5 Ways Online Bookkeeping Companies Can Help You Grow Your Business

No business owner is prepared for the amount of time and effort that bookkeeping will take. As much as you may wish you didn’t have to do it, you have to take care of your books for the sustained growth and development of your company. If you run a business and would like nothing better than to find a cheaper yet efficient bookkeeping option, you should consider online bookkeeping.

Online bookkeeping or virtual bookkeeping refers to bookkeeping services provided from a remote location; so your online or virtual bookkeeper will work on your books from a remote location over the internet. Pretty neat, huh? Now why would you want to outsource bookkeeping to an online company? Simple; because doing so can help you grow your business. How? Read on.

  1. Save Money and Resources– Which business owner doesn’t love being given a reason to save money and resources? Since online bookkeepers work remotely, you save up on rent, office space, plus, it is cheaper. You can now use this money and resources to serve other needs in your company.

Online Bookkeeping

  1. Save Time– Since you no longer have to spend so much time on your bookkeeping, you are free to use the time to attend to other business matters that require your expertise.
  1. Impeccable Business Records– Since you now have a certified bookkeeper working for you, you can be sure that your books are up-to-date and accurate no matter what the time of the year. No more running around when tax time arrives.

Outsource Bookkeeping

  1. Framework to Scale– Before you get ready to scale your business, you need to make sure that all aspects of your business are equipped to handle the growth. Outsourcing your bookkeeping to online bookkeeping companies means that you no longer have to worry about whether your bookkeeping can handle the growth; your bookkeeper will take care of it.
  1. Lesser Mistakes– A certified bookkeeper is less likely than an untrained business owner to make mistakes. Besides an online bookkeeping company would always have a team of trained professionals to cross check the books, leaving you in a better position to take informed business decisions.

Bookkeeping need not be the burden that it is for you right now. Find a good online bookkeeping company to outsource your bookkeeping to, so that you can focus on growing your business.

What to Look For When Hiring a Bookkeeper

Bookkeeping is an important part of any business; hence it goes without saying that your bookkeeper is also vital for the smooth and efficient running of your business. Unfortunately most small business owners feel that bookkeeping is out of their league and so don’t know what to look for in their bookkeepers. While the basic criterion is that they are well versed in the principles of bookkeeping for small business, there is a lot more that you should look out for. So let us take a look at what else you should expect in a bookkeeper.

  1. Good Communication Skills– Good communication skills are important for success in any field. How can you work with your bookkeeper if he/she doesn’t understand you or has trouble talking to you? A good bookkeeper is a valuable asset and can provide information useful for the growth and development of your business.

hiring a bookkeeper

  1. Basic Understanding of Your Industry– A bookkeeper with experience working in your industry will find it easier to navigate and get things done for you. While the essentials of bookkeeping for small business are the same for all, there will certain terms specific to the industry which the bookkeeper can understand only from experience.
  1. Knows How to Use Computers– Every sphere of life today is governed by computers and the internet, same goes with bookkeeping for small business. So, the smart and efficient bookkeeper of today should know how to use computers and accounting software like QuickBooks and Xero so that you can stay on top of your finances and reap the benefits of using these tools.

Bookkeeping for Small Business

  1. Attention to Detail– One of the reasons why bookkeeping is such a headache for small business owners is because there are so many small details that require your attention. Ideally a good bookkeeper will be able to pay attention to all the tiny details and give you accurate and up-to-date books.
  1. Have Financial Statements Ready on Time– As a business owner, financial statements and reports are extremely important to you and it is imperative that they are correct. Hence your bookkeeper should be able to provide you with the accurate reports and statements, namely the balance sheet, the profit/loss statement and the cash flow statement on time.

Hiring a bookkeeper is not a task to be taken lightly. Take your time and ensure that your bookkeeper has these qualities and any other qualities that you feel are important based on your prior experience with bookkeepers. If you can think of any other important qualities, leave us a comment.

