Small businesses can be tasking and exhausting to handle. Daily activities, sales, transactions, and other things are not easy to monitor. Bookkeeping is a vital part of any small business and is often underestimated. However, there are a thousand reasons why you should hire a bookkeeper. 

Many small businesses fail as a result of poor book records. According to research, about one-third of companies have a bookkeeper. And this statistic highlights the downfall of many companies.

Bookkeeping for small businesses can be misinterpreted for accounting, but the two positions have different responsibilities. This article will explain why you need a bookkeeper in your small business. I will also discuss the roles and tasks of a bookkeeper.

Before we go into the main topic, let me talk about Bookkeeping.

What is Bookkeeping?

Bookkeeping is the recording of daily financial transactions of business activities such as sales, expenses, and other details. This practice is an essential tool in monitoring and keeping track of your economic activities.

Small businesses need an excellent and updated bookkeeping record that is comprehensive. It would help in saving time and money and also avoiding unnecessary tax fillings.

Although it is different from accounting, bookkeeping is often taken as accounting. But both a Bookkeeper and an Accountant have different roles to play in a business.

 

Difference between Accounting and Bookkeeping for small business

As I just mentioned, both roles have different job descriptions. However, they work together to achieve a particular goal. Here is the difference between a Bookkeeper and an Accountant.

• Bookkeeper; A bookkeeper takes charge of the daily transactions in a small business comprehensively. They record sales expenses and make the invoicing. 
• Accountant; The accountant, on the other hand, is responsible for making official financial reports either quarterly or annually. Accountants also make sure that tax filings are appropriate and your business avoids unnecessary tax utilities. 

The lines above highlight the significant responsibilities of an Account and a Bookkeeper. It would help if you had both to attain efficiency in your finances.

 

Why should I hire a bookkeeper?

Hiring a bookkeeper is necessary for every business that demands accountability of its financial and general activities. The roles of Bookkeeping for small businesses include monitoring your daily activities, making tax filings easier, understanding the figures, maximizing tax benefits, and increasing your chances of getting loans. 

These benefits are the significant reasons you should hire a bookkeeper for your small business. Below I am going to discuss why hiring a bookkeeper is essential.

 

·         Monitoring your daily activities

Running a business can be a very hectic task. That is because you handle many customers, proposals, sales, expenses, and everything that concerns your business. But bookkeeping can help ease the burdens off your shoulders.

A bookkeeper will make sure that you keep track and monitor every activity in your business. Sales expenses invoicing are all recorded, and at the end of the day, you have good accountability of every information.

Without a bookkeeper, you lose track of all the relevant information you need. Balancing and accounting for your business can be difficult if you do not have a bookkeeper.

 

·         Making tax filings easier

Whether you have an excellent financial record or not, the tax returns must come. Managing tax filing can be made easier and less stressful with the help of comprehensive financial records.

Although this is a job that an accountant would handle, the success of this job must also require competent bookkeeping. That is why you need someone to cover both roles and perform effectively.

Your tax filings would help you avoid unnecessary returns when paying taxes. That shows how you can also save some money.

 

·         Understanding the figures

Every business today was established to make profits. However, they might still be sometimes where you could attain losses. But as a small business owner, you can know the stability of your finances. Bookkeeping for small businesses makes your finances more comprehensive and understandable.

Small businesses can be able to keep track of their loss and profit. That can only be obtained with a good financial record of your daily activities, which is the primary role.

If you do not understand the numbers behind your profit or loss, you need a Bookkeeper.

 

·         Maximizing Tax benefits

Paying tax comes with benefits, and some people might ignore these utilities. Tax utilities such as phone, accessories, travel, and internet bills can be maximized, which will save money for your business.

When you have a competent bookkeeper, your business will take advantage of tax benefits, rules, and exemptions. It will save you some money, but if you do not know the tax rules, your business might suffer unnecessary costs. This knowledge further explains why you need to hire a bookkeeper.

 

·         Getting loans

Businesses might need loans to grow sometimes. Getting loans from banks or other financial funding institutions can often take a long process. However, accounting for your financial records can give your business a chance.

This area is another reason why bookkeeping for small businesses is a necessity. If you have a comprehensive record of your daily financial records, sales, expenses, and tax, you would likely get a loan from these institutions.

Business accountability is a vital criterion to getting loans, and that is what bookkeeping offers to small businesses. So, why not hire a bookkeeper and get to ascertain a good command of your business activities.

