Bookkeeping

Bookkeeping, the record keeping of the monetary aspects of a business, is an important part of each and every business. There are three options for bookkeeping: hiring an outside firm, using an online accounting program, and doing the bookkeeping yourself.

Bookkeeping Overview
When considering the bookkeeping for your business, there are certain things you will want to keep in mind. First, you need to keep detailed records. Record every income and expense as soon as you can. This eliminates the scramble to find receipts and sales invoices when tax time rolls around.

Next, decide how you are going to keep your records. Some businesses throw all of their receipts in a file and take that file to their accounting service. Others will keep detailed records on their computers, and use the digital record to take care of quarterly statements.

Another consideration to make when looking at your business’s bookkeeping is that there is no set rule for keeping track of your financial records. If your business is primarily internet based, you can keep track of your records through the payment processor you use. If you have a larger business that is selling at a retail store, you will have a cash register that keeps track of these records.

The important thing to remember when considering how to tackle bookkeeping tasks is that you want to make bookkeeping easy for you to do, and understand. That way when it comes time to figure taxes, you can easily pull out your accounting program or file, and you have everything you need to do your taxes. You will find as you become better at bookkeeping that keeping detailed records helps you analyze your business and decide whether or not you are reaching the level of profitability that you desire.

Bookkeeping for Small Businesses
Bookkeeping for the small business has special considerations that most large businesses do not deal with. The main principle is the same with a small or large business. You need to keep detailed, timely records. However, small businesses are usually short on accounting staff. They may find that they are required to do more of the bookkeeping on their own, rather than hiring an accounting firm or accounting professional to handle the bookkeeping themselves.

The most important thing for a small business owner to understand about business accounting is that everything needs to be recorded as it happens. For example, if you are going to take an employee out to dinner, you need to record that receipt the same day. You cannot wait until tax time and then write down all of the employee lunches you bought. The easiest way to do this is to simply write it on the back of the receipt as soon as you pay. This is sufficient bookkeeping.

Small businesses also find that they benefit from hiring an outside accounting service, or certified public accountant. These people know much more about accounting software and tax laws. They are trained to deal with money on a daily basis, and can help the small business owner stay on top of the many pieces of paperwork associated with running a business.

Accounting Software
Using accounting software is a great way to maximize time and minimize effort when dealing with bookkeeping for your business. There are several popular software models out there to use. Look for an accounting software program that allows you to input your expenses and income as they come. Then, you want to be able to print out statements at whatever time frame you want, whether it is quarterly, weekly, monthly, or yearly. These statements will help you analyze your business and increase profitability.

Even if you are looking into outsourced accounting through an accounting service, you can still benefit from accounting software. Your accountant will appreciate the benefit of having organized data when you come with your files on the computer. If you are going to use an outsourced accounting firm, talk to the firm of your choice about which piece of software they use. If you use the same one, the accounting task will be much simpler.

If you are going to do your accounting yourself and you have a fairly simple business, you can use a simple spreadsheet to keep track of income and expenses. This will make it easy to see at the end of the year just how much money you have made and what your expenses are. Having this visual reference helps you know if you are running a profitable business.

Choosing an Accounting Solution
When looking at bookkeeping solutions, there are three main ways to handle the records for your business. Many businesses, both large and small, choose to hire an outside accounting service to manage their books. This is an excellent solution if the money is there that is needed to hire a firm. Also, it frees up employees to focus on running the business.

Online accounting services, known as hosted accounting or ASP solutions, allow you to access the bookkeeping for your business on the internet. You have access to a highly secured website that backs up your information regularly. You can handle payroll, write checks, and make expense reports from this site. Usually less expensive than hiring an accounting service, this is an excellent choice for those businesses who need more accounting services than they can do themselves, yet want to save money.

The final solution, and one chosen by many small businesses, is to do the accounting and bookkeeping yourself. You could hire an employee that has accounting experience to work in house and do the accounting. You could do all accounting yourself using accounting software. This type of bookkeeping is usually done for tax purposes, but can be difficult to use when you have employees that need to be paid.

Keeping an Accountant on Staff
One option that many large businesses employ is keeping an accountant or two on staff. This saves money, because there is no travel that needs to happen to the accounting firm. The accountant is staffed with the company, and puts all of his or her effort into managing the books for this one company. This is an excellent option for businesses with huge amounts of bookkeeping and paperwork. Outsourcing accounting to a firm that has many accounts may be problematic to a large corporation or business.

