On social media everyone talks about their books when it comes to business, but what are your “books”? There is already so much to do as a business owner, why is there one more task? These are financial records otherwise know as the “books” of the business that not only help you understand the health of your business, but also provide the necessary information for your CPA/Accountant to file your tax returns accurately.
Bookkeeping is not a new topic in the small business world, it dates back to Luca Pacioli, the “Father of Accounting” in the 1400s, His work “Summa de arithmetica” is still the basis for accounting today.
Why should every small business owner understand bookkeeping?
Bookkeeping is the day-to-day transactions within your business. By ensuring your bookkeeping is always current and organized using best practices, this allows you to understand your profit numbers, debt, and even money owed to you in one quick press of the button in most cases.
The three items you should understand about bookkeeping as a small business owner are:
Bookkeeping is the record of ALL transactions within your business.
Did you pay for office supplies while you were at the store buying personal items? Those need to be recorded in your books appropriately as well.
Expenses are not the same as tax deductions.
Your CPA/Accountant will take your bookkeeping and analyze the information to file your tax returns which include various deductions and tax credits.
Monthly bank reconciliations are essential to accurate bookkeeping.
Each month you should take every statement (even the statements from those payment processors) and match up all the transactions, starting balance, and ending balance.
The bottom line with bookkeeping is, if you don’t have accurate books you will in return pay more for CPA/Accounting services and also may in turn pay more in taxes.
When should a small business owner outsource it?
In most cases, I say always! Most business owners don’t get into business to do bookkeeping. Outsourcing can give you the peace of mind of knowing your bookkeeping is up to date and following the latest IRS, State, and sometimes local reporting standards.
While there are no revenue guidelines on when to hire a bookkeeper, it is ideal to hire a bookkeeper before you need one. If hiring a bookkeeper at the beginning of your business is not in the cards, by the time you elect as an S-Corp, you should definitely have a bookkeeper on speed dial.
Do you collect sales tax? Or unsure if you need to? Having a bookkeeper on speed dial is ideal for business to understanding the grey that comes with Ohio Sales Tax rules.
As a larger business, often time financing and capital are applied for. Having bookkeeping up to date, will allow you to focus on the important parts of this process by having accurate data immediately available at your fingertips.
Even as a startup, outsourcing your bookkeeping can not only save you time, but also money. Providing a clean set of books to your CPA/Accountant from a Bookkeeper can help save you money in most cases, as your CPA/Accountant is able to focus solely on Tax Guidance and filing returns.
What is the cost to outsource Bookkeeping?
While the cost of bookkeeping services will vary by bookkeeper, it’s important to note that while outsourcing is an investment, bookkeeping fees should not become a large line item in your books.
Curious what it looks like to outsource your bookkeeping? Reach out to Victoria at www.goingbeyondbookkeeping.com to schedule a call.