Bookkeeping involves the entering of financial transactions on a day-to-day basis into the accounting system. This is a time-consuming process and often takes the back seat when a small business is in full swing. In this article, we will see why bookkeeping is important for your business and the advantages of outsourced bookkeeping services.
Don’t let these duties slide
Consistent bookkeeping is critical for your business because accurate financial reporting provides useful information on performance.
Most business owners hire people who have the right skills and experience to keep their books.
First, we should point out that bookkeeping and accounting are not the same. A bookkeeper helps the business in:
- Reconciling bank statements
- Processing payroll, accounts payable and accounts receivable
- Posting journal entries
- Performing month-end closing
Accountants provide business insights and prepare the financial statements of the company based on the bookkeeping information.
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4 ways to find a good bookkeeper
But where does one find an experienced and reliable bookkeeper? There is no straightforward answer, but you can adopt any or all of the below-mentioned options to find the perfect bookkeeping partner for your business. While they take over this critical task, you can focus on your venture’s vision.
- Recommendations.
- Freelance and job sites.
- Online marketplaces of service providers.
- Bookkeeping agencies.
Let’s look at each of these suggestions in detail, including a few tips on how to make right choice.
1. Recommendations
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You can start your search by asking for recommendations from the people you know in the industry. You can get honest feedback about the bookkeeper from someone who has worked with him or her.
Many business owners prefer to work with local bookkeepers to have face-to-face meetings.
If the bookkeeper has experience in your industry, then he must also understand the nuances of your business well.
2. Freelance and job sites
You can also post your job requirement on freelancing platforms such as Upwork and Freelancer. There are hundreds of expert bookkeepers on these sites to choose from. You can choose a bookkeeper based on their previous experiences, location, etc. Pay special attention to their ratings and testimonials, as these provide ample information on the quality of their services.
3. Online marketplaces of service providers
There are marketplaces like ClearTax and IndiaFilings that are dedicated to providing bookkeeping services. These marketplaces do the initial vetting and verification of potential bookkeepers to ensure high-quality services to you, their client.
This option might cost more than finding your own bookkeeper, but will have fewer risks for you.
4. Bookkeeping agencies
Agencies employ competent and trained staff to offer bookkeeping services to clients. You can get in touch with them and ask about their industry experience and fees.
The main advantage of bookkeeping agencies is that they minimize your dependence on an individual.
Since these agencies have a team of professionals, you will always have someone available for your assignment.
Tips on choosing bookkeeping services for small business
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Before hiring bookkeeping services for your small business, you should evaluate or shortlist the providers based on the following major parameters:
- Educational degree and license: You should enquire about their education degree and licenses. Chartered Accountants (CAs) who have a degree in accounting are the most sought after.
- Experience: The best candidate is someone who has experience in your industry and understands your type of business well.
- Responsiveness in communication: Outsourced bookkeepers should respond to your queries and submit reports well in time for proper decision-making. You can learn about responsiveness by asking for references who you can contact.
Once you’ve narrowed your choices down to two or three, meet with each one in person. This will give you a good sense of what the agency or person is like, before you make your choice.
Why proper bookkeeping is important
It is critical for your business to keep its books for the reasons mentioned below:
Business insight
Proper bookkeeping helps you make smarter business decisions. While you get an accurate view of your finances, you can also identify the opportunities and threats well before they require action.
Compliance
Declaring of correct income and filing of taxes is a statutory obligation and it must be done on time. Proper bookkeeping helps you to maintain correct financial records and comply with tax laws.
Cash management
Bookkeeping tracks your cash movement, account receivables, account payables, invoicing, etc. You will have more control over the business once you understand the actual cash position and its movement on a regular basis.
Internal control
Proper and timely bookkeeping helps to check the possibility of fraud or fund embezzlement in the company.
Advantages of outsourced bookkeeping service
As a business owner, you might have the inclination to take all the business processes in your own hands. But bookkeeping is a time-consuming task and requires appropriate skills and patience to yield the best results.
Hiring bookkeeping services for small businesses can provide the following benefits:
Frees up your time
Outsourcing of other operational tasks frees up your time so that you can focus on more important roles in the company like:
- Bringing in more business
- Improving the quality of services or products
- Raising funds
Even a slight error in bookkeeping can lead to incorrect tax calculations that can have serious implications. Therefore, it is advisable to appoint a professional who can devote enough time to the task.
Expertise on your side
Through outsourcing, you are using the services of more skilled staff and leveraging their experience for your business.
Unbiased financial opinion
An external bookkeeper is not influenced by the internal operations of the company and can give you an unbiased opinion on your financial position.
Lower cost
The cost of hiring an external bookkeeper is less than hiring a full-time employee. Once your business and staff expand, then you can plan to hire a full-time bookkeeper.
In conclusion
Bookkeeping is a time-consuming task and requires skilled knowledge to perform the job perfectly. You can do the bookkeeping when your business is in early stages but as business grows, it is a wise decision to hire a bookkeeping service for better consultation.
It takes some effort to find the right bookkeeper, but it is worth the effort, given the importance of the role they play in the success of your business.
The above content should not be construed as finance or tax advice. Always consult a finance or tax professional regarding your specific situation.
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