With technological advancements, SMEs (Small and Medium Enterprises) and startups are expanding, evolving and inventing new ways. Bookkeeping is a subset of the accounting process that involves tracking and recording accounts receivable (AR) and accounts payable (AP), which helps the business owner or founder manage their cash flows or finances. Globally, SMEs and startups account for 90% of total business, with many business owners unable to handle their own accounting and bookkeeping work.
Source: FinancesOnline
Top accounting challenges faced by SMEs and startups
To solve this problem, the owners must rely on a bookkeeper or an outsourcing firm to complete this tedious bookkeeping work. Firstly, you must be thinking of solving this problem by hiring a bookkeeper for your business. However, this is not a good idea because you may require a bookkeeper who can handle your books of accounts in a more reactive manner as you might be very busy. With all of the innovations in business processes, this old bookkeeping work can be done more efficiently by using online bookkeeping services, which come at a much lower cost and work in an automated way.
So, here comes the question : why should you choose an outsourced online bookkeeping service provider or what are the potential benefits of hiring an online provider to give you a bookkeeping service for startups and SMEs?
Reasons of choosing an online bookkeeping services by SMEs and startups
Do you know that 90% of all startups fail every year, out of which 16% fail because of a lack of finance and accounting management? Therefore, there are many reasons to choose online bookkeeping services which are-
1. Planning your business
The planning process for SMEs and startups are very crucial in the first few years because it is the time you will have to make plans to set up your business and think of probable expansion. Therefore, budgeting, forecasting cash flows and financial planning is very important.
As the owner of a small business or the founder of a startup, you always look for the best suggestions from your accountants to better manage your business finances. The online bookkeeping services provider will assist you in obtaining financial assistance and also help you with establishing, managing or financing your business in its early years in an efficient way.
2. Saves Time
If you are thinking of doing it by yourself, then you must be facing a tough time managing your business at the end of the financial year because switching between various tasks will cost you more and hamper your productive time.
If you are considering scaling up your startup or SME, then selecting the right online bookkeeper will assist you in a smooth process by managing your financial records using the best technological software, managing your payroll work, accounts payables and receivables, records and so on.
3. Cost – Effective
Choosing an online bookkeeping service for startups and SMEs is one of the top reasons to minimize the total cost and overhead cost of the business. It helps in reducing the administrative work. Hiring an in-house bookkeeper can be a costly affair for your business in a growing period because you have to pay him double the fixed amount of salary than an online outsourced firm.
4. Team of Professionals
According to a study, 40% of accountants feel less confident about their practices. Therefore, taking help from just one accountant cannot be a good choice and hiring an online bookkeeper will provide the team of professionals and they are also very much certified and provide assured results as they are backed by some firm’s trust and reputation.
Source: FinancesOnline
Most outsourced online accounting and bookkeeping activities by SMEs and startups.
5. Tax Preparation
As seen from the graph, tax preparation work is the most outsourced work by SMEs and startups because of its excessive regulatory work and time consuming. You also need a team of professionals that can handle this in the best way with the knowledge of latest regulatory measures. Also, an online service provider will also help you with all the benefits you might get for your startup, as the government always supports businesses to grow and provides tax rebates.
A study says that 64% of the SMEs in the US spend $1,000 every year just on tax preparation, which is very costly. Besides the cost, 26% of US companies use a minimum of 10 hours per year to complete the tax-related paperwork and 40% say that it can also reach 40 hours per year. Therefore, you can easily manage the time and cost during the tax season and increase your focus on the business’s core activities.
Benefits of opting for online bookkeeping services for SMEs and startups
According to a study, 67% of SMEs owners are very much satisfied with the accounting services they get from an online outsourced bookkeeping firm. Therefore, there are numerous advantages of hiring an online bookkeeping service for startups and SMEs.
1. Experienced Staff
You can get access to experienced staff by hiring an online bookkeeping service provider because they are equipped with the latest technology and also provide a team of professionals who cannot just help you with the data entry or bookkeeping but also suggest the best ways to manage your business finances and cash flows. They also provide other services such as personal financial planning and assistance, auditing and tax preparation.
2. Low Cost
Hiring a full-time CPA will cost you more than $1,00,000 per year and also hiring an in-house bookkeeper will also cost you around $40,000 per year. Therefore, the cost of an online bookkeeping service is much lower and it also provides customized features for scaling up or scaling down the options you choose.
