their financial records for their quarterly BAS or annual tax at the last minute. Hiring a bookkeeper means your business can file all liabilities on time, while setting up automatic reminders for when receivables are expected, and when next payments are due. This is the best way to guarantee you won’t fall behind on the financial record keeping side of your business.
Australia has some strict legalities and regulations regarding business ownership. The Australian Taxation Office is definitely the most important regulatory body, and all business owners must adhere to their rules. For example, it’s crucial for your business to account for relevant wage obligations with automated systems like Single Touch Payroll and Superstream. It is imperative this happens after each and every pay, and not monthly or quarterly, because inaccuracies can easily create issues for you with the Australian Taxation Office.
A bookkeeper who has experience in your industry will also know many of the common tax-deductible expenses that your business can legally claim. Plus, it’s good to know that the cost of your business hiring a bookkeeper is definitely tax-deductible for all sectors of business.
The Final Word
Many small businesses focus most of their attention on either development of their product, or how they are going to market their product to customers. By underestimating the importance of bookkeeping, their product ends up performing poorly, which means lower than anticipated sales. Ultimately, they eventually fail before they really get the chance to succeed, because they didn’t pay enough attention to the financial side of their business.
There are many business owners who incorrectly assume money spent on a bookkeeper would be an unnecessary expenditure. But if you take the time and hire a professional, they will most likely pay for themselves in under 6 months. Especially considering failed business ventures in Australia were up last year, with over 15,000 of them closing down in the last 3 months of 2016 alone. So in the current economic climate, proper management of business finances has become even more important than ever before.
Investing in the services of a professional bookkeeper can be a beneficial asset to any business, while also lifting some serious weight from your shoulders. A bookkeeper can provide you with the necessary assistance with business management, while controlling your profitability and helping to maintain growth. Understanding the finances of small business, or at least hiring someone who does, can make or break your chance of success. The key to creating a profitable and growing business, is knowing that the heart of every business is the finances.
Don’t forget that businesses shouldn’t be trying to decide between hiring a bookkeeper or an accountant, because they concurrently provide different functions together. Engaging both an accountant and a bookkeeper means you will get some diverse business advice and a more complete financial picture. Utilizing both positions allows for a broader view of your finances, which in turn frees you up to concentrate on running your business.
Bookkeepers can help make your money go further, while keeping your finances out of the red, and ultimately helping you concentrate on managing your business. If you want your business to be a success, you are going to need the assistance of a professional bookkeeper. Get in touch with our team today! We’d love to help you!