5 Reasons Why You Should Consider Outsourcing Your Bookkeeping

The advent of computers and the internet has changed the way the whole world works. From business to education, everything is online and the online community is growing steadily with each passing day. There is no field not touched by the internet and computers, including bookkeeping and accounting. Gone are the days of ledgers and journals; today if you want to stay on top of things and keep out trouble with the IRS, you need a reliable accounting software and adequate knowledge of bookkeeping.

outsourcing your bookkeeping

Unfortunately, business owners, especially small business owners, don’t have the time and luxury to become expert bookkeepers and maintain their books accurately. They cannot afford to move their attention away from their business because that is all it takes for your business to lose its footing, which is why you should consider outsourcing your bookkeeping. Not convinced? Here are few reasons why.

  1. Saves Time– You will no longer have to spend time pouring over your books; instead you can use the time to attend to business related tasks that require your attention. You are now free to focus on growing your business.
  1. Save Money– You save money because you won’t have to retain a full time or part time bookkeeper on your payroll; you will only have to pay for the bookkeeping services. You will also benefit in the long run due to better financial reporting and advice.

why outsource your bookkeeping

  1. You Get To Do What You Love– No business owner likes doing the bookkeeping, but it is necessary. Outsourcing your bookkeeping means that you no longer have to spend time on it and can instead do what you love- working on and for your business.
  1. Access to Bookkeeping and Accounting Experts– Outsourcing will give you access to accounting and bookkeeping experts, people who know the tax codes and tax laws, so you know you can rely on them. All this will make your life a lot easier.
  1. Easy to Scale– All business owners want to grow and expand their business; outsourcing your bookkeeping can make this easier. Firstly by providing with data, reports and suggestions to increase profits, and secondly by providing you with bookkeeping service that is capable of accommodating the scaling of your business.

Ideally outsourcing can provide you with tons of options and flexibility that will allow you to grow and sustain the growth. Think about it.

Understanding Bookkeeping for Non- Profits

Non- profit and for- profit organizations are quite different from each other in their principles and method of functioning, however there is one thing that they share- both see money flow in and out of the organization. Money flow= Accounting and Bookkeeping; if there is money involved, you need to keep track of the money- where did the money come from, where is it going, do you have enough to cover your expenses, so on and so forth. Non-profits are built with the sole purpose of serving society and fulfilling a need, but what good can the organization do if you have to shut down or cannot meet the needs due to lack of resources?

bookkeeping for non profit

While bookkeeping for all organizations is technically the same, there are certain aspects of bookkeeping for non profit that are different.

  • Instead of the income statement that for- profit businesses issue, non- profits are required to provide a Statement of Activities.
  • Since non- profits do not technically have owners, there is no owner’s or stockholder’s equity and no distribution to owners.
  • Non- profit organizations can apply to the IRS to be exempted from taxes.

Non- profit organizations have numerous sources of income- pledges, donations, membership dues, fees for special events, investments, grants etc. For accurate and up-to-date bookkeeping, it is important that you record and account for all of these.

Non Profit Concept

Whether you decide to do your bookkeeping yourself or hire a bookkeeper, what is important is that the bookkeeping is accurate and up-to-date. If you decide to get yourself an accounting software, there are few things that you need to keep in mind.

  • Some accounting software are developed solely with conventional businesses in mind, so find one that meets your non- profits needs.
  • Find a good accounting software that provides in depth reports with income and expense graphs, accounts receivable ratios and other useful statistics that you can access easily.
  • You should be able to access your account and data anytime from anywhere.
  • Keep in mind that your organization will grow so your software should allow you to add more users as and when needed.
  • The software should be efficient and capable of handling simple manual tasks by itself.

Bookkeeping for non profit may seem tiresome and time consuming, but it is important for the sustained growth and development of your organization.

Why Virtual Bookkeeping?

Bookkeeping.. Ahh.. The bane of most small business owners lives, but no matter how you feel about it, you can’t do without it. So what are your options? You can either do it yourself or hire a bookkeeper. Most business owners feel that hiring a bookkeeper is an unnecessary expense, especially when you are just setting your business up, so they go the DIY route. Unfortunately, those who do learn the hard way that it’s tough and can take up more time than they can afford, so what next. Enter virtual bookkeeping.

online bookkeeping

What is Virtual Bookkeeping?

Virtual bookkeeping is simply bookkeeping services provided remotely, i.e your books will be maintained by a certified bookkeeper working from a remote location. Skeptical? This is actually a lot more convenient than hiring your own bookkeeper. There are three ways this online bookkeeping method works. The bookkeeper can:

  1. Access your system remotely and take care things like you would.
  2. Work over a cloud based bookkeeping software with your login details.
  3. Work on the same software you use and access it online using a hosted virtual desktop.

virtual bookkeeping

Why Virtual Bookkeeping?

