Whether you own a startup or a growing business, a professional bookkeeper will help ensure you're following standard business practices and provide the financial information you need to make better business decisions.
From recording daily transactions in the general ledger to delivering in-depth financial reporting, here are several of the key tasks a professional bookkeeping service can perform:
1. Compiling Key Financial Reports
At a basic level, the goal of any business is to take in more money than it spends. But figuring out if the business is actually doing that can be surprisingly difficult. In order to fully understand what's going on, you need to review an array of financial reports. Of particular importance — especially in the startup phase, where cash is often in short supply — is the cash flow statement. If you or your bookkeeper don't understand the implications of this statement, the results could be disastrous.
2. Performing Regular Reconciliations and Closings
Does your business use a cash method of accounting or the accrual method? An experienced, educated bookkeeper can advise you on which method makes sense for your business and then set up a bookkeeping system to follow that method consistently. A professional bookkeeper knows how to track expenses in real time, so that when the month ends, the month-end closing is essentially nearly done. Setting up a system of daily, weekly, monthly, quarterly and annual bookkeeping tasks will help keep your business organized and give you up-to-date financial information.
3. Maintaining Accurate Tax Records
It's critical that your tax records be properly coded, categorized and kept track of, not just at the filing deadline but year-round. Staying current will enable you to not only keep up with all the required forms, such as 1099s, but also prepare your firm for an unexpected IRS or state audit.
4. Leveraging the Latest Technology
By now, your bookkeeper should have made the transition to a cloud-based, paperless system. In addition to increased convenience and efficiency — no more overstuffed file cabinets or a blizzard of receipts blowing across your desk — it's more secure. Not only does cloud-based bookkeeping not need paper, it also needs no onsite server. Your records are protected from flood, fire and other threats. The files are also shareable from remote locations, and a wide range of industry-specific software is now available to help you glean valuable information that can make your business more efficient and more profitable. Has your bookkeeper made any changes in the past five years — or even in the past ten years? The answer should be a resounding yes.
5. Keeping Business Expenses and Personal Expenses Separate
This last one applies to business owners who keep their own books. Commingling personal and professional finances increases your exposure to liability — even jeopardizing your personal assets. If you want to take advantage of the protection provided by a business entity, you need to build a firewall between your two financial worlds. That means separate bank accounts, separate credit cards and separate sets of books.