Everything You Need To Know About Bookkeeping Services For Your Small Business

"Bookkeeping is the recording of financial transactions and data about a business. It assures that records of the particular financial transactions are accurate, up-to-date, and detailed. Accuracy is, hence, vital to the process."
bookkeeping services for small business

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Bookkeeping is an important aspect of any business large or small. Bookkeeping services for small business specifically is even more critical due to the nature of many SMBs having to manage an extremely tight cashflow.

What is Bookkeeping?

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Bookkeeping is the recording of financial transactions and data about a business. It assures that records of the particular financial transactions are accurate, up-to-date, and detailed. Accuracy is, hence, vital to the process.

Difference between Accounting and Bookkeeping Services for Small Business

BookkeepingAccounting
Definition
Bookkeeping is limited to examining and tallying financial transactions only. Accounting refers to the process of summarizing, interpreting, and communicating the financial data of an organization.
Basis of Accounting
It is the basis of accountingIt is the language of business
Preparation of Financial Statement
Not done in the case of bookkeeping.Financial statements are a part of the accounting process.
Analysis
No analysis is required in the bookkeeping.Accounting evaluates the financial information and establishes financial insights for the business.
Persons Involved
The person concerned with bookkeeping is known as a bookkeeperThe person affected with accounting is known as an accountant
Determining Financial Position
Bookkeeping does not indicate the financial stance of a businessAccounting assists in exhibiting a detailed picture of the financial standpoint of a business
Level of Learning
No high-level learning is required.High-level knowledge is needed for comprehension and assessing accounting strategies.

What is single-entry bookkeeping? 

Single-entry bookkeeping is an easy and precise bookkeeping strategy in which every transaction is listed as a single entry in a financial journal. This is a cash-based bookkeeping technique that trails incoming and outgoing money in a financial journal.

How does the single-entry system work? 

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In single-entry bookkeeping services for small business, you keep a cash book in which you report your revenue and expenditures. Beginning with your overall cash balance for a given duration, calculate the income you obtain and deduct your costs. After analysing these transactions, you can compute the cash balance that you are left with.

A regular cash book will have the following info:

Date – The date indicates the date when a financial transaction occurred

Description – A short note on the transaction and its nature

Transaction value – The amount can be either incoming, known as debit, or outgoing, known as credit.

Balance – Running total of how much cash you have in hand

In the next illustration, presume you’re a small business owner documenting the debit and credit entries for all of the transactions that take place in a given week.

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Single Entry Bookkeeping Illustration

Bookkeeping for Debit & Credit

1. Let’s assume you have a $5000 cash balance at the beginning of the first week in June. So this will be your first entry.

2. On the second day of the week, you reimburse your rent, which stands $1000. Since this is an expense, you deduct this payment from your cash balance. This puts you at $4000.

3. Your customer pays an invoice for $500, which is income. So this amount is debited to your account and raises the account balance to $4500.

4. You purchase office furniture for $1500. So you deduct this amount from the overall balance.

5. At the end of the week, you are left with $3000 in cash.

What is double-entry bookkeeping?

Double-entry bookkeeping is the procedure of documenting transactions whereby each transaction entry is listed in at least two accounts as a debit or credit. In a double-entry approach, the payments recorded as debits must be equal to the amounts recorded as credits.

How does the double-entry system work?

The key feature of this system is that the debits and credits should always match for error-free transactions.

The double-entry bookkeeping strategy functions on the fundamental accounting equation, which is as follows:

Assets Liabilities Image

Knowing the difference between account types is the key to coding transactions accurately. 

Difference Between Assets, Liabilities, Equity and Income

Here’s our simple guide to understanding the distinction between assets and liabilities, equity, and income.

  • Current asset– Anything that a business owns can be converted into cash within the next 12 months.

  • Non-current asset-A physical asset such as office appliances, land, buildings, computers, or automobiles that aren’t expected to be converted into cash within the next 12 months.

  • Current liability-An amount owed by the company is due within the next 12 months, including weird stuff such as credit cards.

  • Non-current liability– Anything you owe that isn’t due to be paid out within the next 12 months, such as hire purchase debts or the bank loans.

  • Equity-The ‘interest’ that shareholders or an owner has in the company, including both capital provided and the profit or loss built up over time.

  • Income– Income can be defined as the amount generated from sales to customers or returns on investments.

  • Cost of sales-What it costs in raw materials, supplies, or production labor to make the goods you sell (also called the cost of goods sold or variable expenses).

  • Expenses –The day-to-day running costs of your company, including things like an advertisement, bank payments, computer consumables, electricity, motor vehicle expenses, rentals, telephone expenditures, and wages. Charges are sometimes also called fixed costs or overheads.

The Term Balancing The Books

You must understandthat each side of the equation must balance out each other. This is how we come to the term “balancing the books.” A little illustration will enable you to understand this equation.