Now why would anyone in their right minds avail of online bookkeeping services; here is why.

  • You save money because you don’t have to arrange for office space, equipment or supplies for them. If they are contractors, you will not have to worry about insurance, benefits and employment taxes either.
  • The online bookkeeping arrangement offers you a lot of flexibility and the bookkeepers can work as much or as less as your business requires.
  • Business owners who work out of their homes will also appreciate the fact that this means they will not have to worry about someone invading their home space on a regular basis.

So think again. Virtual bookkeeping is convenient for clients and bookkeepers and both groups can benefit a lot from the arrangement. So go over your options and find out what bookkeeping arrangement will work best for you; it is always good to remember that one size doesn’t fit all.

Accounting and Bookkeeping for Start-ups

You finally did it! You are running your own business- a dream come true. After all the planning and running around, your business is finally up and running; but all entrepreneurs know that it doesn’t end there. In fact, it has only just begun; sustaining your business and growing it steadily is tougher than setting it up. This is precisely why all small business owners become engrossed in running the business and end up ignoring something vital to keeping their business afloat- their accounting and bookkeeping.

Why is accounting and bookkeeping for small business so important? Simply because both keep track of your money and money is the first indicator of where your business is headed- to success or failure. First things first- let us understand what accounting and bookkeeping are and how they differ from each other. Bookkeeping is the daily activity of recording and categorizing transactions and reconciling accounts with bank statements, while accounting is the next step of analysing the bookkeeping data to understand business progress and trends to make informed business decisions.

Busy females

Now that we have established why accounting and bookkeeping for start-ups is important, the question is how can you take care of it.

  • Use spreadsheets- Well, you can always choose to handle the accounting and bookkeeping for your start-up yourself using spreadsheets; it is not really that difficult. The problem however is that this can take up a lot of time, time that you could have otherwise spent on growing your business. If you are not careful, you will end up neglecting either your business or your books; neither a favourable outcome.
  • Use an Accounting Software- This is better than using spreadsheets, but the responsibility of maintaining the books will rest on you, thereby eating into your time.
  • Hire a Bookkeeper/ Accountant- Definitely the easier option but can be a problem if you don’t have money to spare, especially when you are talking about accounting and bookkeeping for start-ups.

Research and choose wisely; find the option that best suits your needs.

bookkeeping for small business

There are a few basic things you need to keep in mind for effective accounting and bookkeeping for small business.

  • Maintain accurate and up-to-date records. Might seem obvious, but you will be surprised to know how easy it is to not do so.
  • Track expenses carefully and keep copies of all transactions, payroll data, payments and organizational documents.
  • Schedule and perform regular end-of-period procedures like balancing accounts, reconciling bank statements etc.
  • Maintain perfect tax records and pay your taxes on time.

Accounting and bookkeeping for small business is definitely not easy especially if you are a start-up but it is not impossible. With the right guidance and support and a little bit of patience on your part, you can get a handle on it.

Categorizing Small Business Transactions

Whether you handle your own bookkeeping, hire a bookkeeper or outsource it, you need to be able to understand your books to keep your finances under control and to make good business decisions. One of the first things you need to achieve this is basic understanding of business transactions and how they are categorized.

For small business bookkeeping, all business transactions have to be recorded. Noting the type of transaction is important to identify where your business stands- are you making money, are you losing money, where are you losing money, how much cash do you have in your account- all of this can only be determined by analyzing your business transactions. So let us take a look at the most commonly used terms in categorizing business transactions.

Credit– Any cash that comes into your business from somewhere, it could be a sale or fees, is technically a credit.

Stack of $100 bills

Debit– The opposite of credit, debit is any cash that your business has to give someone else, like rent or fees.

 

Journal– The record of all your credits and debits is referred to as the bookkeeping journal and the entries made in the journal are your journal entries in small business bookkeeping.

bookkeeping for small business

Account and Account Types– Pretty sure you know what an account is- it is where your money comes into and goes from. There are 5 different types of accounts from where the money flows. Understanding these accounts can help you understand your books better and categorizing business transactions.