These points I have just discussed are strong reasons why your small business needs bookkeeping services to be better. There are other essential benefits of hiring a bookkeeper for your business.

A bookkeeper can save you time which will enable you to handle other areas of your business. Your business can also save money while processing invoices faster and getting paid. The importance of a bookkeeper in any business cannot be overemphasized. If you are a small business owner and do not have a bookkeeper, you should consider hiring one.

 

What does a Bookkeeper do?

A Bookkeeper is primarily responsible for the daily financial transactions of a business. There are also other responsibilities that a bookkeeper handles for your business. They include the following;

• Availability at all times
• A clear and easy communication channel of your business
• Monitor the sales, receipts, and payments of your business.
• Design effective maintenance and workflow of the business process.
• Collate daily activities, including expenses and other returns.
• Record financial transactions and make them comprehensive for the accountant

These are the responsibilities and tasks that a competent bookkeeper can offer to your small business.

 

When do I need a Bookkeeper for my Business?

Every small business needs bookkeeping as soon as it starts making sales. It is advisable to hire a bookkeeper at the start of your business. However, some business owners do not employ a bookkeeper soon enough. This action can be evident in how the company will pan out. You will notice a few red flags and issues you need to address.

In this section, I will discuss some of the signs that you need to hire a bookkeeper for your business. They are;

·         Bookkeeping takes too much of your time

When you take too much time trying to get your records up to date, it is a clear indication that you need a Bookkeeper. Just as I mentioned earlier, bookkeeping can save you time to focus on other aspects of your business. That means you should hire a bookkeeper and get the most of your time.

·         Your records are not up to date

Handling your record and bookkeeping can be stressful. If you do this yourself, you might start playing catchup with your daily logs. Even then, it makes it almost impossible to understand your revenue. This defect is another reason why you should hire a bookkeeper immediately.

·         Your accountant does your bookkeeping

Accountants are meant to handle monthly, quarterly, or annual financial records. If you have to reach out to your account with bank transcripts in the time of taxes, it shows you need a bookkeeper. Also, accountants would charge more for hours than Bookkeepers would.

It is vital to know that business decisions cannot be made with only quarterly and annual records. Hence the need for a Bookkeeper.

·         You do not take advantage of tax benefits

Tax deductions can come for different reasons. As a business owner, you might miss out on the chance to take advantage of the deductions that come with tax. A competent bookkeeper can efficiently solve this problem. They have more knowledge about tax rules and deductions to help you save money.

If you discover that you have missed out on certain tax benefits or deductions, hire a Bookkeeper.

So, if you discover any of the signs I have highlighted above, you need to consider the services of a competent bookkeeper. Bookkeeping for small businesses in a particular area should get much attention.

That is everything you need to know about hiring a bookkeeper. If you have any questions about this topic, check out the ‘Frequently Asked Questions and Answer section below.

 

Frequently Asked Questions and Answers

Why should small businesses hire a bookkeeper?

Bookkeeping services offer virtual or physical assistance to businesses. They handle the daily financial records and allow business owners more time for other issues.

 

How do I hire a bookkeeper?

Recruiting a competent bookkeeper is tricky sometimes. However, you can hire by getting recommendations from friends, searching social networks, and asking acquaintances. Your Accountant can also recommend a bookkeeper for you. You can also hire virtual bookkeepers from online freelance platforms. It would cost at least $15 to $25 per hour.

 

What questions should I ask a bookkeeper?

Recruiting the best and most competent bookkeeping requires a good interview with them. If you are hiring a bookkeeper, here are a few questions you should ask them.

1. What is the curriculum of the services you offer?
2. What previous experience do you have on this job?
3. What are your specializations?
4. Have you worked in a similar industry before?
5. How do you communicate with clients?
6. What level of dedication do you have for this job?

These questions can help you assess the applicants during the hiring process.

Watch and Learn the Bookkeeping Basics for Small Business Owners

 

Conclusion

Hiring bookkeeping for your small business is a necessity. I have also discussed how this role differs from that of an accountant. If you did not know the benefits of hiring a bookkeeper, I believe you now know.

The benefits, freedom, and financial gains a bookkeeper would bring to your business are overwhelming. Your company might fall short and outdated with records if you have poor records.

So, this article has revealed that bookkeeping for small businesses is an essential service, and that is enough reason you should hire a bookkeeper.

 

Found this post interesting? Feel free to share it with your friends and families.

 

Originally posted 2022-02-24 14:57:36.