When you start a small business, it is crucial to get your finances in order from the start. A bookkeeping service can play an important role in this. It could give you the financial edge to get your business off the ground in a competitive climate. You may wish to do the task yourself, given that part of a bookkeeper’s role is organisational. However, if you value your own time as a manager in monetary terms, it may work out cheaper to get a bookkeeping service.
Bookkeeping involves keeping a record of financial transactions, including sales, purchases, payments and receipts. Single entry or double-entry bookkeeping can be used to record transactions accurately. A number of businesses fail to implement this important process, even though they are required by law to maintain accurate books and records. Inefficient accounting can even lead to the failure of a business.
When income and expenses are kept organised, it is simpler to review resources and expenses. A budget can be used to create a long-term plan for future expenses and the resources that may be required to cover these.
Bookkeeping is crucial for all businesses because it makes it easier to budget. Properly organised income and expenses make it simpler to analyse your financial resources and costs. With a budget, you can plan for future outgoings to help your business expand. If you don’t maintain precise and up-to-date books, it’s a lot more difficult to get the budget right because you will be relying on estimates.
Reasons to Hire a bookkeeping service
Bookkeepers can adapt to the priorities of different companies. They free up time so that the manager can concentrate on crucial decisions that need to be made. Doing the bookkeeping yourself can rob you of time that could have otherwise been invested in streamlining existing processes like client relationship management and billing. The company can concentrate on growing its customer base and keeping clients happy. You will also get your financial statements on time, and business papers will be processed punctually.
A tax return must be filed each year. Many businesses leave this until the last minute. A bookkeeper can help to make this process more efficient. With a solid process in place, you can have the information ready in time, saving you hurriedly looking for receipts and invoices. All your financial details will be stored in one system.
There are a number of parties interested in your company’s financial records, such as IRS investors and lenders. If you cannot provide the relevant information to these parties, by the deadline, then your business could be in trouble. In the case of the IRS, this might mean financial penalties. You could also lose thousands of pounds from investors. Not taking care of your books will cost you over time and could even cost you the company.
Bookkeeping aids business performance analysis. The financial statements generated from bookkeeping should be used for this. They allow you to monitor your outflows and inflows. You can see what is and isn’t functioning in your business. This allows you to make important changes.
Easy reporting to investors
The balance sheet, income statement and cash flow statement all convey the value of your business. Bookkeeping allows investors to have up-to-date and accessible information via financial statements. Investors can then make decisions more readily. Bookkeeping is both for current investors and future investors. Potential investors are more likely to invest in your business when they are given detailed financial information.
Bookkeeping allows you to take hold of your business’ finances, highlighting exactly how you spend money. You can view outstanding invoices owed by you or your customers. You will be able to pay your bills punctually, and you will receive payment for your products or services on time as well. This inflow/outflow balance will keep your business thriving.
Tracks profit and growth
On an income statement, you can assess your business’ profitability. A bookkeeper can go through this with you. Bookkeeping also helps you to monitor growth. As time passes, you will amass years of data. This data can be used to study trends, learn more about your business cycles and compare results from different points in time.
Better cash flow
Bookkeeping leads to a better cash flow. Regularly recording receivables, revenues, expenses, and liabilities allows you to keep a hold on when your customer and vendor invoices are paid. Businesses need to make sure that customer invoices are being paid punctually. Vendor invoices should also be paid in a timely manner to avoid charges. Bookkeeping allows you to highlight information from outstanding invoices, which can be used to develop better cash flow policies.
Easier IRS audit
If you are ever subject to an IRS audit, you will want to make sure your books are organised. Otherwise, you are more likely to receive fines as the auditing process could be unnecessarily extended. It is best to provide the information they need as quickly as possible, or you will end up paying out needlessly.
Keeps you prepared for the tax
Having a bookkeeping process in place means that you will have access to all the financial details you need when you file taxes at the end of the year. When HMRC asks for a financial statement for tax purposes, you will have a better idea of how that is likely to end.
Easier to see targets
The inadequate organisation of financial records can prevent your company from growing at the pace intended. Setting goals also becomes more difficult if you lack accurate data. You don’t want to leave it all down to guesswork.
Better relations with banks and investors
You are more likely to gain what you want from investors and shareholders with a solid bookkeeping service in place. A visibly thriving company leads to more chances of bank loans. Having proof is a major plus point in bookkeeping.
Faster business response time and financial analysis
You can adapt more efficiently to any market or business development when you have up-to-date and accurate information about your accounts. You can make important split-second decisions with greater ease.
Having detailed records will reduce the amount of time an accountant will spend on analysing your accounts and making financial statements. This will lower the cost of accounting, and it will free up time to act upon analysis and alter planned strategies.
Bookkeeping speeds up producing financial statements. Conducting an audit will be easier with a bookkeeper as your accounts will be organised.
The final say
Every single company would benefit from having a bookkeeper. The choice of professionals online is vast, so make sure you find the best person for the job at a fair rate. If you don’t have the time to search for providers online and speed up the process while receiving the highest quality, get in touch with Expert.