Blog: The Top 5 Benefits of Catch Up Bookkeeping

Only 2.5% of small businesses are audited, so the chances are low. However, thorough bookkeeping gives you the defense you need if the IRS decides to dig deeper. As a small business owner, it’s crucial for you to understand where your cash is coming from and going. Bookkeeping is an essential function in your business for both legal and financial management purposes. Here are some advantages of accurate bookkeeping for small businesses. Here are some accounting terms small business owners need to know.

Fail to do this can sink you in hot water against government penalties. Virtual bookkeeping hashigher accessibilityas compared to in-house accounting services. Hiring a full-time accountant means you can only gain access to your accountant during office hours. In contrast, virtual bookkeeping allows for access to your financial information anywhere and anytime around the clock. Since 2000, Invensis has been catering to the diverse outsourcing needs of clients for multiple industries and constantly striving to add value to clients’ businesses. Hence, you should implement internal controls to reduce the risk of fraud.

Reasons Why Bookkeeping is Important for Your Business

Previously, bookkeeping was a tedious and monotonous task that involved physically recording all transactions. Thanks to new cloud-based technology, bookkeeping is now a simpler process that won’t require hours of your time come tax season. Outsourcing bookkeeping to an online bookkeeper is also a cost-effective alternative to hiring an in-house bookkeeper for businesses of all sizes. Outsourcing your bookkeeping streamlines your business operations. It helps you to reduce costs, save time and scale your business.

As a Benefits Of Good Bookkeeping Practices owner, you know that there are a lot of things to keep track of. You need to make sure that your product is high-quality, that your employees are happy, and that your customers are satisfied. But what you might not realize is that accounting is the most important thing for your business. Bookkeeping guides companies in decision-making, such as whether it is necessary to close or switch store locations or start recruiting talented staff. The person who opens the mail should keep track of checks in a physical paper log of what checks were received and when.

Bookkeeping best practices

Outsourcing accounting functions, including bookkeeping, payroll, tax reporting, and other activities has become commonplace. You don’t need a bookkeeper on staff to accurately track your expenses and income. Even if you just opened a business that’s operating out of a home office, you can still take advantage of the benefits of bookkeeping by utilizing online and cloud-based services.

• Before your invoice is approved, ensure it goes through the accounting department for review and verification.
• It can also help you identify expenses that made sense at one point, but no longer prove fruitful.
• Expenses refer to purchases made by the business or costs the business incurs.
• You could use your time better, focusing on your business growth.
• Bookkeeping ensures proper transactions to approve payments previously made, which creates responsibility.

They assist the company in both maintaining its financial position and making smarter financial decisions. The bookkeeping records are utilized by accountants to generate a report for the financial summary. Keeping track of financial flows is a crucial duty for every company. Bookkeeping helps in cash flow management by following the appropriate measures to effectively record financial data.Bookkeeping helps in the proper management of cash flow. When expanding and growing a business, owners may need to seek loans from finance entities. If you’re finding it difficult to stay on top of important bookkeeping tasks, then outsourcing makes sense.

What Is Deferred Revenue? Journal Entry and Examples

Inaccurately allocating funds can cause cash flow issues that complicate tax filing and auditing processes. Avoid getting into legal trouble by separating personal and business funds. As a small business, you’re likely the one in control of the finances. In such cases, you must be even more careful to separate business expenses from personal ones. One great way to do so is to open different bank accounts and cards for your business.

Hence, using a cash-based accounting method is a more sensible option. Continuous monitoring and refining of your business roadmap shows lenders and investors that you are responsible. You will be able to adjust quickly to changes in your personal and professional life. Your year-end financial responsibilities will be exponentially easier if your daily, weekly, monthly and quarterly bookkeeping tasks become true habit. If you’re looking for a blend of personal service and expertise, Nolan Accounting Center is here to serve you.

Cynthia Uzialko is a retired small business owner and bookkeeper with three decades of experience managing financial record-keeping for both public and private organizations. Financial statements such as your Profit & Loss Statement, Balance Sheet, and Cash Flow Statement are essential for understanding your business from a financial standpoint. This will not onlydiminish the cost of accountingbut will also give you more time to act upon the information provided by the analysis and change any strategies you might have planned. Hiring an employee involves more costs than just payroll services. The other expenses include insurance, training, benefits, and recruiting. Someone in your business will have to devote time to training a bookkeeper.

These statements include the balance sheet, income statement, and cash flow statement. As a small business, you may have heard that it’s essential to keep updated with your bookkeeping and accounting records. Business owners have to consider taxes, compliance, and other legal requirements.

Bookkeeping maximizes your deductions come tax time.

Because the bookkeeper holds himself or herselfaccountablefor any work that they do, you can rely on them to clear any mistakes. This saves time and effort for the bookkeeper, which in turn saves money for the company. Unorganised books, HMRC giving you problems and those looming tax deadlines can all contribute to plenty of stress and panic. As a business owner, the last thing you want on top of your day-to-day tasks is bookkeeping issues weighing on your mind. With a budget in place, you can plan for future expenses for your business to help with growth. If you don’t keep accurate and up to date books, it’s a lot harder to get an accurate budget because it’s all mainly guesswork.

The checks should be handed over to the bookkeeper or accountant with a copy of the list. This covers both the person who opened the mail, and the bookkeeper or accountant. Most bookkeeping consultants will agree that to achieve success, every business should adhere to the following bookkeeping best practices. Meet with your bookkeeper and/or accountant for your monthly financial review. Run a daily cash flow report to stay informed on day-to-day operations.