Bookkeeping Services Examples
You might know that bookkeeping exists, but do you know what services it actually includes, and how they differ from accounting? Learn the distinction and examples of how outsourced professional bookkeeping could transform your business.
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Bookkeeping Services Examples
Bookkeeping is an essential administrative function of small business success that many business owners and founders don’t know how to manage. 60% of business owners admitted they aren’t confident in finance and accounting, including bookkeeping. Even those who are confident may simply not have time to give their books the attention they need. When a business owner does try to manage the books alone, small miscalculations, or disorganized tracking of payments received and owed can lead to expenses attributed inappropriately, unclear revenue streams, the business running out of cash, more tax paid than what is necessary, and ultimately compromise the future of a business.
The right bookkeeping services can provide the solution to these stresses. While a bookkeeper won’t give advice about the finances, their diligent recordkeeping and attention to detail can help businesses avoid errors in tracking income and expenses that are necessary for compliance and decision making. We want to share several bookkeeping definitions and examples to help you understand why this service is essential and decide what type of bookkeeping services are right for you.
What are Bookkeeping Services?
Bookkeeping services are the work of keeping up with your general ledger—the recording of all your expense and income transactions. Said another way, bookkeeping is the process of “keeping the books”—recording the day-to-day transactions of a business. These records are very important for a business to understand how they are performing and how much money they are owed by clients and customers, and how much money the business owes in turn to employees, vendors, landlords, and others. Depending on how many transactions your business incurs on a monthly basis, you may need a part-time or full-time bookkeeper.
What Services are Included in Bookkeeping?
Here is a list of accounting services that are usually provided by any bookkeeping professional successfully performing this role:
- Processing vendor bills and related payments
- Posting credit card transactions
- Preparing customer invoices and posting related deposits
- Assisting in the collection of past due invoices
- Reconciling bank, credit card, and merchant accounts
- Posting payroll
The important responsibility for the day to day record keeping and all transaction documentation falls on bookkeeping, meaning that when business owners choose to hire a bookkeeper, they are freeing up a lot of their time and thought-space. So if you are wondering “what type of services do bookkeepers provide,” it’s not just a question of their literal duties. Their role saves you time and it needs to be done correctly by an experienced and knowledgeable bookkeeper.
What is Bookkeeping in Accounting?
Now that we have reviewed what are the basic bookkeeping services, you might be wondering how they differ from outsourced accounting services.
Bookkeeping services are those offered to record the day to day financial transactions of a business… While this is a major asset to any business, what these services do not include is advice about how to improve the financials or make strategic decisions about growing the business based on the numbers. Bookkeeping is the administrative recordkeeping and foundational documentation that allows accountants to accurately prepare high-level corporate reports, analyze the cost of operations, and advise a business owner about the potential impact of pending financial decisions.
Types of Bookkeeping
There are two primary types of bookkeeping: Internal bookkeeping and outsourced bookkeeping.
Internal bookkeeping is when a company hires a bookkeeper on staff that records the day to day transactions of the business in the accounting system. While these tasks are often straightforward and redundant, companies whose bookkeeping supports a specialized accounting workflow sometimes opt to bring an in-house bookkeeper so they can be trained on the process and management has more control.
Outsourced bookkeeping is what most companies opt for. This means someone outside the company, a contractor or firm, manages the day to day tracking of expenses. Outsourced bookkeeping is popular for small to mid-sized businesses because most companies don’t have enough bookkeeping work for a full-time hire and it can be an incredibly dull task for someone who has a separate job, leading to errors. Outsourcing bookkeeping often ends up being cheaper than a full time hire and ensures accuracy.
What is Included in Full-Service Bookkeeping?
A full-service or full-charge bookkeeper often completes the duties of both a bookkeeper and an accountant. Full-service bookkeeping is often used by small businesses where accounting duties are small enough that a full-time controller is not justified and could be handled by a bookkeeper. But in those same situations, bookkeeping services for small business can be completely outsourced, providing a valuable and useful option to reduce costs and gain critical talent for a growing small business. Outsourced bookkeeping firms often have experienced controllers or CFOs that can help provide additional oversight, often a requirement when a company uses a full-service bookkeeper. While bookkeeping services provide a great start for many small businesses, most also consider fractional or outsourced CFO services to gain a strategic advantage beyond essential bookkeeping services.
Is There a Bookkeeping Certification?
