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  • 14 Facts About Bookkeeping Services for Small Businesses

    14 Facts About Bookkeeping Services for Small Businesses

    14 Important Facts About Bookkeeping Services for Small Businesses

    Small Business Bookkeeping

    Bookkeeping is essential for any business.

    Through bookkeeping, an owner can identify if a business is generating profits or looses.

    1. What are bookkeeping services?

    Bookkeeping is the recording, storing, and retrieving of financial transactions for a company, nonprofit organization, individual person, etc.

    Bookkeeping can include common financial transactions

    • paying suppliers
    • billing for services provided or goods sold to clients
    • documenting receipts from customers
    • recording invoices
    • processing employees’ payroll
    • financial reporting
    • monitoring accounts receivable
    • recording depreciation
    • and more

    2.Bookkeeping and Accounting are not the same thing

    What is the difference between accounting and bookkeeping?

    bookkeeping vs accounting

    Both bookkeeping and accounting are necessary for any business, but they aren’t the same thing.

    Bookkeeping is the recording of financial transactions, where as accounting is the interpreting, classifying, analyzing, reporting, and summarizing of financial data.

    In accounting there is interpreting and analyzing data, in bookkeeping there is not.

    Big picture outlook: Bookkeepers handle the recording aspect of all accounting processes, accountants handle all parts of the accounting process.

    3. Types of Bookkeeping Systems

    single entry bookkeeping

    source: Google

    The 2 main types of bookkeeping systems are the single-entry system and the double-entry system.

    Single-entry bookkeeping is used for companies that have few or uncomplicated transactions.

    This system records business expenses and cash sales that are paid when incurred.

    Single-entry bookkeeping typically consists of a cash sales journal, a cash disbursement journal, and bank statements.

    It is not typically used for a company that has accounts payable, accounts receivable, or a lot of capital transactions.

    Businesses that have more complex transactions use double-entry bookkeeping systems.

    The double-entry bookkeeping system posts single transactions as an income or expense item. Then a second entry is created to trace the transactions to a corresponding account.

    4. Bookkeeping Software is Common for Small Businesses

    source: Unsplash

    Now a days, many small businesses do most or all of their bookkeeping using bookkeeping software, instead of traditional systems.

    Popular bookkeeping software, such as QuickBooks, use the double-entry system, but the user doesn’t need to be well versed in the method to be able to use the software.

    The software is usually designed to be user friendly and can help reduce bookkeeping mistakes.

    Benefits of bookkeeping software

    Bookkeeping software is becoming increasingly popular among small businesses.

    It is an effective way small business owners can access the financial information they need.

    5. Proper Bookkeeping Helps You Pay Your Taxes on Time

    tax services

    source: Unsplash

    The more organized your books are, the easier it is to file your taxes.

    You will need to father all financial records and organize them by category.

    Accounting software, like Quickbooks, helps small businesses keep track of all their financial information.

    This can help reduce stress and last-minute scrambling during tax time.

    6. Always Keep Data Up to Date

    bookkeeping data

    Even if you hire an accountant to help with bookkeeping, make sure all files are up-to-date.

    An accountant only uses the information handed to them, so any errors or changes need to be addressed as soon as they are realized.

    7. Bookkeeping Is Typically Performed by a Bookkeeper

    bookkeeping service for small businesses

    source: Unsplash

    A bookkeeper is someone who records the day-to-day financial transactions of a business.

    A main responsibility of a bookkeeper is to write the daybooks.

    Daybooks contain the records of sales, receipts, payments, and purchases.

    A bookkeeper records if the transaction was cash or credit.

    Bookkeepers also record things in a supplier’s ledger, customer ledger, and general ledge.

    8. Bookkeeping Has Been Around for a Very Long Time

    clay bookkeeping tablet

    source: Google

    In written form, the history of bookkeeping dates back to 4000 B.C., and non-written form goes back as far as 8000 B.C.

    There have been clay tablets found in Babylon and Assyria from 4000 B.C. that recorded business and communal contracts.

    9. “Everything About Arithmetic, Geometry, and Proportion.”

    luca pacioli

    Everything About Arithmetic, Geometry and Proportion” was a book written by Frater Luca Pacioli in 1494.

    It is generally recognized as the first complete text written about bookkeeping.

    It describes the standard accounting system in detail, including commonly used bookkeeping tools such as ledgers and journals.

    Pacioli is commonly known as the father of modern bookkeeping.

    10. Common Bookkeeping Accounts for Small Businesses

    Bookkeepers for small business will typically record

    • cash
    • accounts receivable
    • inventory
    • accounts payable
    • loans payable
    • payroll expenses
    • owners’ equity
    • retained earnings

    If these items are recorded correctly, bookkeeping can be your best friend and the reason a business runs effectively.

    11. Integrating Outsourced Bookkeeping with Your In House Accounting Department

    calculator for bookkeeping

    If handling your accounting department on your own is starting to get overwhelming, there are many benefits to connecting your accounting department with an outside bookkeeping service.

    Many bookkeeping services provide additional manpower, accounting software resources, and expert advice.

    They help with time sheet monitoring, payroll processing, financial consulting, and can help with accounting technology questions that goes beyond your IT department.

    12. How to Become a Certified Bookkeeper

    certified bookkeeper

    source: Unsplash

    If becoming a certified bookkeeper for your small business, or hiring one, is something that intrigues you, there are necessary steps to take in order to be a certified public bookkeeper.

    You can obtain a license by education or by experience.

    If you choose the later route:

    1. Pass the Uniform Certified Public Bookkeeper Examination
    2. Possess Two-years (4,000 hours) of Bookkeeping or Accounting Experience
    3. Agree to Abide by the CPB Code of Professional Conduct
    4. Obtain 24 hours of CPE credit each year and
    5. Complete and Submit the CPB Application for Licensure

    13. Bookkeeping Options

    Small businesses do have options when it comes to bookkeeping.

    The first option is to do it yourself.

    If you are going to take on the tasks of being your own bookkeeper, know that bookkeeping can be time consuming but can’t be forgotten.

    Another option is to hire an accountant or an accounting firm.

    When hiring an accountant to do your bookkeeping, you’ll be privy to expert advice and not have to stress about it.

    A third option is to use a DIY software.

    Software can be extremely helpful, but as with all things, it does have a downside.

    Using a good piece of software, doesn’t typically educate a user about US tax code, requirements, or regulations.

    The last option is a fully automated bookkeeping service, like the one mentioned above.

    It’s important to find the bookkeeping service that works well for your company.

    What worked for your family friend, or competitor, may not work for you.

    You can always talk to a consulting and accounting firm to get a better idea of what would meet your needs.

    14. Maintaining Consistency is Key

    No matter what type of bookkeeping system you use, consistency is vital.

    Have daily, weekly, monthly, and annual tasks that you check in on.

    If you aren’t doing the bookkeeping yourself, follow up with who is.

    Volpe Consulting and Accounting Bookkeeping Services

    Volpe provides affordable bookkeeping services for businesses, and one set up, they are virtually autonomous.

    Some of our bookkeeping services include

    • monthly, quarterly, and annual bookkeeping
    • individual and company payroll services
    • ledger and financial statement prep

    At Volpe, we will work with your current staff and train them on crucial everyday aspects they use.

    Our goal is for your books to reflect your operations, and to streamline your bookkeeping process to make it as efficient as possible.

    We are also certified for Quickbooks online and desktops, and can integrate our services into any existing Quickbooks campaign.

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