  1. Assets- Anything that your business owns is an asset. Asset can be physical- equipment, property, inventory, cash or intellectual property. It can also be anything that promises returns in the future like a loan or an agreement.
  2. Liabilities- Any loan that your small business takes out or money that has to be paid is a liability.
  3. Equity- This refers to money that comes from the owners and is usually never expected back. There are different types of equities as well.
  4. Revenue- Revenue refers to income that is collected from customers. Revenue means increased equity.
  5. Expense- An expense refers to all cash payments made out for the purpose of keeping the business afloat like payroll, infrastructure costs etc.

Categorizing business transactions can sometimes be confusing and can take some time to get a hang off, but once you begin understanding the purpose behind each transaction it will be easy.

7 Basic Bookkeeping Elements for Small Businesses

Bookkeeping and accounting are probably the bane of every small business owners’ life; don’t like them but can’t do without them. As annoying as the tasks are, they are critical for the sustained growth of your company. Without small business bookkeeping, your business will never reach its full potential; besides you have the IRS to answer to.

Small business bookkeeping is really not that difficult. One of the first steps to get a hang of bookkeeping and accounting is to understand its common aspects, so here are some basic bookkeeping elements explained for you.

  1. Accounts Receivable- This refers to money that you are due to you, or that you should receive from clients and customers, so it technically refers to a major portion of your income. Sending out invoices and collecting the payments on time are vital to keeping your cash flow steady.basic bookkeeping for small businesses
  1. Accounts Payable- Any money that you owe or money that you have to pay is Accounts Payable in small business bookkeeping. Keep track of your Accounts Payable, pay your bills on time and accurately. This goes a long way in maintaining your business’ good will and to ensure you don’t make the same payment twice.
  1. Inventory- All the products you have in stock is technically money on a shelf, so keep careful track of your inventory. Make sure you have regular physical checks to ensure the count is correct and also to ensure that the quality of your inventory is not compromised.
  1. Revenue- Which businessman doesn’t love this word; after all it is the purpose behind starting a small business in the first place. Record all your sales so that you always know where your business stands.small business bookkeeping
  1. Payroll Expenses- This is probably the biggest cost for small businesses and big ones. Make sure you record the expenses accurately and pay your employees on time. This is also essential for tax purposes and to satisfy government reporting requirements.
  1. Taxes- Maintain up-to-date and accurate records and preparing and filing your tax returns will be a breeze. This will also reduce your chances of underpaying or overpaying your taxes, thereby ensuring good small business bookkeeping.
  1. Cash- Now this of course doesn’t require any explanation, but no list of bookkeeping elements is complete without mentioning cash. The money in your account is your cash. All cash transactions pass through the cash account and are tracked as Cash receipts and Cash disbursements. This is the lifeline of your small business.

5 Bookkeeping Tips to Remember for Small Businesses

If you are the regular small business owner, chances are that there is probably nothing that you hate doing more than bookkeeping. No surprise there because unless you have a head for numbers, it can be an arduous task. Unfortunately, whether you like doing it or not, it is essential to keep your business afloat and to keep you out of trouble with the IRS. So, here are some bookkeeping tips for small businesses that will keep you on top of your finances and make your life easier.

  1. Set Up a Bookkeeping Process

It is essential that you have a bookkeeping system and that everything is not in your head. Don’t take bookkeeping lightly. When the IRS comes knocking, you will definitely not be laughing, so make sure you have a system. If you don’t know how to proceed, get professional help.

bookkeeping tips for small businesses

  1. Keep Aside Tax Money

Who doesn’t dread tax time, but you can make it better for yourself by setting aside the money systematically throughout the year. You know when you have to pay your taxes, so be prepared and make sure you have everything in order. It would be wise to remember that the IRS can penalise you for not filing quarterly tax returns on time.

  1. Record Expenses

One of the basic rules of bookkeeping- record your expenses at all times no matter where you are. If you do not know where your money is going, you are en route to financial ruin. You will also need the information for your taxes; otherwise you might end up missing some tax write-offs.