Let us take the identical illustration that we adopted above, but this bit uses double-entry bookkeeping. Consider that you are documenting debit and credit entries for the transactions in a week, utilizing double-entry bookkeeping.

The initial balance for the week is $5000. In one week, you reimburse your rent ($1000).

Account Balance

You buy office furniture ($1500).

Account Balance

Meanwhile, Excel Tech pays an invoice with a price of $500.

Account Balance

If you notice all three transactions, you can identify that total credit and total debit are the same: they both sum to $3000.

What Does a Bookkeeper Do For a Small Business?

For many small business owners it can be hard to know what to expect from a bookeeper before they hire them. As such we felt it was important to explain in layman’s terms. 

An experienced bookkeeper should do the following things for you:

1- Gathering Basic and Advanced Financial Information 

The books can inform a small business owner about their business as a whole, and these numbers do count. In essence, a bookkeeper can create financial reports and analysis, assessing a business’s specific areas. For instance, if you wanted to gather a description containing what monies have been spent on materials per month and what is recouped via paid invoices, bookkeepers can write a detailed financial report. This could then be used to see which areas are costing you more; however, bookkeepers can also carry out basic weekly bookkeeping for the business.

2 – Bank Reconciliation 

This is quite a foreign concept to most, and it isn’t hard as to why thousands of business owners struggle to understand what bank reconciliation means. However, bookkeepers can offer this service, and it can be useful for spotting errors. The way bank reconciliation works are straightforward; the bookkeeper will obtain records from a bank for a certain period and compare them to the company’s cash balance records. This is the time when the bookkeeper can pick up on potential errors made.

3 – Checking Trial Balance Sheets 

Trial balance sheets may appear to be an accounting task, but in reality, it is a bookkeeping task and one which every bookkeeper should carry out. Bookkeepers should take the accounting worksheet and go over it with a fine-tooth comb to check everything is correct and in order. This is also the time when bookkeepers can pick up on any errors or mistakes made. However, it is an essential service as it can prevent simple errors from becoming worse.

4 – General Ledger Keeping 

Every bookkeeper’s principal service is to sustain financial ledgers of the day-to-day dealings of your small business. This is a pivotal part because, without this principle, a company cannot run. Every penny coming into your business and going out from your business is recorded (either in a single or double entry system) in these ledgers. Bookkeepers will also handle the accounts payable and account received, which means that they list every transaction the business owes and which it is also owed. Essentially, every transaction made by the company is recorded and verified by the bookkeeper.

How to Develop a Bookkeeping Setup for Your Small Business?

If you are looking to develop a bookeeping setup for your small business, the following stage by stage bookkeeping checklist should hopefully assist you. You will have confidence that you have accomplished what you needed to do to get your books in good shape.

  1. The first step is to confirm you systematize bank feeds for every account.
  2. At the minimum, once a month, restore every bank account against bank statements.
  3. Keep an eye out for pre-dated or future transactions.
  4. Eat an ice cream tub in one sitting (oh yes, and tidy up the debtor’s list).
  5. Skim through the creditor’s list.
  6. Review tax codes on all the transactions.
  7. Appease your GST liability accounts.
  8. Provide inventory with the once over.
  9. Confirm all payroll liability accounts.
  10. Check your transaction reports for unusual mistakes or blunders.
  11. Examine through the financials and check whether they make sense or not.


BAS Payment Summaries PAYG & Superannuation Bookkeeping Requirements

Here is some helpful information on different taxation requirements/statements and how they need to be handled.

TypeDescription
Business Activity StatementsFor Monthly payments – It needs to be 21 days after the end of each month.
And for Quarterly payments – It needs to be 28 days after the end of each quarter, where the December quarter is considered an exception. Finally, the deadline is considered February 28th.
Payment summariesSpecified Date – July 14
Annual withholding declarationSelected Date – August 14
SuperannuationIt should take place 28 days after the end of each month or quarter, which depends upon the funds.
PAYG withholding taxAfter 21 days after the month’s end for monthly payments or 28 days after the quarter’s end for the quarterly payments, it should take place.

What is the Best Method for Small Business Bookkeeping?

For thousands of small business owners, they often struggle to fully understand what to expect when choosing small businesses’ bookkeeping services. It can be exceptionally confusing if owners have never dealt with bookkeepers before, and for many, they have missed out simply because they aren’t aware of the additional services available. You can hire a bookkeeper for complete business financial services.

Suppose you are a small or medium-sized business owner and struggling with managing your business financial services. In that case, you need to hire a certified Bookkeeping Services provider firm like an account-consultant who can help you manage all your financial needs like accounting, payroll, tax return & preparation, accounts payable & receivable, and much more.

Why should you outsource bookkeeping services for your small business?

Many businesses worldwide outsource somehow, and it’s increasingly prominent to engage an outsourced bookkeeper. This may sound a little bizarre to those unfamiliar with outsourcing, though it has become very much possible to go for Bookkeeping Outsourcing Services today. Nonetheless, what are the justifications of why a small business should consider outsourcing their bookkeeping services for small businesses?

