Posted on December 14th, 2018
Bookkeeping is defined simply as the process of recording and organizing transactions derived from business events. A bookkeeper performs the bookkeeping function of a business by entering business transactions into a record keeping system, usually accounting software, that keeps track and organizes transactions into financial categories or “accounts” presented on financial reports. A good bookkeeping service for small business uses these accounts to reconcile periodically to ensure accuracy of the account balances. In addition, a bookkeeping service will bill and collect from your customers, pay the business expenses, process payroll and file payroll taxes.
Why are quality bookkeeping services important?
Bookkeeping services are the foundation of a company’s accounting and tax processes. A quality bookkeeper understands the nature of various business transactions and will record those transactions correctly and timely resulting in reliable financial statements and accurate tax returns. These financial statements show the value of everything the business owns (its assets), everything it owes (its liabilities), how much money was made (its revenue) and how much the company paid out (its expenses). The accuracy of these financial reports is extremely important, especially regarding filing tax returns, since inaccurate tax returns can result in unnecessary higher taxes or trigger penalties from the IRS and IRS audits, which is even scarier. Accurate financial statements generated from quality bookkeeping services are also important in that those financial statements are used by business owners and other users to analyze the financial health of the business, obtain loans, manage cash flow, etc. Another benefit of a quality bookkeeper is that your customers and vendors will appreciate the fact that their accounts and transactions are organized, accurate and there are never any problems! All of these benefits ultimately free up time from busy business owners who can focus on the operations of the business rather than financial statements they are unqualified to prepare.
What to look for when hiring a bookkeeping service:
Hiring a new bookkeeping service for small business can be time consuming and complicated. Not knowing what to look for will make the process even more difficult. Here are the most important factors to consider in your decision making process: