Bookkeeping Services for Small Business
Any entrepreneur knows that accounting and bookkeeping is a crucial element to the foundation of their business. The most basic function for growing businesses is bookkeeping, which involves the ongoing maintenance of a company’s financial records to track revenue and spending. Milestone offers customized bookkeeping services for small business owners.
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Bookkeeping Services for Small Business
Any entrepreneur knows that accounting and bookkeeping is a crucial element to the foundation of their business. The most basic function for growing businesses is bookkeeping, which involves the ongoing maintenance of a company’s financial records to track revenue and spending. Bookkeepers can help small businesses with anything from processing vendor and customer invoices, recording credit card transactions, reconciling bank and credit accounts, to collecting payments from customers. Bookkeepers can be hired internally, but they can also be hired through outsourced accounting services.
Needless to say, bookkeeping plays a vital role in every small business, but how much do you know about the profession and what you should consider as you hire a bookkeeper? Let’s explore what bookkeepers do, examine some of the benefits of bookkeeping, and find out how much a bookkeeper can cost.
What does a bookkeeper do for a small business?
Bookkeeping is considered the plumbing of business, and a bookkeeper is the plumber. They make everything function correctly from a finance perspective. Bookkeepers help businesses keep their finances intact by posting transactions, reconciling accounts, and preparing reports. They ensure that your vendor bills get posted and paid on time, your credit card charges get recorded correctly, and your customer invoices get sent out and collected. They can take care of the daily, repetitive tasks that make it possible for business owners and accountants to get accurate and timely data to build budgets, identify trends, and plan for the future. Good bookkeepers are organized, skilled with numbers, and fastidious problem-solvers.
For example, let’s say a marketing company just signed on a new client and are now working with them to lay out and implement a strategic plan for their products. A bookkeeper may help the company generate invoices, collect customer payments, post the related deposits and enter vendor invoices related to the project.
Another example could be a non-profit that has to keep track of expenses for grant reporting purposes. A bookkeeper for the non-profit has to understand the various programs and ensure that both revenue and expenses get allocated and tracked correctly and that reports get prepared timely.
Examples of bookkeeping services for a small business
Examples of bookkeeping for a small business include things like:
Recording daily credit/debit card transactions
Most small businesses pay for goods and services with a credit or debit card. Ensuring the timely and accurate posting of those transactions into the accounting system is an important bookkeeping function.
Processing vendor invoices for payment
Just like credit card transactions, processing vendor invoices is a critical function for most small businesses. A bookkeeper will route the invoices for approval, enter them into the system, and process the payments at the appropriate time.
Invoicing customers and collecting payments
Arguably the most important bookkeeping function of all is the process of invoicing customers and collecting cash receipts. A good bookkeeper will help build a process to ensure that invoices not only get out on time and that nothing slips through the cracks, but that cash is collected in a timely manner.
One of the main responsibilities of a bookkeeper is to ensure that all transactions get properly recorded in the accounting system. By reconciling an account, a bookkeeper matches the posted transactions with the original source documents like a bank statement or credit card statement. Only after reconciling all of your accounts can you really trust that your financials are accurate.
Payroll is a critical function for every organization. It is not only important that your employees get paid on time, but that you also post the payroll in your accounting system as soon as it occurs. Payroll is usually a significant expense for a business and by not recording it in your books in a timely manner, you will not have an accurate view of cash.
Should I hire a bookkeeper for my small business?
If you want to have a growing, successful business, the simple answer is—yes, you should use bookkeeping services for small business owners. You might think that doing bookkeeping duties yourself may save time and money, but it’s actually the other way around. A professional bookkeeper saves you more time and money in the long run by allowing the financials to get done correctly, preventing errors, then freeing you up to focus on what you do best: growing and improving other areas of your business.
Benefits of hiring a bookkeeper for your small business
- Error prevention: One of the top benefits of hiring a bookkeeper is that they often help you avoid costly errors in tax filing and payroll. Even the most seasoned business owners are known to make posting errors, double count transactions, or forget to invoice customers. While no one is perfect, a trained professional can help ensure that your records are up to date and error free.
- Analysis: You have probably heard the phrase “garbage in, garbage out.” Good bookkeeping provides the foundation for financial reporting and analysis. With it, you can prepare accurate and timely financial statements that support goods decisions. Without it, you are making decisions in the dark.
- More free time: While bookkeeping is a critical function, it is not the best use of time for most entrepreneurs. They are far better off outsourcing the bookkeeping function and using that time to focus on running their business.
- IRS Compliance: Another important point that you should not overlook is that a good bookkeeper will help you stay in compliance with the IRS. They understand the rules and will put procedures and safeguards in place to ensure you are capturing the right information to avoid costly IRS fines or penalties.
What is the difference between bookkeeping and accounting?
The terms bookkeeper and accountant tend to be used interchangeably sometimes, so it is important to note their differences. There are a few important distinctions between the two roles.
Good bookkeepers help business owners manage their finances by recording transactions, paying and issuing invoices, reconciling accounts, and posting payroll. Bookkeepers ensure the timely and accurate recording of transactions in the accounting system, which in turn, provides the foundation for solid reporting and analysis. That’s where an accountant comes in.
