One of the challenges business owners face is managing the books of their business – bookkeeping. Accurate bookkeeping is important because it’s required to file tax returns each year, and it is also necessary to have financial information at the ready when it comes to making the right business decisions.
Though a lot of business owners know the importance of keeping accurate records, at times it can be confusing as to how exactly to do so. That is where professional bookkeeping comes in and hiring a bookkeeper becomes the best way to manage your company’s financial transactions. But what is bookkeeping? What is the difference between bookkeeping and accounting? What goes into bookkeeping, and what should you expect from your bookkeeper?
We’re glad you asked as we have a number of articles that answer these questions while walking you through what bookkeeping is and how a bookkeeper can help your business financially, operationally, and strategically. To get things started, let’s first define what bookkeeping is.
What Is Bookkeeping?
Bookkeeping is the recording, classifying, and summarizing of financial transactions for a business. It is part of a business’s overall accounting process and it allows a business to better manage its finances for operations, strategy, and taxes. Bookkeeping can be done as often as the business needs based on the frequency of transactions.
When Was Bookkeeping Started?
The first form of bookkeeping was probably the original use of a ledger. However, the first known practice of record-keeping was in Sumer during the 3rd millennium BC. From that point, modern bookkeeping evolved and was formally established in the late 15th century when Italian mathematician and Franciscan monk Luca Pacioli described double-entry bookkeeping in his book, Review of Arithmetic, Geometry, Ratio and Proportion.
Since then the fundamentals of bookkeeping have not changed a lot. Bookkeeping is still based on double-entry accounting and “the books” still need to be balanced — known as a trial balance — before financial statements can be prepared.
Even with the advent of technology that makes recording transactions more efficient, bookkeeping for small businesses can be a full-time job and is why many choose to hire dedicated bookkeepers.
What Does a Bookkeeper Do?
A bookkeeper is someone who records the financial transactions of a business. They take care of things like budgeting, taxes, and payroll. Bookkeepers are essential to any company that needs to keep track of finances-especially if they want to save time or money! A bookkeeper is a crucial but often invisible support system for most businesses.
Continue reading: What Does a Bookkeeper Do?
How a Bookkeeper Helps Your Business
People are often surprised to hear how much bookkeepers work to maximize their efficiency and potential as a business. In addition to keeping clean books, bookkeepers can evaluate your routines and systems and identify ways to improve them.
Continue reading: How a Bookkeeper Helps Your Business
The Differences Between A Bookkeeper and Accountant
While a bookkeeper and an accountant work with numbers, their jobs are very different. Bookkeepers keep records of and classify an organization’s financial transactions such as sales, payroll, payment of bills, etc.. The majority of the job is typically spent recording, posting, and verifying transactions in an organizations’ accounting software programs like QuickBooks. They do not complete tax returns or account for assets but they may be responsible for data entry into spreadsheets that act as organizational balance sheets or expense reports.
Continue reading: Bookkeeper vs Accountant, What’s the Difference? Who do you need?
Hiring a Bookkeeper? When To Know That You Need One
As your business grows, it can become increasingly difficult to properly manage finances and maintain records. If this sounds like an issue for you or your business, then keep reading! In this blog post, we will discuss when a business should hire a bookkeeper.
Continue reading: Hiring a Bookkeeper? When To Know That You Need One
What to Look For In A Bookkeeper
The job of a bookkeeper is more than just recording transactions – it’s about being a part of the growth and even the day-to-day operations of a business. It’s about maintaining and regulating an organized process in order to help ensure that the business continues towards success. That’s why when looking for a bookkeeper, you want to find someone who will be committed to helping your business succeed and keep things running smoothly.
Continue reading: What to Look For In A Bookkeeper
Virtual vs Traditional Bookkeeping, Which is right for your company?
Traditional bookkeeping and virtual bookkeeping are similar in that they function almost exactly as the other would, whether in-house or online, but there are some distinct differences that will help determine which is the right approach for your business.
Continue reading: Virtual vs Traditional Bookkeeping, Which is right for your company?
How Bookkeepers Help File Your Small Business Tax Returns At The End of the Year
The end of the year is a busy time for tax preparers and bookkeepers. Accountants must have all tax records for their clients gathered to file timely tax returns. Since tax laws constantly change, tax preparers must stay on top of changes throughout the year in order to be sure that tax forms will be correct by the time tax season comes around again. At the end of the year, this task becomes even more complex as accountants attempt to complete all tax records and return filings within a few weeks. When tax records and tax return filings are prepared correctly, business owners will have the peace-of-mind knowing that their taxes are properly taken care of, thus allowing them to focus on the other aspects of running/managing their business.
10 Bookkeeping Tips for Small Businesses
Business owners face many challenges when it comes to running their venture. It is so easy to get overwhelmed by work that basic bookkeeping tasks can be forgotten.