Does My Business Need Bookkeeping Services?
November 16, 2023
Whether starting a new business or growing an existing business, tracking overall income and expenditure is critical. Bookkeeping services have become essential as accurate work and reporting become emphasized.
There are many reasons why your business might need bookkeeping services. Preventing losses is high up on that list, and mistakes are the number one loss contributor. Mistakes not only take money away from your company, but they can also make your business look bad.
This article outlines bookkeeping services, how they benefit a business, and why you should consider outsourcing this service.
What Are Bookkeeping Services?
Bookkeeping refers to recording financial transactions to produce an accurate overview of a business' accounts at regular intervals. This could be monthly, quarterly, even annually.
These reports include income and expenditures, as well as other valuable metrics. Examples of these reports include balance sheets, P&L statements (which includes income and expenses), and company budgets.
Accurate bookkeeping helps business owners get a complete picture of their business's financial position and help identify and solve any potential or occurring issues. This information is also the foundation for reports that will help inform future decisions.
Here is a list of what bookkeeping services may include:
- Management reporting
- Monitoring business performance indicators
- Balancing business financial statements alongside bank statements.
- Preparing tax returns
- Conducting business cash flow analysis and budgeting
Why Does My Business Need Bookkeeping Services?
Business owners are often faced with two difficult decisions. Which is more important: the quality of their bookkeeping services or the money they can save by doing it themselves?
For most businesses, a bookkeeping service isn't an option they should refuse. Utilizing these services can help provide legal protection and maximize profits. Not to mention, it is challenging for an owner to pay attention to all the little details of running a successful company independently.
Let's look closer at legal protection from fraud, which is a good reason to secure bookkeeping services.
Even if you've mastered excel sheets and other basic accounting programs (like QuickBooks), entering data into a computer system won't protect you from fraud charges. You must ensure your business is complying with legal requirements.
Accurate record-keeping can also help you:
- Understand your business' financial position
- Make well-informed decisions concerning the future of your business
- Monitor the performance of your business
- Keep track of expenses
With that said, not all bookkeeping services are created equally. The quality of bookkeeping services varies wildly, and the difference can mean big business for both you and your company.
Outsource or DIY: Which Is Best?
Several factors determine whether a business owner should outsource their bookkeeping or not. They include the size of your business, how involved you are in its day-to-day operations, and your existing financial arrangements.
Many small businesses struggle with an internal bookkeeping service, which can be very time-consuming and not always efficient. Not only would it be easier and more efficient for business owners to hire someone, but it is also the law in most cases.
A lot of businesses are required to keep records in a certain way. This is an investment of time that business owners might not have. The alternative is hiring a professional. Outsourcing to an experienced bookkeeper can free up your time, allowing you to focus on running your business.
Professionals also take better care of records than someone trying to learn as they go along. If you were going to do your taxes, would you rather hire a professional who understands the ins and outs of the tax code or try it on your own and risk potential savings?
Professionals exist because they have expertise that not everybody has. The same goes for your business – you are an expert in your business's primary operations. Focus on building and supporting your business, and let a professional bookkeeper take care of the finances.
Benefits of Outsourcing
Understanding the ins and outs of bookkeeping is challenging for someone just starting. Many details go into caring for your money. It can be overwhelming to figure out everything at once, especially if your expertise is not in finances.
If you decide to learn bookkeeping to maintain your business records, it could take years to yield tangible results. Your focus should be on your core talents for your business offerings. Doing so will maximize your business's efficiency while building solid business practices.
Here are the benefits of employing the services of a bookkeeper:
Comprehensive View of Finances
An organized financial statement will help you understand your finances and provide the resources necessary to apply for a loan. It is a must to have a well-maintained financial statement so you can have the financial solvency of your business at your fingertips.
Compliance with Statutory and Regulatory Laws
A bookkeeper will ensure your business accounts are up to date if there's any change in the state or federal laws. In keeping with this, you'll always act by any regulations regarding accounting and business.
Ready for Tax Season
Tax season shouldn't take your attention away from your business. Let your bookkeeping services detail the year's expenditures – they are best equipped since they already keep your accounting books up to date. Outsourcing bookkeeping services to a firm knowledgeable about tax law can also save you money by decreasing your tax burden.
DIY bookkeeping is not the best approach for a business owner. While it might serve you as you're starting, you'll soon realize that it's counterproductive to your business' growth. Building a business comes with a long to-do list and challenging new responsibilities. It's essential to make sure you focus your attention on your core strengths.
Bowers aims to offer helpful information to our clients and friends. Learn more about how we can help should your business need client accounting & advisory services.
Disclaimer: To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document or video is not intended for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.