Service Description for Bookkeeping
What is the definition of a bookkeeping service?
Bookkeeping is the practise of recording and tracking your business’s financial transactions. Bookkeepers are required to summarise your business’s operations on a regular basis in financial reports. These reports summarise your business’s financial situation and performance.
Along with managing financial records, accounting services include the following:
• Tax return preparation
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• Surveillance of performance indicators
• Tidying up accounting records
• Keeping track of receivables and payables
• Resolving inconsistencies between financial statements and bank statements
• Budgeting or conducting a cash flow analysis
• Reporting to management
However, it is critical to understand the distinction between accounting and bookkeeping services. Bookkeeping is the process of maintaining daily financial records. Thus, bookkeepers amass financial data with the purpose of preparing financial statements or books of accounts.
On the other side, accounting refers to the process of preparing, reporting, analysing, and summarising financial data gathered by bookkeepers. Accounting reports provide a glimpse of your business’s financial situation and performance.
Typically, bookkeeping is conducted in a double-entry manner, with each transaction or occurrence being recorded in at least two distinct nominal ledger accounts.
What is the purpose of a bookkeeping service?
A bookkeeper’s role is to ensure that financial data is correct and up to date so that accountants can compile annual financial reports and tax filings for your organisation.
These accounting reports are utilised by you, the business owner, as well as other stakeholders such as managers, to aid in the decision-making process.
Consider the following basic and secondary bookkeeping services that a bookkeeper can offer your business:
Entry of Data
Data entry is simply the process of recording financial transactions, that is, keeping track of what comes into and leaves your firm. It is the bedrock of bookkeeping and accounting services, as precise financial data is required for financial statement preparation. This is because precise financial records enable you, as a business owner, and other stakeholders, to obtain an accurate and fair picture of your business’s performance.
Reconciliation of Accounts
Bank reconciliation is the process of comparing the financial transactions recorded in your books of accounts to those recorded on your bank statements. The purpose of bank reconciliation is to ensure that the financial transactions recorded in your books of accounts match those on your bank statements. Bank reconciliation is critical for your organisation since it assists in identifying and rectifying data entry errors or missed transactions.
Payroll, Accounts Receivable, and Accounts Payable
A bookkeeper ensures that invoices are sent to clients and that payments are collected on time. Additionally, he ensures that any unpaid bills to suppliers are settled on promptly and without running out of funds. He ensures that bills are paid on time to avoid delays in deliveries or supplier credit being withheld.
Along with accounting for payables and receivables, a bookkeeper also performs payroll services. This includes calculating employee pay, adjusting deductions, and ensuring that employees receive their net salaries on time. Paying salary on time will ensure that your staff are satisfied. Additionally, appropriate payroll is critical for compliance purposes.
Financial Statements Published Monthly
Each month, a bookkeeper is required to prepare a variety of financial reports in order to monitor your business’s success. Several of these financial reports include the following:
Balance sheet — a statement that summarises your business’s current financial situation.
Profit and loss – a statement that tracks revenue and expenses and indicates whether or not your firm is profitable.
Cash flow statement — a statement that summarises all cash transactions and displays the business’s cash on hand.
Accounts receivable — a statement that details the debtors or the amount owed to customers, as well as the dates on which such receivables are due.
Accounts payable – a statement that details the creditors or the amount owed to suppliers, as well as the due dates for such payments.
These reports indicate whether or not your business is profitable and whether it has enough cash on hand to cover day-to-day expenses. If the bookkeeper does not record these reports accurately, it might have an effect on your business estimates, client payment terms, and business spending.
Further Reading: The Value of Bookkeeping Software for Small Businesses
What Are the Benefits of Using a Bookkeeping Service for Your Business?
Hiring an accounting service for your small business is one of the most critical decisions you will make as a business owner. There are numerous advantages to hiring bookkeeping services:
Capacity to Focus on Core Operations
You are overloaded as a business owner with essential activities such as marketing, production, and customer relationship management. As a result, you are unable to devote sufficient time to controlling spending, processing payroll, and paying invoices on time. However, a bookkeeper can handle all of these tasks for you, freeing up your time to expand your firm.
Consistent Application of Regulatory and Statutory Laws
A bookkeeper guarantees that you always adhere to all applicable legal and accounting standards. Additionally, he will verify that your finances and records are up to date in the event that any regulations alter. This saves you time because you are not need to go into depth about the legislation.
One of the most critical components of your organisation is the timely delivery of invoices to clients and suppliers. This is because it enables you to sustain your business’s cash flow. A bookkeeper assists you in accomplishing this goal by ensuring that payments are received more quickly.
Accountants and bookkeepers have access to accounting and bookkeeping software.
Because you, as a business owner, lack the experience necessary to use online bookkeeping and accounting software, it is always prudent to outsource bookkeeping services. The bookkeeping software includes a variety of features such as balance sheet, profit and loss, cash flow, and bank reconciliation, which simplifies bookkeeping and accounting.
Prepare Yourself for Tax Season
If your books of accounts are current, there will be no stress associated with putting receipts in place and completing your books of accounts throughout tax season. A bookkeeper ensures that tax-ready financial statements and trial balances are maintained. This also implies that you’ll save more money and take advantage of all available tax deductions.
Obtain a Clear View of Your Financial Situation
Financial statements that are kept up to date are critical since they assist you in understanding your money and applying for loans when necessary. Basic financial documents such as the profit and loss statement, balance sheet, and expense report provide a transparent and accurate picture of your business’s health. Additionally, such financial statements inform you of the debts incurred by your business and the sums owed to you. Thus, it is critical for you as a business to acquire accounting services in order to gain a comprehensive picture of your finances.
Engaging the Services of a Bookkeeping Firm
As a small business owner, you may frequently be unsure whether or not to use bookkeeping services.
In an ideal world, you should hire a bookkeeper as soon as your firm begins. Otherwise, several months’ worth of bills and receipts would be lost in the shuffle.
However, you should employ a bookkeeper in whom you have complete faith. You can obtain a recommendation for a competent bookkeeper from your accountant.
Additionally, it is always prudent to employ a bookkeeper who is familiar with the bookkeeping and accounting software used by your accountant. This simplifies the process of exchanging information and maintaining records for both parties.
Additionally, you should confirm that the bookkeeper offers online bookkeeping services, which means that all financial statements are accessible online. This manner, all stakeholders, including your accountant and bookkeeper, will be able to interact and gain access to your business’s financial data. And this may be accomplished at any time, from any location, and at any time.
Further Reading: Bookkeeping – A Free Guide