Accountants rely on the information that comes out of the accounting system to prepare the necessary reports and analysis that business owners use to make informed decisions. They also do things like build budgets and prepare dashboards to track key performance indicators for the company. Additionally, an accountant may oversee a bookkeeper’s work. So, generally, an accountant’s role requires more education.
When comparing accountants and bookkeepers, know that an accountant may also be a bookkeeper. But entry-level bookkeepers are not accountants. Familiarizing yourself with what a bookkeeper does and what accounting clerks do can help you narrow down your financial needs.
Types of Bookkeeping
Now that you can confidently answer “What does a bookkeeper do for a small business?” you may be wondering what the options are for covering the bookkeeping needs of a business. Consider these possibilities when choosing a bookkeeping option for your business.
- The DIY: Some business owners want to save money and prefer to have their hands in everything, especially in the early days. If you have a knack for numbers and organization, or a history in accounting, this option might work for you. But as we’ve stated above, if you decide to do your own bookkeeping, it’s important to consider the time-consuming tasks involved and how they might pull you away from other responsibilities. It’s also important to understand the significance of any errors and how they can cost money in the long run.
- The in-house professional: If your transaction volume is high enough and you’d rather let a professional handle your bookkeeping, hiring an in-house bookkeeper is always an option. Depending on your needs and your budget, you could hire someone part-time or full-time. Hiring a bookkeeper can help free up some of your time, but it tends to be one of the more expensive avenues for small business owners.
- The outsourced service: Maybe you’d rather leave the number-crunching and reporting to the experts but don’t have the budget to hire someone inhouse. Hiring an outsource bookkeeper may strike the perfect balance for that need. By tapping financial professionals for the important work of bookkeeping and financial analysis, business owners can benefit from reliable expertise without the overhead of an internal hire. With the right provider, business owners can gain access to their financial status to make smarter decisions.
How much does a bookkeeper charge for a small business?
So we know a bookkeeper is critical, but what is the cost of bookkeeping services for a small business? Is it affordable?
When it comes to bookkeeping, most outsourced providers will quote a fixed fee based on the complexity of your books and the volume of transactions, but some will charge by the hour. So how much should you budget monthly for a bookkeeping service? $250 per month is a good starting price for the most basic monthly bookkeeping services. If you are paying by the hour, you can expect to pay between $40 and $100, depending on your location. You should also be wary of companies that are charging too little. You typically get what you pay for and will likely be disappointed by the quality or level of service you receive.
Tips for Hiring a Bookkeeper
So you’ve read everything about bookkeeping. Maybe now you’re ready to hire a bookkeeper. Here are a few tips to help you hire a successful bookkeeper that will lay the foundation of your business:
Hire a bookkeeper that understands your small business
A successful bookkeeper will make sure to go out of their way to understand your business and any unique industry or company needs.
Choose a local or virtual bookkeeper
You will want to connect with your bookkeeper personally on a regular basis. That doesn’t mean that you have to hire someone locally though. The old school model of accounting required a local bookkeeper to come to your office to open the mail and process a stack of paperwork. With online collaboration tools like Zoom and Slack, combined with robust cloud-based accounting tools like QuickBooks Online, you can work very effectively with a virtual bookkeeper. It is far more important to work with the right person or firm versus the one that is around the corner.
Check for credentials and experience
Ask about the company’s experience and training. Do they have any type of certification? Most software applications have their own certification program, which gives you a great way for you to ensure the person you work with is qualified. For example, if you are using QuickBooks Online, you should find someone that is certified as a QuickBooks ProAdvisor. You should also find out how long they have been doing bookkeeping and whether they have relevant industry experience.
Find out what type of software they use
Before you decide to hire a bookkeeper, ask what accounting software they use. If you already have a software package that you prefer, will they use that or make you change to something else? You should also make sure you understand who owns the software license and whether it is transferable. Most reputable outsourced accounting firms that work with third party applications will transfer your license if you leave. Be wary of those companies that want to put you on their own proprietary platform. It may work well when you are with them, but what happens to your data when you decide to leave? Even if they tell you you can transfer the data, it is often a huge hassle.
How Milestone’s bookkeeping services can help your small business
Have you searched for “bookkeeping services for small businesses near me?” You’re definitely not alone. You’ve come to the right place for your bookkeeping needs. As a local Indianapolis accounting service firm with a national footprint, we’ve founded Milestone Business Services as a direct response to the need from small businesses that are looking for a true partnership in business.
Milestone offers a reimagined back office experience that combines best-in-class technology tools with expert accountants and bookkeepers. We will take the burden of accounting off your plate and provide you with the information you need to proactively manage your business. Whether you are looking for basic bookkeeping support or someone to help you with more complex financial planning, our team of dedicated professionals can help you reach your goals.
At Milestone, we believe in true business partnerships that make life easier, provide the best information to make smarter decisions, and help clients build successful companies.
Wherever your business is today, and wherever you want to go tomorrow, Milestone is here to help you take the right steps forward. Click here to learn more about the Milestone difference and unleash your back office.