Yes, the National Association of Certified Public Bookkeepers (NACPB) accredits bookkeeping services in the USA with the Certified Public Bookkeeper (CPB) license. This license tests and confirms a bookkeeper’s knowledge of bookkeeping, accounting principles, payroll, and QuickBooks. To receive this accreditation, a bookkeeper must pass the four-part Uniform Certified Public Bookkeeper Examination, as well as possess either an associate’s or bachelor’s degree in accounting or complete an Education Alternative. Before becoming certified, they must already possess one year (2,000 hours) of bookkeeping and/or accounting experience.
However, there are a lot of competent bookkeepers that don’t have a certification. If you are concerned about the competency of your bookkeeper, we recommend that you work with someone that operates within the context of an outsourced accounting organization with accountant oversight.
Now that we’ve defined what are typical bookkeeping services and how you might choose to leverage them, let’s explore some hypothetical examples to demonstrate how bookkeeping services can help small- and mid-sized businesses in a variety of situations.
Accounts Payable: A busy solopreneur keeps getting requests from vendors to pay invoices they believed were already paid. Without the time to fully monitor the status, and eager to preserve their essential vendor relationships, they are concerned they may be double-paying. An outsourced bookkeeper is able to easily-establish a process for documenting when invoices are paid and confirming the payment with vendors.
Accounts Receivable: One entrepreneur is mindful of sending invoices the first of every month, but then as things get busy, they forget to follow up to confirm who has paid—or enforce late fees for those who have not. A bookkeeper is able to assume responsibility for sending the invoices, matching them with incoming payments, and tracking clients who haven’t responded by the due date.
Cash: A small business owner has given two remote sales employees company debit cards and worries they might be losing control over spending. They don’t want to upset the sales people by requiring them to justify the expenses but they know they need to get receipts for tax compliance purposes. The outsourced bookkeeper they hire takes the responsibility for inputting submitted receipts and monitoring the expenses to ensure tax-deductible expenses are recorded correctly.
Inventory: The owner of a small restaurant is continually running out to buy ingredients at the local grocery as-needed, but also receives a bi-weekly shipment of food from an industry wholesaler. They are challenged to understand what they are under-ordering, as well as how much the additional ad-hoc purchases are really costing them. When a bookkeeper records expenses in a way that is attributable to a vendor, that empowers the owner to revise the budget and increase ordering as necessary.
Loans Payable: A solopreneur has taken out several lines of credit to fund their startup, and each loan has a different payment due date. Since cash flow is uncertain month-to-month, they do not want to set up auto-pay. An outsourced bookkeeper is able to spend less than one hour a month making sure the owner’s loans are paid on time and that their credit is maintained.
Purchases: An independent contractor routinely purchases materials like lumber, nails, screws, glue, and other necessities to do work for their clients. They know they should be upcharging each client for their portion of consumption of the goods, but it’s too much work to do the math, so they often just deliver the items at-cost. An outsourced part-time bookkeeper is able to help the contractor improve profitability while also tracking the cost of the purchases to provide transparency.
Sales: An ecommerce retailer is thrilled that one of its products recently went viral, but the high volume of sales has led to a significant increase in the need for daily recordkeeping. Balancing all the other duties that have come along with the sudden spike in business, and the owner simply doesn’t have time. An outsourced bookkeeper is able to collaborate with the owner to document the sales while also ensuring inventory is in alignment.
These are just some examples of how bookkeeping services are a small improvement that can transform the performance of a business, and the lifestyle of the owner and other employees. Working with a bookkeeper is an important step in the maturation of a business.
Bookkeeping Services Custom-Created for the Entrepreneurial Journey
Milestone provides full-service bookkeeping services to businesses of all sizes and specialties, especially small and mid-sized businesses. No matter what challenges, concerns, or goals bring a client to our door, we consider it our duty to provide good information that leads our clients to make better decisions. When you work with Milestone, you gain the support of a partner who truly considers themselves an extension of your team. As a small business ourselves, we know the ups and downs of the entrepreneurial journey and how essential it is to retain any and every competitive advantage. That’s why we leverage cutting-edge technology to deliver enterprise-level solutions to every client we serve.
We also take a progressive approach to our business model, refreshing the concept of outsourcing to meet the needs of diverse clients today. Working with Milestone, you never sign a long-term contract. And you will never be directed to an offshore call center. Instead, you will develop a relationship with a dedicated point of contact that serves as your resource and support for exactly as long as you need us.
Our goal as an outsourced financial services provider is to empower our clients with the ability to transform their back office functions into a catalyst for growth. We will work with you to develop a customized, cost-effective solution to your accounting and finance needs.
We would love the chance to apply our support and expertise to meet your needs. Contact Milestone today to tell us more about your business, your story, your goals, and let’s work together to help you enter the next stage of success.