Proper Bookkeeping for a Solid Business Future

Tax Act

Business owners would agree that a proper bookkeeping system is not only essential, but it’s also the foundation that will secure your company’s financial future.

Running a business means more than just keeping your clients happy; it requires proper systems that are in place to secure your company’s future, whether this is looking after your employees, providing top-notch customer service, or maintaining a decent set of books. Bookkeeping is one of the most important aspects of managing an organization and failing to look after this important part of your office can ultimately lead to a financial disaster.

The Basics of Bookkeeping

The main purpose of bookkeeping is to keep an accurate record of a company’s financial transactions. This can be done in-house, but you may also find a bookkeeper from an external source to handle your company’s books. The person does not necessarily need to be qualified, but he or she should be very knowledgeable regarding the functions of a bookkeeper and the specific guidelines and State laws that your company should adhere to.

Bookkeeping also entails proper record keeping of the company’s various spending and income activities; such as supplier payments, customer payments, employee salaries and advertising costs. These items should be categorized and properly filed, in a way that the records are easy to find. Financial statements are also an important aspect of every company’s books, and they give you an accurate overview of your performance, and they are reliable measuring tools when comparing your performance against those of your competitors.

Budgeting is equally important and allows you to set sustainable financial goals and constantly guard against overspending. Comparing your budgets against your actual spending also gives business owners a good indication of the goals accomplished, and the areas that can be improved. If you are looking to hire an individual that can accurately prepare budgets on you company’s behalf, try to find a bookkeeper that has significant experience and sufficient knowledge to assist you.

Complying with tax laws is also an area that every business needs to focus on. Filing tax returns is very important and if your financial system is in order, it will make this task so much easier. Your tax returns need to accurately reflect your company’s profit, turnover and spending. This is best done by a professional and it is advisable that you hire such a person to oversee these activities.

The Importance of Record Keeping

Document retention is something that every business should adhere to, and it can help a company with litigation and to ensure that all State laws and regulations are met. Here are the basics that every business owner should be aware of:

  • Records can refer to both hard- and soft copy documents; for example a physical receipt for goods purchased, or an email from a customer.

 

  • The length that you keep these records will differ, for example sales receipts are only valid up to the time the limitations expire. Important documents such as cancelled checks, duplicate bank deposits and employment records should be kept for a few years.

 

  • Documents are kept to avoid the burden of proof in the future. Documentation would need to be provided in case any issues or claims arise a few years from now.

 

Anthony Azevedo, CPA is the managing member of EZCFO, an accounting and bookkeeping company specialized in payroll, human resource and employer solutions.

Should You Hire An Outside Bookkeeping Business?

Tax Act

Your business is starting to grow. You’re hiring new employees. You’re considering adding a health plan. You might even move from your cramped storefront to a more luxurious space across town. This growth is good news. But it also comes with a price. Your business is gobbling up your free time like never before. You need relief. It might be time to hire an outside bookkeeping business to provide it.

Your talents lie in finding the right employees for your business, crafting marketing plans that attract attention and securing new clients and customers. Spending too many hours balancing your books, tracking unpaid invoices and crafting expense reports is not a good use of your time. You should always be concentrating on income-producing activities. Bookkeeping work, while critical to the financial health of your business, is definitely not an income-generating activity.

That’s why hiring an outside bookkeeping business is a financially wise move for you and your business. A bookkeeping service will handle your financial matters, tracking invoices, revenues, expenses and wages. It will compile the information you’ll need to file your taxes every way. And it will help you decide on whether it makes financial sense to move to a new location or stay put for another year.

Hiring a bookkeeping service will cost you money. But you’ll have to decide if this expense is covered by the amount of free time outsourcing your bookkeeping needs will leave you. Your time is valuable, remember. If you have more time to work on new advertising campaigns or develop new products or services, your business will grow all that much faster. If you have more time to interview potential new employees, the odds are better that you’ll land workers who are as passionate about your business as you are.

Not all bookkeeping businesses are built equally. Some may be operated by Certified Public Accountants (CPAs) while others may be staffed with high-school dropouts. Before outsourcing your bookkeeping, you’ll definitely want to investigate the quality of the employees. Having CPAs around is one indicator that this company knows what it’s doing.

Business owners never enjoy adding a new expense to their bottom lines. But businesses thrive when their owners make the right investments in them. Hiring an outside bookkeeping service is one of those expenses that more than pays for itself in the future.