If you choose to hire a CPA for your business, keep in mind that the CPA is an expert who has been educated in the accounting filed. You will need to pay the CPA the same salary you would any other expert. Also, with a CPA on staff, you can have reports printed whenever you need them. All you have to do is contact your accountant in his or her office and ask for a report!

If you decide to hire an accountant with your company, interview carefully. If you can afford someone with experience, then find an experienced CPA. Experience in bookkeeping is worth the extra expense of hiring the person at a higher pay. Remember, your bookkeeping affects your business on a daily basis, so put the necessary study and research into hiring an accounting professional.

Outsourcing Your Accounting
When you look into outsourced accounting, your business turns all bookkeeping responsibilities to a firm that is staffed with several experienced and professional accountants. This is an excellent option for many businesses, because it allows them to focus the energies of their employees on activities that actually bring in revenue: dealing with customers, making sales, and building the business.

Some companies are afraid of the cost associated with hiring outsourced accounting. But there are two sides of this cost. The services provided by outsourced accounting may be pricey, but when you bring an accountant into your firm, you have to not only pay that professional a salary, but also take care of benefits, deal with vacation and sick time, and pay for the office space used. Hiring an outsourced accounting firm can be a more affordable option for your business accounting needs.

You may need to consider whether to hire a full time accounting service, or a part time accountant. When considering these two options, keep in mind that the full time accounting service is going to be staffed by licensed professionals with many years experience in bookkeeping and accounting. When you hire the part time accountant, you may be receiving a novice with only a lower level accounting degree. Decide which of these options is best for your business, but make sure you know what you are getting for your investment.

Do-It-Yourself-Bookkeeping
Doing your accounting yourself is an option considered by many small and home based businesses. It can work well, provided there are no employees on staff that need a paycheck and benefits. Do it yourself accounting almost always incorporates the use of upper level accounting software. This software makes tracking expenses and income easy. Those who consider doing it themselves are usually only looking at the part of bookkeeping that relates to filing and paying taxes.

When you do your taxes yourself, make sure you know plenty about the tax codes and laws. Businesses can write off many things on their taxes that they often forget about, including business use of the home and car. Because these laws can be confusing, most businesses turn to professional accountants for their business accounting needs. However, for simple small businesses, accounting can be done by the business owner, if the owner is willing to get a little education about tax codes.

Online Bookkeeping
Online bookkeeping is another solution for your business bookkeeping. Sometimes called hosted accounting, online bookkeeping gives you a website to use to input your data. The hosting provider backs up this website on a regular basis as part of your fee.

Online bookkeeping is an excellent option for the business owner who travels frequently, or has employees who work from home or on the road. Also, online accounting services can be used in conjunction with the services provided by an accounting firm. When both the accountant and the business personnel have access to the website, communication is made much simpler.

Using online bookkeeping eliminates the need to install and learn software. When you use the internet, the help you need when you have a problem with the program is just a click away. You will not need to make sure that your computer has enough room to store the vast amounts of bookkeeping files you will have as a result of your new program. With online bookkeeping, all of those files are stored on the server.

Online bookkeeping is also an excellent choice for those choosing to do their accounting on their own. One of the benefits is the multiple backups that the server host automatically does. Many small business owners find that when their computers crash, they lose all of their bookkeeping information. This can be a devastating occurrence, and is eliminated with the security found in online accounting.

Accountants – More than Just Tax Professionals
If you decide to hire an accountant or use an accounting firm, remember that your accountant has more benefits to offer you than just tax preparation. Your accounting professional is an excellent resource for problems and situations your business will face all throughout the year! For one thing, your accountant is going to be up to date on your bookkeeping. This makes the accountant the person to see when you need statements and reports about your business’s success.

Your business accounting professional will also be able to make projections about cash flow. This is helpful when you need to make a purchase or investment, because you will have a better understanding of whether or not the money will be there for what you need to buy. Because of this benefit, many accountants take on the role of business advisor for their clients.

An accountant is going to have the contacts in the financial field that you need to make your business successful. Your accounting professional will know how to find the banks that are more likely to give loans to businesses, debt solution attorneys when the business faces debt trouble, and other professionals in the financial industry. Talking to your accountant when you are in need of a new bank or other financial professional will save you time and effort!

So whether you choose to do your bookkeeping yourself, keep records online, or use the services offered by outsourced accounting, the point is that you need to be keeping track of your records. Accounting affects more than just your taxes. A good accounting service will help grow every area of your business.


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