3. Time Saving
Time is the most important factor to consider as a startup or SME owner because you must be busy with most of the operational work. Therefore, choosing online bookkeeping will help you manage your daily transactions and record them with less time. You don't have to be on your toes to manage and record your finances.
4. Real-time Information
The information is only useful if you get it on time. The late reporting of financials can cause harm to your business, as startups and SMEs generally face cash crunches. So, knowing the real-time information on your financial accounts is very important to taking the necessary steps thereafter. You will get all information on losses, profits, tax information, personnel and payroll data, etc., on a real-time basis.
They will also help you save time by managing your finances. The online bookkeeping service for startups also helps you generate invoices and collect your money on time by sending reminders to your debtors. They also manage your inventory data, including how much inventory is left in your warehouse and how much cash you can generate after selling it.
5. Accurate Results
Accountants in today’s world are constantly updating their knowledge on all aspects of the business, such as taxation regulations, accounting standards, client management, business advisory services, and project management. Therefore, the team of accountants and professionals handling your bookkeeping work will have updated knowledge in regards to rules and regulations in tax preparation and accounting standards in a particular country, thereby providing accurate results and information. If you do it yourself, you will be more likely to make mistakes.
6. Communication and Support
As a business owner, you might be thinking of getting a broader range of services from an outsourced online bookkeeping firm than just traditional bookkeeping. This additional service includes the personalized support and constant communication you want to have with the team.
If you hire an in-house employee, then they might be available to you only during the working hours, but this online team is available anytime and accessible anywhere because they have a team that handles communication and is also ready to clear all your queries and doubts on any financial matters. They will also provide additional services such as virtual CFOs, which can help you manage your cash flows in a better and more efficient way.
7. Technological Access and Data Security
Across the globe, 82% of the business owners hiring an outsourced online bookkeeper service provider demand the best accounting technologies with data safety protocols. You must be thinking of data breach fraud if you hire an outsourced online bookkeeping service for startups and SMEs. Then you don't have to worry because these online bookkeeping service providers use cutting-edge technological software to give you access to financial data while also taking all necessary data security precautions.
Choose IBN Tech for your online bookkeeping needs
IBN Tech bookkeeping and accounting services will offer the best online bookkeeping service for startups and SMEs, meeting all of your financial needs and recording everything in one place. Here are the benefits of hiring us for your bookkeeping needs:
You can cut your operational costs by half.
We provide software expertise in Xero, QuickBooks, Quicken, Sage and so on.
We have 99.99% accuracy in the work handled by our team of professionals.
The services we provide in bookkeeping are accounts payable, accounts receivable, reconciliations, revenue reconciliation with bank deposits and electronic document management.
Automobiles, banking, healthcare, hospitality, insurance, mortgage, multi-location businesses, non-profit organizations, travel, recruitment firms, retail and telecommunications are the industries in which we provide our online bookkeeping services in the US and UK.
For data security, we also have the cert certification and along with that, we provide constant communication support through our virtual team.
To summarize, SMEs and startups with limited budgets and funds can access the best online bookkeeping services available anywhere in the world. The owners can focus more on their operations, reduce the cost and time spent on administrative work, get technological support at minimal risk and cost and customize the package based on their capabilities and funds.
Frequently Asked Questions (FAQs)
- 1.Why is bookkeeping very important for a small business?
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Bookkeeping is important for small businesses and SMEs to monitor their financial health. It assists small businesses in managing cash flows, meeting financial obligations, filing taxes, budgeting and planning investments.
- 2.What are the benefits of virtual bookkeeping?
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The benefits of online or virtual bookkeeping include updated and accurate books of accounts, an expertise team with abundant knowledge and automated software. It also helps an owner save money and time so they can focus more on growing their business.
- 3.What services do virtual bookkeepers provide?
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The services provided by a virtual or online bookkeeper are bookkeeping services, controller services, accounting systems and software. They also provide virtual assistance from CFOs, cash flow and budgeting analysis, handling accounts payable and receivable, prepare financial statements and tax filing at the end of the financial year. Along with that, they also provide the businesses with the best way to manage their cash flow and attain high profits.