Reasons for Small Business to opt for Outsourced Bookkeeping Services –

1- A Bookkeeper Offers Quick Turnaround Times with Quality

It’s crucial to remember bookkeepers who don’t work as part of a large bookkeeping firm have only a few things to keep their reputations alive. Firstly, bookkeepers depend on affordable prices and quality work. If they hand back a company’s books with several errors, they are less likely to be rehired and very unlikely to get a job elsewhere. Secondly, bookkeepers need quick turnaround times to keep their clients happy, which is the biggest reason why small businesses need to outsource. Experts know that the competition is enormous for them, and unless they provide quality practice in a short space of time, they won’t go far.

2 – Internal Resources

Small businesses don’t usually have many people behind the scenes and look to double-up the workload as much as humanly possible. Sadly, having a member of the section dealing with their regular employment and the bookkeeping services can often be distressing. Occasionally the employee takes away valuable hours devoted to their regular duties but is relatively concentrated on bookkeeping. It’s rapidly becoming a crisis for small businesses, but you eliminate this issue when you outsource to a bookkeeper.

3 – You Get the Full Story from a Professional Bookkeeper –

Employing bookkeepers who are friends or family members are tremendous, but they potentially hurt your business if they aren’t qualified. It’s the same with allowing employees who have no real experience or qualifications to deal with bookkeeping; disaster is looming large. However, when you outsource and hire a bookkeeper, you can learn much more than ever before. You can get a detailed report of your finances and know whether the business is in a strong position to expand or stay afloat for the upcoming months.

4 – Reducing Office Space

An important reason why small businesses should outsource bookkeeping services for small businesses is to lack room. A small business doesn’t have a large office building. Most start with a home-based office and eventually expands into a larger office, but even then, the space is tight. Being able to reduce office space, even by only one or two people could make all the difference. Bookkeepers don’t have to work within the office when you outsource, which is a real saver.

5 – Outsourcing Makes Sense for Small Businesses –

Large companies may not find outsourcing the most effective solution personally; however, small businesses disagree with this nine times out of 10. It does make perfect sense for a small business to consider outsourcing bookkeeping services. It could make things much easier in the long run, and hiring a bookkeeper is so simple today.

If you are still confused about what you are looking for and your business demands, small businesses disagree with this, u can contact us here to help you with all your business financial needs.

If you want to check out some free bookkeeping programs then there are several to choose from.

How do You Price Bookkeeping Services For Small Business?

how do you price bookkeeping services

The charges for small business or nonprofit bookkeeping will depend upon a lot of factors. These factors include the size of your company, the volume of monthly financial transactions, amount of employees, how many payrolls are processed monthly, the sum of expenditure accounts, company credit cards, invoices, bills that need to be reimbursed, the quantity of balances sheets to conform, etc.

What should You Consider when Hiring a Bookkeeper for Your Small Business?

You would need to consider the following aspects whenever you are hiring a bookkeeper for your small business – 

1. Scope of financial work within your business. This includes things like frequency of financial transactions on a daily, weekly, and monthly basis.


2. You need to verify whether they are verified and registered to practice bookkeeping or not. For instance, If your bookkeeper will be filing your BAS in Australia, he should be a Registered BAS agent. BAS agents are registered and verified by the Tax Practitioners Board.

3. As per your requirements, you need to factor in their experience, expertise, communication, delivery time, etc. The perfect bookkeeper for your small business is one that holds the technical expertise required to maintain your books. They must be deemed a specialist in your industry, prepared and inclined to learn.

FAQs 

1. Why do you need a bookkeeper for your business?

Bookkeepers have quite a varied role. While most mistakenly believe they only deal with primary number inputting. It is far more complicated than that. Verified and Certified bookkeepers can deal with many financial matters. Although the best program is one that suits your accounting style.

2. Are Bookkeeping Services really worth it for small businesses? 

There are various kinds of bookkeepers and services that each can offer your small business. You need to figure out if a bookkeeper is required for your small business. After reviewing your small business and financial transactions, you need to analyze whether having a professional bookkeeper is worth it for your small business.

3. How do you keep accounting records for small businesses? 

There are various methods that you can follow to keep your accounting records. You can do this manually or with the help of accounting software.

4. What is the best course to learn bookkeeping? 

There are a lot of paid courses for bookkeeping in the market. However, if you don’t want to spend a bomb, you can learn about bookkeeping basics in this free course by the Accounting Coach its quite effective.

5. What is the cheapest bookkeeping solution for small businesses? 

Most small business owners do their accounting themselves. They usually take help from accounting software to manage their accounts. The most feasible way to invest in a bookkeeping solution would be an additional feature with your accounting software. For example, accounting software like Xero helps you integrate accounting and bookkeeping easily. 

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