Bookkeeping is a process that involves the recording of financial transactions and information related to business on a daily basis. It is not easy to maintain every financial detail for a small business owner due to time constraints or lack of bookkeeping knowledge. Hence, in these cases, it is suggested that one makes use of bookkeeping services.
In order to run your business healthy and successfully, you need to keep a good track of your income and expenses. Bookkeeping helps you keep track of all the expenses, sources of revenue and way to save on your income tax. Keeping a close eye on your business helps you make fewer mistakes irrespective of you being a maths person or not one should understand basic bookkeeping method which would help you understand effective ways of bookkeeping.
- It is always important not to mix business and personal expenses:
- There are two ways to record your financial transactions, such as single entry and double entry. Keeping a double-entry accounting record separates your debits and credits. It will help you understand where is the money coming from and where is it going. In single entry record keeping does not record two aspects or accounts of all the financial transactions. Debit and credit should be equal; double entry accounting is like double-checking your account.
- On a cash basis, you only recognize when you receive it for example when you deposit the cheque into your account. On accrual basis you recognize revenue when it is earned. For example, once you complete a project and write the invoice. For small businesses or if you are planning to just start you can probably use the cash method. It is easy to change from cash to accrual method whenever required.
- You can choose bookkeeping methods that can be done by using paper, excel or use accounting software.
- Categorize your transaction as they are essential to classify your transactions. It will help you to learn the tax deduction system.
- You need to keep a record of your bookkeeping by organizing and storing them properly. You should keep every receipt, bill, bank statements, etc. There are two rules for your record .keeping. A) You should keep record of your expenses that are over $ 75. B). You should keep every receipt and financial record for three years.
Keeping your record digitally will help you as there are some software developed, especially for your bookkeeping needs.
Small business owners higher professionals for their accounting needs. It is called outsourcing. Some hire part-time professionals, and some choose full service bookkeeping for their business. Full-Service bookkeeping may be in charge of account receivable, payable, and payroll and tax deposits. His/her duties are similar to an accountant or controller of a large business as they take full responsibly for your company’s finances.
What do bookkeepers do for small business:
The main focus of a bookkeeper is to record financial transactions involved in the business by maintaining records, keeping track of transactions and creating financial reports. Their other duties are
- Entering coding and paying bills.
- Creating and sending customer invoices.
- Collecting past-due accounts receivable.
- Maintaining venders for account payable and clients for account receivable.
- Reconciling bank and credit card accounts.
Cost of bookkeeping services for small business:
There are three options for bookkeeping services and their cost accordingly.
- Hire a part-time bookkeeper: You can hire a part-time bookkeeper someone who comes to your office once a week or once a month and works somewhere between 10 to 15 hours a week or month depending on how much work you need. That person would cost you somewhere between $ 35 an hour for basic data entry to $55 an hour for full charge bookkeeper and they would do entering of the bills, entering the timesheets, entering of your receipts.
- Hire a full-time bookkeeper: Full-time bookkeeper would come in and work 35 to 40 hours a week and you can expect for a bookkeeper to charge $35000 to $55000 for a full charge bookkeeper. Hiring a full-time bookkeeper is expensive as you are going to have cost of health insurance, pay role tax, give them a desk, telephone, etc expense that you will have with any full-time employee.
- Outsourced accounting service: In this case, you have the option of getting a bookkeeper or a team a fractional share of accounting department. However, do you know: what is the average hourly rate for a bookkeeper? It is around $21. But real deal come round, if you have a bookkeeper who charges somewhere between $500 to 1000 for a month. If you have a full accounting team it would cost you $1000 to $3500 a month.
Types of bookkeeping services:
In this digital era, people tend to use advanced technology for their financial needs. Previously, manual bookkeeping was used to maintain records, but these days there are various forms of bookkeeping available such as:
- Single entry system: This system is used by a business that has minimum uncomplicated transactions.
- Double-entry system: This is used for businesses that have more complex transactions.
- Bookkeeping software: The availability of bookkeeping services helps small business owners to keep track of their financial activities.
- Virtual bookkeeping: This type of bookkeeping lets you telecommute rather than physically being present at the office.
- Outsource bookkeeping services India: Outsourcing work lets you reduce financial and accounting costs, which helps in effectively managing accounting and tax preparation needs. Hence, many companies and businesses are planning to outsource work to India.
Hence, we can conclude by saying that bookkeeping plays a major role in managing its finances. So, it is very important to have a proper and effective bookkeeping method in place depending on the size of the business.