Choosing a bookkeeper for small business is important as bookkeeping is an essential financial function. You need to maintain a record of your financial transactions as these are imperative in decision making.
However, how a business handle its bookkeeping is up to them. Some business founders may do their own bookkeeping using software. Depending on the type of business, they can hire a part-time or full-time bookkeeper. Or they may choose to outsource the service to an expert which is a common option. Let’s take a more in-depth look at bookkeeping and choosing one for the benefit for your business.
Who Is A Bookkeeper
A bookkeeper is a financial professional who records, processes, summarizes, and reports financial transactions. They keep a note of a company’s day-to-day activities, which includes basic data entry, and payroll. They maintain the accuracy of a company’s financial records. They record financial transactions, create reports for stakeholders, and maintain ledgers.
Key Responsibilities of a Bookkeeper for Small Businesses
As we can see, bookkeepers have a lot of responsibilities, requiring diligence and precision in managing a company’s financial health. So, let’s delve into some of the work a bookkeeper does for a better understanding.
1. Choosing an Entry System
A bookkeeper for small business helps determine whether single-entry accounting meets your needs or if double-entry accounting is the better fit. Here’s a closer look at both methods.
Single Entry Accounting – Here, all your transactions are recorded as a single entry to the books. They are simply listed under ‘income’ and ‘expenses’. It’s like recording the bank transactions, specifically when money changes hands.
Double Entry Accounting – This is a more holistic approach to bookkeeping with a debit side and a credit side. It also considers AR, AP, inventory, loans, and owner’s equity.
2. Choosing Accounting Methods
Similar to the above, there are different accounting methods to choose from. A bookkeeper will have to decide between the following.
Cash Basis Accounting is when money exchanges hands. It doesn’t take into consideration invoices or any outstanding bills until they’ve been paid.
Accrual Basis Accounting is when the bookkeeper will make a record of invoices and bills, even if the funds haven’t been exchanged.
3. Transaction Management
A bookkeeper for small business imports and categorizes transactions, reconciles them, and ensures they’re recorded properly. They must keep accurate records of all transactions in their book of accounts.
They must also ascertain the total impact of financial transactions in the company. This helps management and shareholders formulate policies and plans. Bookkeepers also detect errors and fraudulent transactions.
4. Accounts Receivable and Payable
Bookkeepers also manage accounts receivable and accounts payable to keep a track on who the business owes money to, and who owes the business. This will include sending out invoices, and estimates. It also means they must keep a track of due dates for these payments.
5. Setting Up Payroll
A bookkeeper for small business must also set up payroll using the appropriate software. The number of employees you have, and their benefits will influence the software that the bookkeeper chooses for you.
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Bookkeeping Options for Small Business Owners
1. Using Bookkeeping Software
Small business owner can themselves use software to maintain and manage their books. There are a vast number of software out there for bookkeeping. These can be powerful tools for small businesses, helping them manage and track each transaction, generating financial reports, and automating many bookkeeping processes.
2. Having An In-House Bookkeeper
If a business leader is more inclined to focus on building their business, they can hire an in-house bookkeeper. That person would work for your business directly. You can hire a part-time bookkeeper or a full-time bookkeeper depending on your needs.
3. External Consultants
Many small businesses may choose to hire external consultants to manage their books. This is great for a small business as it’s a way for them to get the benefits of a dedicated bookkeeper and accountant for small business without the need to have your own accounting and bookkeeping department.
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How IBN Technologies Helps
Small business owners could be benefit from outsourcing their bookkeeping services, as it would save operating costs, save time, reduce paperwork, reduce errors, and get detailed financial reporting.
IBN Technologies does exactly that with our team of expert bookkeepers who will make all the important bookkeeping decisions for your company. With 25 years of experience, we have a deep understanding of industry requirement and what our clients need.
Reach out to us and connect with a bookkeeper for small businesses for more information today.
