Bookkeeping? What is it and is it relevant for you? Maybe you already have a bookkeeper and therefore this blog is a reminder or refresher of all they do (and possibly more they can do) to help take the weight off your shoulders, or maybe you wear the weight on your shoulders yourself and are wondering whether it’s time to pass on the bookkeeping tasks to a professional so you can continue to do what you do best.
Anyone who has started a business knows that at any stage, you wear many hats — you may be a manager of a team, a creator or service provider, HR, customer relations manager, accountant etc (the list goes on!). Time is precious, you are busy and there is a lot to get your head around. As a busy-business-owner it’s easy to feel like you’re missing something when it comes to your books and staying up-to-date with the ins and outs of the finances in the business.
So let’s look at all things bookkeeping
What is bookkeeping?
Bookkeeping is the recording and tracking process of the financial transactions of a business.
It involves keeping track of how much your business spends and receives. The reason this practice is called “bookkeeping” is because in the past, these tasks were managed using books and ledgers as transactions were recorded in daybooks, cashbooks and diaries and then transferred to a ledger. Now, xero and other accounting softwares are used to manage seamless and thorough bookkeeping practices.
The books or ledger of a business are made up of 5 accounts that fit into 2 key financial reports
Balance sheet:
- Assets: Things Owned
- Liabilities: Things Owned
- Owner Equity: Money from the Owner
Profit and Loss:
- Income: Money In
- Expenses: Money Out
What tasks does a bookkeeper do?
A bookkeeper regularly looks at the activity of a business and summarises them into reports to show how a business is tracking. They regularly check the pulse of the business. The core responsibilities of a bookkeeper include:
- Data Entry
- Bank Reconciliation
- Monthly Reports
Along with that, they also can take on a wider variety of tasks including:
- Invoicing
- Paying Bills
- Payroll
- Preparing Tax returns
- Managing KPI’s (Key Performance indicators)
- Providing Strategic Advice
- End of year reporting
- Business Processes
The difference between bookkeepers and accountants:
Bookkeepers generally take on the day-to-day tasks of up-keeping a business’s financial recorded.
Accounting is the analysis, reporting and summarising of the data that bookkeepers gather, determining how much tax is owed and giving an overview of how a business is performing.
There are a few differences in tasks, along with tasks that can cross-over:
Differences
Bookkeepers:
Data entry, bank reconciliation, invoicing and paying bills
Accountants:
EOFY reports
Cross-over:
Monthly reports, payroll and Tax Prep
Why do I need a bookkeeper?
Do you find yourself running out of time, feeling overwhelmed or like you’re missing something? or maybe you’ve had a growth-spurt and are taking on new employees and business responsibilities. These are great reasons for getting a bookkeeper, mainly because they are trained professionals who know what they are doing! This has the potential to save you a lot of time and mistakes, potentially saving you money and resources!
Some benefits include:
- Create an accurate budget for your business — bookkeeping helps you manage the in’s and outs of your income and expenses and asses your finances giving you a clear view of your financial resources.
- Tax Preparation — Bookkeeping gets your organised with proper records for your earnings. This makes tax time easy!!
- Business Analysis — Bookkeeping allows you to get an overview of exactly how your business is going with profit and loss statements.
- Better Strategic decision making — With accurate and up-to-date info, you can make clear and strategic decisions for your business with GOOD bookkeeping.
- Improve Cash Flow — Bookkeeping can assist with cash flow as it provides all info on invoices. The routine of recording revenues helps to track when invoices are paid.
- Frees up time — As we’ve mentioned TIME IS MONEY. Freeing up time as a business owner and reliving the stress of bookkeeping when you don’t always know what you’re doing, can be life-changing and the key to levelling up your business, allowing you to do what you do best.
Signs you need a bookkeeper
The minute you put on an employee you need a bookkeeping.
Whether it’s help setting up so you can run with the bookkeeping yourself or you need a monthly ongoing package, having an employee requires plenty of bookkeeping to ensure you are following compliance correctly on behalf of the employee and the business.
How much does bookkeeping cost?
Bookkeeping costs vary because there are different levels of bookkeeping you could engage to meet your business needs. Full service bookkeeping for a large company will be a lot more expensive that for partial bookkeeping for a sole trader. If you’re looking for a bookkeeper and would like a quote, we have a few team members who are bookkeepers in our office, so please get in touch.
Which bookkeeper is right for me?
When deciding which bookkeeper is right for you, there’s a few things to consider:
- Find out if the bookkeeper is qualified. A bookkeeper should have a qualification. If you need a bookkeeper who can do your BAS statements, then they must be a registered BAS agent or a tax agent. (All our team are qualified!)
- Ensure your bookkeeper is a member of an association. Being a part of bookeeping association will ensure your bookkeeper is across changes to accounting, bookkeeping and tax that may affect your business.
- What range of services do you need? once you’ve worked out what you need, you need to find out if the bookkeeper can do all those things. There might be needs that aren’t considered standard that you require, for example technology assistance with POS services etc
- Do you need a firm or someone self employed? This really comes down to your size and needs. If you need someone who can be across multiple employees and every area of your books, then a firm with multiple employees might be best. This ensures if someone is sick, there may be someone else to cover your day-to-day needs.
- Find out how you will be billed. Monthly, fortnightly, weekly?
Let's get your books sorted
Have no doubt, as a business owner, bookkeeping is your new secret weapon that will help take your business to the next level. It will supercharge your business strategy, claim back your time, reduce your costs, empower quick decisions, and keep you in control.
Our team are CPA accredited bookkeepers and are ready to help you with all your bookkeeping needs so you can ave time and money. Get in touch