  1. Track Deposits

Another basic of bookkeeping for small business- make sure you record all your deposits and incomes accurately. Tracking expenses and deposits are important to ensure that your activities balance each other out. Besides if you don’t, you might end up paying taxes on money that isn’t income.

bookkeeping for small business

  1.  Following Up On Invoices

Any small business will fall if the pile of late and unpaid bills continues to mount, so it is vital that you have personnel dedicated to following up on billing and collecting payments on time. If your cash flow is hit, you will find yourself in serious trouble.

Bookkeeping for small business may not be easy but you can make it easy for yourself by following these simple bookkeeping tips for small businesses.

 

Top 10 Common Small Business Bookkeeping Mistakes

It is an accepted fact that bookkeeping is not everyone’s cup of tea, but one cannot deny the fact that ignoring bookkeeping is detrimental to your business. So, of course, every business owner finds ways to maintain their books. Most big established businesses hire bookkeepers so that the owners can concentrate on running their business. What about small business owners; now that is a bit more complicated.

Small business owners most often than not have only one thing on their mind- growing their business and making profit, not that you can blame them, but what happens is that in the process, bookkeeping is sidelined and not wanting to spend too much on the “menial” task, the small business owners delegate it (to someone with no bookkeeping skills) or decide to do it on their own. Oh dear, trust me, that is definitely a recipe for disaster and mistake # 1.  It is important that your small business bookkeeping is done with the utmost care and by someone who knows what they are doing. Your books will be accurate and the task will be completed quickly and efficiently.

Mistake #2- How many times have you thrown away receipts for minor purchases? You might not think too much of it then, but when Uncle Sam asks you for documentation for claimed expenses, you will wish you had done otherwise (it happened to us and it isn’t a day we choose to remember). So make it a point, or better, a habit to keep every single receipt and maintain a separate file for them.small business bookkeeping mistakes

Mistake #3- Do you reconcile your books and bank accounts every month? Did I hear anyone say “No”? Huge mistake! One of the fundamental elements of good small business bookkeeping is that your books are reconciled with your bank accounts every month. Make time every month to get this done or else things can go really bad.

Mistake #4- If you rely on technology to take care of your bookkeeping, I hope you have backed your data. Today’s heavy reliance on technology means that everything is online, while that is good for numerous reasons, it also leaves you susceptible to data corruption and data loss; lose your data and you lose everything. So the only precaution- make sure you have accurate and up-to-date data backed up on preferably an external device.

Mistake #5- You might not have thought about this but improper categorization of your expenses and employees is a big no- no in small business bookkeeping. Your categories, sub- categories, independent contractors, freelancers, regular employees are all key elements in understanding your business’ finances, so name them right.

Mistake #6- I cannot begin to count the number of times I have been told how important communication is to life and living; well believe it or not, communication is essential to bookkeeping as well. How? Imagine what happens if the person maintaining the books- you, an accountant or whoever keeps your books- doesn’t know when $1000 is given as a bonus or doesn’t have relevant receipts? Ouch! Backtracking is such cases is not just painful but also increases the probability of errors; so make sure you have an open line of communication with your accountant.

small business bookkeeping

Mistake #7- Do you often incorrectly account your sales tax? I seriously hope not because oversight in collection and reporting sales tax would mean you have to pay significant fines and penalties. Why go through all that trouble?

Mistake #8- How many people are good with numbers? To be honest, I have no clue but not everyone is good with numbers and at the end of a long day all you want to do is relax and in your hurry to do so, you make a few calculation errors. This is a common occurrence, and you don’t need me to tell you what these math errors can do to your bookkeeping and to you.

Mistake #9- This is probably the most common mistake and the most dangerous- falling behind on your bookkeeping. Understandably small business owners often can’t find the time to enter their expenses but to not do so will leave you in a bigger mess. So fix a slot in your day’s schedule and sit down to enter your expenses without fail at the appointed time.

Mistake #10- That brings me to my last question- do you have an accounting system? If you don’t, you should consider doing something about it; it will make your life a whole lot easier and bookkeeping accurate and less painful.

I have only covered the top 10 common small business bookkeeping mistakes; there are so many more. So what can you do to avoid these errors? Be more careful with your bookkeeping, but if you ask me, I think you should let go- let go of your bookkeeping- hire a competent bookkeeper or find yourself a reliable accounting software. While this will not solve all your problems, it will take care of most of them and most of all, give you time to focus on growing your business. Always remember that bookkeeping and accounting is capable of making or breaking your business.