Bookkeepers are financial watchers who always ask the right questions. They can even ask awkward questions if that means they can prevent your business from being in red numbers.
Bookkeeping is a fundamental and essential component for the financial operation of any entrepreneur, but many business owners are not sure how a bookkeeper can help. Keep reading this article to discover how proper bookkeepers can be a lifesaver.
What is bookkeeping?
Financial bookkeeping involves the recording of transactions, either manually or using online accounting software, and storing and retrieving data. By using good tenancy practices, you can register purchase and sale invoices, pay suppliers, and perform other financial functions.
But bookkeeping is different from accounting because your accounting records are used by accountants to prepare their business tax returns, many times, accountants and bookkeepers work collaboratively throughout the year. Thanks to this collaboration, your accountant can help you manage the cash flow or answer questions you have about your balance sheet and your income statement. By keeping accurate records, you can conclude your year-end financial records and have your finances in order.
Ten ways bookkeeping can help your small business
Bookkeeping is a vital area of any company. If you still have doubts about it, we share ten habits that will help your small business:
1. Monitor payroll expenses
The bookkeeping system includes payroll services, withholdings, and payroll taxes. Automated systems are added to the ledger accounts once you write checks so you can prepare the end of the year W-2 for employees.
2. Stay informed about tax deadlines
An important tenure policy is to make sure that IRS tax payments made. There are also deadlines for paying withholding taxes on social security, Medicare, withholding federal income tax, and federal unemployment tax.
Depending on your industry, you may owe individual taxes on specific products you manufacture or sell, for the equipment you use or for the payments you receive.
Remember that if you do not pay your taxes to the IRS on time, you could face substantial fines and penalties.
3. Track tax deductions
When you keep records of one year, you can detect tax deductions to reduce your income and any taxes that your company may owe.
That is an occasion when hiring an accountant, and a bookkeeper makes sense since they are kept up to date on laws and tax deductions.
With proper bookkeeping practices, you will have records to support any tax deduction.
4. Maintenance budget Check
Bookkeeping allows you to review your income and expenses monthly so you can be sure that you are within your budget. Otherwise, you will have no idea what areas you spend too much. Also, you can make adjustments to spending.
By adding to a system of consistent accounting practices, your records will identify the financial areas to which you should pay attention to avoid a financial crisis.
5. Have more free time
When you know how money comes and goes, you can spend more time growing your business. With proper bookkeeping, you will know where your money is being spent in your business. Necessarily, you won't need to juggle so many tasks at once.
6. Take off unnecessary pressures
Assigning tenure tasks to someone else takes away the stress of having to manage microfinance. The bookkeeper can look for ways to reduce costs, make recommendations to simplify accounting, or find applications to improve efficiency. They become a valuable participant in the success of your business and allow you to concentrate on taking your business to the next step.
7. Meets the IRS
In case your company is audited, you will have records to justify purchases and deductions, thanks to bookkeeping. You can provide paper tracking of canceled checks, receipts, and other data to support transactions.
8. Prepare for the worst
Maybe a business partner decides to go free and pays a fee to a non-existent company.
Maybe do not send the tax money to the government. When you use accounting software and have a good bookkeeper, you can restrict manual payments, require two signatures on checks, and track expenses through your business and bank records.
9. Monitor the accounts receivable balances
When you have customers who pay slowly, your cash may not cover costs. You can track past due accounts to develop payment plans or other agreements with customers. When a customer cannot pay, he may be able to cancel the amount as an expense for bad debts.
Be sure to check with your tax professional for advice.
10. Pay suppliers on time
Your business could have problems if it doesn't pay for materials and services on time.
You can schedule account payments based on pre-established terms with suppliers. Remember that if you do not pay on time, sellers do not sell you materials or may require payment upon delivery.
Use accounting for the benefit of your business by putting in bookkeeping into practice to help your small business succeed and increase profits. You will discover ways to improve your financial process to save money. If your books are 3 to 6 months behind, you will not know when you will need funds for more working capital. Nor can you analyze profitability or calculate the value of your business if you decide to sell it. When you use bookkeeping strategies, you can focus on the most important thing: business growth. Bookkeeping not only helps you manage your business; it keeps you on the road to success.