Hiring a bookkeeper allows you to focus on what you’re truly meant to be doing – and leaving the daily dollar management to someone else. A qualified bookkeeper does more than just simple data entry and can provide a wide range of benefits for your company. What are some of the things a bookkeeper can do for you? Here’s a look.
Proper Recording & Reconciling
While accounting software and online banking tools make it easier to keep track of your transactions, someone still needs to review them regularly for accuracy. A bookkeeper can match transactions in the accounting software’s register, including transactions through checking/savings accounts, credit cards, or other account types. Reconciling these items on a regular basis ensures that all your business transactions have been recorded and are properly reflected on your financial statements and tax returns.
It is crucial for transactions to go in the right bucket when it comes to tracking expenses and income as well. Things like loans, which require an amortization schedule to correctly record payments toward principal vs. interest, or large purchases, which may be classified as a fixed asset vs. an expense are important to record correctly and an experienced bookkeeper will be able to do this for your business. Correct classification of transactions provides meaningful data to help you better manage your business.
Business owners can rest easier knowing that someone is keeping an eye on the company’s daily transactions. Regular routine maintenance of your books means errors and/or irregularities can also be caught earlier and can be dealt with before they create a giant financial headache.
Collect money owed
Who owes you money? A bookkeeper can manage accounts receivable, creating invoices and work to help ensure they are paid in a timely manner. They can also process payments as they come in and make bank deposits for payments made by paper check or help you streamline your procedures, as needed.
Knowing exactly how much money you’ve billed allows you to accurately forecast how much cash flow you expect to receive in the next month or quarter. It also allows you to make smart decisions about large expenditures, hiring, or other business-related expenses.
Pay the bills
Vendors, operating expenses, creditors… you’ve got accounts payable. A bookkeeper can assist you in making sure bills are paid on time. They can also record and categorize the payments in accounting software. Recording these transactions as they happen means you’re not struggling to remember what you paid and to whom when it’s time to file a tax return or issue 1099s.
If you have employees to manage, many bookkeepers also serve as payroll manager and/or payroll processor. If you work with a bookkeeping firm, they may offer internal payroll processing services or work with a third-party vendor, like ADP. In either case, a bookkeeper can submit data for paychecks (such as hours worked), make sure new employees are added to the payroll system, and serve as a go-between with a third-party payroll vendor.
Act as liaison to the CPA
While a bookkeeper provides a wide range of benefits, most companies also work with a CPA. The bookkeeper can gather and submit important documentation for the accountant to prepare tax returns or other reports. Since bookkeepers and CPAs tend to speak a common language, bookkeepers can also assist business owners in understanding and completing forms or documents the CPA requests. It’s worth the time to take a look at whether you are really in need of a bookkeeper vs. a CPA as well and the differences between the two.
There is also a benefit to working with a firm that provides a holistic approach since the bookkeeper and CPA are already working together based on your overall business goals. The CPA will be well aware of your accounting situation to provide recommendations throughout the year and serve as a better advisor for your business when it’s time to file your return as well.