15 Reasons Why Bookkeeping Is Important for Your Small Business

It’s more about drawing insights and making strategic decisions based on the recorded financial information. As a small or medium business owner, You might find yourself asking, “Why do I need both an accountant and a bookkeeper? ” While they may seem similar, accountants and bookkeepers play distinct roles in financial management, each bringing significant value to your business. You may think that hiring a bookkeeper is going to cost you money, but at the end of the day, a bookkeeper is going to save you money…big time. A bookkeeper will lower your risk of an audit, late payments, human errors, tax penalties, and cash flow issues. Many of these issues will cost you way more than hiring a law firm chart of accounts bookkeeper.

Accounting Methods

Our in-depth Zoho Books review has more details about features and functions. FreshBooks is a popular accounting solution with many bookkeeping tools for small businesses. It can generate invoices, handle expense management and create financial reports. The software has an easy-to-use interface and integrates with PayPal, Google Workspace, Stripe and other platforms. It also has a mobile app that lets you update and track your books on the go. Read our detailed FreshBooks review to learn more about features and pricing.

Track timesheets

These reports also come in handy if there are any issues with the IRS. Since the birth of Xero in 2006, they started out to only service the New Zealand market. At the end of the accounting period, take the time to make adjustments to your entries. For example, you may have estimated certain invoices that are later solidified with an actual number.

Teach You How Money Works

A lot of business owners try to manage their own books and fulfill the responsibilities of a bookkeeper. However, this can be an overwhelming and unmanageable task for someone who is already stretched thin. Not many founders have backgrounds in finance or even a working knowledge of accounts payable, accounts receivable and taxes.

# You don’t have financial visibility.

Their years in the job mean they have valuable, tried-and-true methods, and faster processes. Only with understandable, detailed, and factual data can a business owner or management team plot a course for future success. A contemporary arrangement and distillation of cash flow, assets, and obligations is key to setting a path forward. If you require day-to-day support in terms of data and compliance, a bookkeeper is perfect. If contra asset account you feel you need richer advice such as forecasting and future focused advisory and business model services, you may wish to consult an accountant.

Getting a Better Handle on Cash Flow

• Corporations may hire comparatively well-educated bookkeepers, especially if they provide additional niche knowledge compared to general accounting software.
• Just like with a bookkeeper, you can find your perfect accountant in an outsourcing company.
• Accounting, on the other hand, provides business owners with reports and financial insights based on information gleaned from bookkeeping data.
• Bookkeepers, in turn, rely on accountants to provide guidance on how to classify certain transactions and how to structure financial reports.
• Investors want to know the financial performance of your business to be able to want to quantify the value of their investment.

A bookkeeper provides a holistic view of your finances and can identify areas needing attention that software might overlook. Keeping your business on track, catching mistakes, and offering helpful solutions are just a few things an accountant or bookkeeper can assist with. Having a bookkeeper or accountant by your side will not only help you handle the IRS, but accountants will also keep you organized and make sure you receive all your deductions. By having these monthly reports available, you can quickly fix any issues involving cash flow before they grow too big to handle.

But eventually, the time comes when managing the books is the last thing you want to worry about. While bookkeepers can be a valuable asset to your business, allowing someone else to manage your finances does pose some risks. Here are the advantages and potential drawbacks of hiring a bookkeeper. However, according to Charlie McClain, principal at GrowthPoint Bookkeeping, bookkeepers’ responsibilities go beyond basic financial tasks. Accountants can also offer strategies to grow your business if you feel stuck. These strategies can include how to get more investors, what risky moves may be worth taking, and who to hire or partner with.

Bookkeeper or CPA: Which One Do I Need and Why?

Bookkeepers are professionals who specialize in the management of business finances, including accounts payable and receivables, payroll, and budgets. They do all the things related to finances that you don’t have the time or perhaps desire to do yourself. Working with a remote bookkeeper is becoming increasingly common. Cloud-based accounting software allows what is a bookkeeper bookkeepers to manage your finances from anywhere while keeping you updated in real-time.