What Are Typical Bookkeeping Services
- Posted by:
- Admin
- Tags:
- Bookkeeping, Service, responsibilities
- Posted date:
- 24-01-2022
If you are a business owner, you may ask: What Are Typical Bookkeeping Services? We look at the range of tasks that you can expect a bookkeeper to complete on your behalf.
What Is A Bookkeeping Service?
Bookkeeping services are an essential part of running a business. All financial transactions are recorded and documented in financial reports, and these are conducted by a professional bookkeeper.
When Should I Hire A Bookkeeper?
Some small businesses choose to complete their own bookkeeping, but you will benefit from hiring a bookkeeper to complete them for you. Keeping track of your financial information isn't something to push to the side, as your monthly transactions and operating expenses need to be calculated and stored securely.
A financial report shows a profit and loss statement, cash flow, and other financial information needed to gauge your position as a business and how you can improve performance. However, that is not where bookkeeping services end, as a professional bookkeeper can also:
Prepare tax returns
Clean up books of accounts
Invoicing
Budgeting & Cash Flow Analysis
Management reporting
Cross-checking financial statements with bank statements
Performance indicators
A good bookkeeper will tailor their services to you, as when you hire them, you're not only paying for their services but their knowledge in the industry.
Your day to day financial records are recorded and collated into a more accurate spread of information, using the best software and techniques. This allows the process of taking your bookkeeping to an accountant to become much easier, but a bookkeeper and accountant are different bodies.
The bookkeeper must complete their work before an accountant. Bookkeeping pertains to the act of providing accurate financial data of your business throughout the year so an accountant can complete tax returns etc. Most businesses of smaller sizes don't realise the potential of working with a bookkeeper, and if you're one of those, it's not too late to join in.
Here are the primary responsibilities of a book keeper and how they can benefit your business:
This is the simplest and most primary function of a bookkeeper: to record financial transactions of your incoming and outgoing of the business. While you may be doing this yourself currently, a bookkeeper can provide more accuracy in preparing financial statements for an accounting team.
Data entry is essential not only for you as the business owner but for other stakeholders to receive an accurate representation of the business performance and future growth opportunities.
Another crucial bookkeeping service is bank reconciliation, which involves cross-checking your financial information and daily books with your bank statements.
Everything must match accordingly, so this is a way of ensuring that the information in your books reflects your bank statements. There can be human error, missed parts, and overlooked transactions, so bank reconciliation ensures no issues or data entry issues arise.
Another part of business that can be time-consuming is ensuring that customers are invoiced efficiently, and all payments are collected on time. A bookkeeper can complete everything and file paperwork, so it is up to date, giving you one less thing to worry about.
On top of this, your bookkeeper can pay bills on time to your suppliers etc., so that your business doesn't experience delays. Your employees' payroll is another task that employers don't want to spend much time on, but it needs attention.
A bookkeeper can also perform this for you, ensuring that salary, deductions, net salaries and more are calculated correctly and paid accordingly on the agreed date. This will not only ensure that all parts of your company are kept happy but that you are complying with your responsibilities as the business owner.
While documenting and calculating daily accurate financial records for you, a bookkeeper will also create monthly financial reports. These include balance sheets, profit and loss reports, cash flow statements, expense reports and more.
When these are completed, you will have a greater understanding of your business financial position, your earnings and expenses, your cash transactions and the amount of cash-in-hand you have at any one point.
A bookkeeper can also manage accounts receivable and create an accounts payable report, giving you information on the debtors and the amounts needing collecting alongside the amount that needs paying to suppliers. All of this can help you become more financially knowledgeable with your business expenses and move smoothly in the future.
These reports will show a forecast on the profitability of your business, along with an estimate of the cash-in-hand you require for your daily operations.
With this knowledge in hand, you will hopefully receive a greater understanding of your business as a whole. At a growth stage where you are finding your feet in the business world among your competitors, there is no better time to hire a full time bookkeeper.
Basic Bookkeeping VS Full Service Accounting
Many small businesses can benefit from bookkeeping services or full accounting services, as there is a lot to manage in those early days.
As business improves and picks up, you will need more assistance with recording transactions, paying bills, payroll accuracy and more regulations you must follow, especially during tax season. At this moment, you must decide if you need basic bookkeeping services or a full service accounting would benefit you more.
The two terms are not interchangeable, as they require different levels of knowledge and qualification, and the cost of hiring an accountant compared to a bookkeeper is much higher. Bookkeeping is more about handling financial data and storing it, arguably more administrative.
Accounting is about creating forecasts from that data to help you make informed business decisions in the future. They have elements that cross over, and some accountants will offer bookkeeping services, but they are different trades, despite needing one another.
Accountants will typically carry more knowledge about taxation and business legislation, ensuring that you are on the right side of the law and complete paperwork efficiently and correctly according to HMRC.
They can advise you on your business decisions, as they can assess whether you have enough profit to bring on new staff, tax and expenses, asset management and more. The best accounting software is used to determine and calculate financial growth, evaluate your business bank account and transactions to give you a clear picture of your business future.
Accounting and bookkeeping services do go hand in hand, and bookkeeping is a large part of any accounting service, but you may not require the whole works at this current moment in time. If you do decide that processing payroll, tax audit assistance and other services do become a requirement that needs fulfilling, this can be brought in at any moment. Outsourcing bookkeeping or accounting help is easier than ever before.
What Does A Bookkeeper Do For Your Small Business?
Despite this, bookkeepers may be the first step that you need to enlist, as your small business isn't at a point where you will benefit from a full accounting service.
Your records will be well maintained, all transactions tracked and financial reports created for you. As the business head, you are juggling many different balls and wearing different hats, so being your own bookkeeper isn't ideal in many situations. A bookkeeper can also provide you with:
Entering, Coding and Bills Paid
Customer Invoices created and sent
Reconciling banks and credit accounts
Past Due Accounts Collected
Account Analysis
Month-End Closing and Audit Support
Tax Support
Client Source Documents (PBCs)
Having in house bookkeeping can save you a lot of time and money, despite the initial fear that hiring one will bring. Whether you decide to outsource one or keep them in house, you can increase profits when hiring a bookkeeper.
Bookkeeping and accounting services alike shouldn't be viewed as something that will cost you money. They are more about understanding your business financial decisions and ensuring you continue to grow as a business.
If you would like to hire a bookkeeper but are unsure how much you should pay, start by assessing how many hours you currently spend on your own books and calculate how much you value that time. Once you've converted that time into a monetary value, that is the base figure that you're looking for in a bookkeeper, and you can begin your research.
Online bookkeeping has become a norm for many professionals, as they can manage bank feeds, business accounts, tax payments, and monthly fees while working virtually. This can aid you also, as you are not surrounded by paperwork and can view everything with more organisation.
Basic bookkeeping costs can vary, so be sure to ask for a quote before you agree to anything final. Part time bookkeeping and full time bookkeeping are options for you, as the size of your company may only require occasional financial assistance until your business grows further. All of this can still be utilised by sole traders, and other duties can be requested where desired.
If you require further assistance or believe that your small business can benefit from bookkeeping services, please reach out to our professional team, and we can advise you further.