As a business owner, your time is valuable. Balancing the many hats you wear—from marketing strategist to customer service guru—leaves little room to dive deep into the details of your financial records. Additionally, it can be hard to know what services you need or even what to ask for from a bookkeeping and accounting firm. That’s where a bookkeeper comes in. Far from just a "data entry" role, a bookkeeper provides vital support to ensure your business operates smoothly and stays on track financially. Here's what a bookkeeper brings to the table and why most businesses could benefit from one:
1. Software Selection & Setup
There are many types and brands of bookkeeping software on the market, and the list is always changing. A bookkeeper can help guide you to the best solution for your business, taking into account factors such as budget, user access needs, complexity of your operations, and integration with other software programs already in use.
Not only can they assist in the selection, but they can also help set up the software and make sure things are correct from the start. Inaccurate setup can result in an expensive and time-consuming cleanup task later and lead to costly or inaccurate tax preparation. For example, having a bookkeeper set up sales items used on invoices is essential because these are easily misunderstood and can result in a cascade of inaccurate data. QuickBooks "rules" are another example where users can inadvertently create incorrect transaction classifications that perpetuate errors moving forward. A bookkeeper ensures a proper foundation to avoid such snowball effects.
2. Accurate Financial Records
At its core, a bookkeeper ensures that all financial transactions are recorded properly and consistently. This includes tracking income, expenses, payroll, and other financial activities. Accurate records are critical for:
Preparing financial statements
Filing taxes
Understanding your business’s financial health
Without a bookkeeper, key steps in the recordkeeping process can be overlooked, resulting in missed tax deductions, inaccurate tax filings, and a lack of insight into the business’s performance. Regular reconciliation of business accounts—such as bank accounts, credit cards, and loans—ensures all transactions are recorded and verified. For instance, deductible expenses like interest on business loans are often entered during this process but can be easily missed if loan accounts are not reconciled regularly, resulting in overpaid taxes.
With so many payment platforms available today (e.g., PayPal, Venmo, ApplePay), transactions conducted via these platforms or personal accounts can easily be overlooked. A bookkeeper knows how to track and record these items while suggesting streamlined processes to avoid complications.
For businesses with employees, recording payroll can be complex. Misclassification of employee and employer taxes is a common mistake that can skew financial statements. A bookkeeper ensures compliance with payroll tax filings and timely payments, avoiding steep penalties and interest.
Additionally, handling large asset purchases, such as equipment, is another area where bookkeepers provide expertise, ensuring proper recording and compliance with tax treatment for these items.
If your business has multiple owners, a bookkeeper acts as an impartial third party to provide trustworthy information and accurately record transactions, including owner distributions and investments, which are crucial for partnerships and corporations.
3. Cash Flow Management & Bill Pay
One of the biggest challenges for small businesses is managing cash flow. A bookkeeper helps you navigate real-world scenarios such as unexpected equipment repairs, additional staffing needs, or sales slumps. They monitor cash inflows and outflows, providing forecasts to ensure you have the funds to meet obligations. Bookkeepers also help determine the right amount of cash to keep on hand for regular expenses, unexpected events, and personal withdrawals.
Many bookkeeping firms offer bill pay services, which can save time and eliminate the traditionally paper-dependent and costly processes of writing checks, mailing, and filing paperwork.
4. Tax Readiness
Tax season can be stressful without organized records. Bookkeepers ensure all necessary documents are ready for your tax preparer or accountant, reducing preparation fees and turnaround time. Clean-up fees during tax season are often higher due to tight timelines, making year-round bookkeeping a cost-effective choice.
Bookkeepers also ensure timely collection and secure transmission of paperwork, minimizing the risk of missing deductions or overpaying taxes. They work closely with tax preparers to streamline the process and ensure compliance.
5. Compliance and Avoiding Penalties
From payroll laws to sales tax reporting, compliance is key. Regulatory requirements change frequently, and bookkeepers stay up to date on relevant rules to help your business avoid costly mistakes or penalties.
For example, in Oregon, small businesses must either provide a retirement plan for employees or enable the state’s OregonSaves program. A bookkeeper can help you stay compliant with such requirements.
Additionally, during events like COVID-19, bookkeepers alerted businesses to time-sensitive programs such as the Paycheck Protection Program and Employee Retention Credit, ensuring they accessed available funds.
6. Peace of Mind
Running a business comes with enough stress. Knowing your financial records are accurate and up-to-date allows you to focus on what you do best. A bookkeeper ensures you always have a clear picture of your finances, reducing uncertainty and stress.
Why Not DIY?
While some business owners handle their own bookkeeping, this approach has limits. Mistakes in bookkeeping can lead to costly errors, such as double-booking income or missing deductible expenses. Moreover, time spent on bookkeeping takes away from growing your business.
Partnering with the Right Bookkeeper
The right bookkeeper is more than just a numbers person—they’re a trusted partner in your business’s success. Look for someone who understands your industry, communicates effectively, and uses up-to-date tools to keep your records secure and accessible.
Investing in a skilled bookkeeper is an investment in your business’s future. It’s not just about keeping your financial house in order; it’s about creating a strong foundation for growth and success. If you’re ready to take your business to the next level, consider partnering with a professional bookkeeper today.
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