All businesses require some form of bookkeeping help across various scenarios. There are also quite a few options available to them, ranging from hiring a full-time bookkeeping staff (or team) to hiring a freelance bookkeeping firm or even hiring a virtual bookkeeper. Each option has unique advantages, and the decision depends on the scale and needs of your business.
How bookkeeping helps every business
Professional bookkeeping is one element no business can do without, as bookkeeping serves to accomplish several important functions. Here are three important business advantages to be had from professional bookkeeping:
#1. Accurate financial analysis
Many small businesses fall into the trap of making major decisions without performing careful financial analysis. It is common for business owners who may lack a solid understanding of accounting principles to focus more on factors such as gross revenue, without giving appropriate consideration to other important variables such as liability exposure, recurrent costs, runaway spending, etc.
Professional bookkeeping help can produce accurate financial reports which will show the true financial state of the business, providing decision-makers with key information needed to make sound decisions.
#2. Tax Compliance
Paying your taxes accurately and on time is incredibly important, and will help you stay out of trouble with tax regulators. Lots of small business owners frequently have difficulty understanding how to accurately compute their taxes without losing any possible deductibles. Professional bookkeeping help can also compute and pay your taxes in line with the relevant regulations and provisions.
#3. Spot and prevent theft
If you run a business with a larger staff, there is always the threat of theft or other fraudulent behavior, which can sometimes be difficult to spot. Having a professional bookkeeper going through your books frequently will help you spot any potential theft issues relatively quickly, and will help you design financial processes which prevent leakages.
Different bookkeeping options: Pros and cons
Despite the advantages of bookkeeping which we have just discussed, you still need to be selective with your choice of bookkeeping help. Not all bookkeeping solutions will work the same for every business.
Here are the pros and cons of the various options explained:
Full-time in-house bookkeeping staff:
Having full-time in-house bookkeeping staff is a great way to keep more control over your business’ bookkeeping, as well as to protect your privacy. However not every business has enough bookkeeping work to justify the extra investment in a full-time bookkeeper. If you have just enough bookkeeping workload to require dedicated bookkeeping help, but not enough to keep a full-time bookkeeper busy, then you might want to consider some of the other options on this list.
Local bookkeeping service:
Instead of hiring a full-time in-house bookkeeper, you might consider hiring a bookkeeping service to come in and take care of your books on a regular basis. Hiring a bookkeeping service will usually be much cheaper than hiring a permanent staff member to do your bookkeeping. Additionally, bookkeeping firms usually have a significant amount of expertise in their field, so you will have easy access to high-level consultation if any complex issues arise.
There is a third option that is typically even cheaper than hiring a local bookkeeping service, and that is hiring a virtual bookkeeper. This could be an individual bookkeeper or even a virtual bookkeeping firm.
One issue to consider with virtual bookkeepers is the fact that no matter how professional a virtual bookkeeper’s website might appear on the surface, you will have no way of knowing who is really doing the bookkeeping work, as it is a common practice for some virtual bookkeepers to sub-contract the work they receive to other bookkeepers. While there is the obvious advantage of cost, you may not be very comfortable with the degree of remoteness that comes with hiring a virtual bookkeeper, and the obvious loss of privacy.Virtual bookkeepers may be a good option for small businesses which may not have much high-value data to protect.
Three questions to ask your bookkeeper
Regardless of which bookkeeping option you decide to use, there are three questions you should ask every bookkeeper:
How much expertise do you have in my industry?
Having many years of experience in one particular industry might not necessarily make one an expert at all the different issues surrounding regulations and compliance within other industries. The best bookkeeper for you is one who has the right experience and knowledge of your industry.
What accounting software do you use?
There isn’t any particular accounting software that works best for all types of businesses, but each software has its peculiar strengths, and these will tell you a lot about the areas of strength of a bookkeeper. Be sure to ask what advantages the system a bookkeeper uses might have for your business.
How up to date are you with current accounting/bookkeeping practices?
The field of accounting/bookkeeping is constantly evolving, and your business must keep up by maintaining compliance in the relevant ways or risk facing potential penalties. A good bookkeeper should be able to demonstrate all the steps they have taken to stay abreast of current regulations.
As discussed in this article, any business may find itself in need of bookkeeping help. However, choosing the right service depends on the kind of business you run and the bookkeeping workload you have. At Park City Bookkeepers, we offer a host of different bookkeeping services customized to your specific requirements.