Bookkeeping, or the recording and tracking of financial transactions, is a vital component of keeping your business’s financial affairs in good order. A strong bookkeeping process enables companies to ensure that they are in compliance with legal and regulatory requirements, to organize and store their financial information in the most appropriate way, and to make analyses and draw conclusions to assist with future business decision-making.
For many small businesses, it can make more financial sense to retain the services of aCPA firm for bookkeeping services than to employ a full-time member of staff to this role.
We will examine six ways in which bookkeeping is critical to small businesses’ success and how a small business bookkeeping service can help you to maintain your business’s financial health and to achieve your aims and objectives.
A strong understanding of your financial position should underpin everything you do and every decision you make for your business. In order to gain this understanding, it is vital that your financial records are kept up to date, accurate, and organized. One of the roles of bookkeeping is to ensure that all of these standards are adhered to.
With robust financial records at your disposal, it is easy to view the complete picture of your revenue and expenses and to understand the implications of all of your financial decisions.
Without a comprehensive understanding of your current financial situation, it is impossible to make strong and informed business decisions for the future.
Your business’s finances impact every aspect of your operations and decision-making, from who and where you can hire to which capital expenditures you can invest in. It also enables you to understand which markets are the most and least profitable, providing invaluable insights into where you will be able to grow your business in the future.
Filing your return and paying your taxes is one of the most stressful tasks for many business owners. Consistent and high quality bookkeeping, however, can vastly reduce the time investment needed for this because you will already be organized with all the information you need to file your return.
This means that you will know in advance exactly how much you are required to pay quarterly and yearly. You will feel more confident in the accuracy of the calculations, and any past errors can be discovered and rectified before they become significant problems.
A strong bookkeeping process allows for continual cashflow analysis and an up-to-the-minute understanding of your business’s cash position.
As you plan for a new year, this information will be invaluable in your budgeting and forecasting processes. It can help you to understand whether you are beginning the year strong or will be facing economic challenges in the coming months. By proactively examining this data, you can plan to reduce expenditure and make savings when necessary.
One important element of the bookkeeping process is the reconciling of credit cards and business expense accounts.
Regular reconciliation of these accounts enables you to identify areas in which expenditure can be streamlined or reduced, helping you to separate your essential expenses from those that may be unnecessary.
If you want to acquire loans to expand your business or even plan to someday sell your company, it is vital to be able to demonstrate your company’s worth to prospective investors. You may someday even need a financial statement provided by a CPA firm to support your bank lending practices.
If your books are poorly kept, you will find this a major hindrance in attracting investors. In this way, bookkeeping is an investment in the long-term success, growth, and expansion of your business.
As we have demonstrated, bookkeeping is a critical aspect of managing your business’s financial health, future prospects, and overall success. Many business owners make the mistake of attempting to manage their bookkeeping themselves, vastly underestimating the time and expertise required to do so effectively and efficiently.
A qualified bookkeeping company with expertise in the world of small businesses is one of the best investments you can make in your business. Retaining the services of professional bookkeepers saves you time, opening up more hours in your day to perform your other essential business duties, from production and operations through to sales and marketing.
Professional bookkeeping brings an additional pair of eyes and a fresh, expert perspective to your business’s finances and expenses. This has the potential to save you a significant sum of money in areas that you may have missed.
In addition, a professional bookkeeper can make sure your finances are filed correctly, keeping you in legal and regulatory compliance and easing the difficulty of a potential audits. These professionals have a robust understanding of the best ways to write off assets and expenses to provide your business with the maximum allowable tax benefit. They may also be able to identify issues and errors in past tax filings before they create major problems.
Finally, professional bookkeepers have the knowledge to advise you on your business, beyond the numbers, to find efficiency, potentially identifying the best ways for you to expand your business and saving you from costly mistakes.
Though there are many bookkeeping services available on the market, our recommendation is to work with a Certified Public Accountant (CPA) Firm. These firms provide bookkeeping amongst many other financial and accounting services to their clients and, though their hourly rates may be slightly higher than a bookkeeping-only firm, they offer superior training and oversight which enables their providers to be far more cost effective for your business.
When you retain the services of a CPA firm, you will enjoy excellent financial support at all levels. In addition to a bookkeeper, you will have access to an accounting and advisory team dedicated to helping your money to work harder for you.
Finally, a CPA firm can manage your tax return preparation and filing in addition to bookkeeping, providing one seamless process that makes managing estimates and tax payments throughout the year simple and stress-free. This makes the entire tax preparation, return, and payment process far more efficient and, though you may pay more for accounting during the year, you will likely pay far less on your eventual tax preparation bill.
Since 1952, the team at Levine, Jacobs & Co has been supporting the small business community with their accounting needs, working to a philosophy of personalized service and individual relationships with each of our valued clients.
We see ourselves not merely as bookkeepers or accountants, but as partners in your business’s development, growth, and success. When you work with us, your company’s financial well-being and long-term financial health is our primary concern.
To learn more about how we can assist you with bookkeeping and other small business financial services, please contact us to speak to a member of our New Jersey CPA team, who will be pleased to advise you.