Need Bookkeeping Help? Here’s What You Need To Do
Even the most business savvy entrepreneurs need bookkeeping help. They might believe their finances are good, but their books might be singing a different tune.
If your books are out of whack, it would be nearly impossible for you to know how well (or not so well) your business is performing. This makes it extremely difficult to make decisions.
There are plenty of reasons why you may need bookkeeping help. Maybe you are having trouble keeping up with all of your receipts, no bookkeeping system, lack of knowledge, lack of time or you’re so behind that you don’t know how to catch up. Regardless, it is time to take control of your business’ books.
Need bookkeeping help? Here’s what you need to do.
Maybe you need bookkeeping help because you are constantly misplacing financial documents. Financial documents include receipts, invoices, and bank statements. Losing these documents makes it nearly impossible to do bookkeeping. They contain all of the information you need to add to your records, i.e date, amount, purpose, and customer/vendor.
The first thing you need to do if you’re missing documents is compile as much financial information as possible.
Start with your bank statements. Most banks keep a record of your statements online. Log on to your online banking and refer to the statements section. Often time, banks only keep statements for a set amount of time, like 6 months. In this case, you’ll have to contact your bank for the earlier months.
If you do not have online access to your bank, seriously consider signing up for online banking. In today’s digital world, your customers, vendors, and competitors are banking online. Not only that, but it gives you 24/7 access to your money.
In either case, you can request statements by mail or digitally.
Some of your business transactions may be conducted in cash, making it difficult to identify its business purpose. The best thing for you to do is examine the date and amount and try to think of expenses you bought that meets its criteria. Example, you might always pay $50/month on or around the 10th for office supplies.
Cash transactions can be tricky. It’s hard to remember the purpose of withdrawing cash. In this case, just try your best to remember and limit your cash transactions moving forward.
Once you have the necessary bank statements, your accountant can add and properly classify all your business transactions to your books.
Lack of a Bookkeeping System
You may need bookkeeping help due to your lack of a bookkeeping system. A bookkeeping system is a programmed software designed to record business transactions and financial information that occur in your business.
The lack of a bookkeeping system is a common mistake entrepreneurs make early on. They may keep up with receipts and statements but fail to organize them into a system that makes sense.
A bookkeeping system is important for tax purposes too. Your business and personal tax returns are dependent on the information furnished by your bookkeeping system. Maintaining accurate financial records in a bookkeeping system makes it easier for you and your accountant when preparing your taxes.
40 years ago, accounting was performed using good ol’ fashioned pen and paper. Now, business owners and accountants can enter transactions twice as fast using one of the many accounting software that exists today.
Bookkeeping software is designed to streamline the accounting process which saves your accountant hours in time and effort. How? For one, they no longer need to hand write each transaction. Instead, bookkeeping software is 100% computer based.
Secondly, most accounting software have tools that allow you to connect your bank account – eliminating the need to enter each transaction. Once you “import” transactions from your bank, they appear in a list format, ready to be classified and added to your books.
A bookkeeping system can also help you analyze your business activities. From your bookkeeping records, financial statements are produced. Information from your income statement reveals whether your business is profitable or not. Your balance sheet tells you the value of your company.
Together, these financial statements paint the full picture of your business position.
Choosing among all of the bookkeeping software that is out there can be intimidating, especially if you are not familiar with any of them. Talk to your accountant and see what he/she recommends or uses for themselves.
Try doing your own research. Many of them offer free trials and demos that allow you to experience what using their software would be like. For the most part, they all have the same functionality and have only minor differences.
The cost ranges but are generally affordable. Most will fall between $20-$60 per month, depending on what the features you add on.
Once you implement a bookkeeping system, organizing all your financial information will be a breeze.
Your Bookkeeping is Behind
In most instances, business owners need bookkeeping help because they have fallen behind.
They have fallen so far behind that the idea of catching up de-motivates them and the issue goes unsolved. Or they feel that if they ignore their bookkeeping, the problem will go away. Well, it doesn’t and the best way to deal with fallen behind books is to address it and maintain them moving forward.
Falling behind on your bookkeeping makes it hard to assess how your business is doing. You may have an idea but there is nothing like having the cold, hard numbers.
Another result of not keeping up your books is an IRS audit. Dealing with the IRS is bothersome but having organized records will make the process easier.
IRS audits can be barren to your business because of all the time and effort it takes to complete one. With disorganized books, it makes it more time-consuming.
The first step in catching up your books is deciding who will perform this task. Either yourself or an accountant can do this.
However, there are invaluable benefits to having an accounting professional do this for you. For one, your business is not put on pause because of the hours you are spending on bookkeeping. You can continue to work and grow your business while having peace of mind that your books are being handled. You can also feel confident that your books will be accurate.
Whether you decide to do your own books or enlist the help of a professional, there are a few steps you need to take to ensure completeness.
First, gather all of your company’s receipts and bank statements for all of the missing periods and add them to your bookkeeping system.
Second, make sure all of your business expenses are separated from those that are personal. If you transact personal expenses in your business account, be sure to clearly distinguish that in your books. Keep in mind, it is good practice to never mix business and personal expenses in the same account.
Third, reconcile all of your business accounts, credit cards included. Reconciling is the process of examining all of your financial documentation and comparing that to the information in the bookkeeping system. This will help identify any errors.
It’s counterproductive to get all caught up on your books just for you to fall behind again. The same steps for getting caught up should be applied month to month to ensure you are staying on top of everything.
In addition, consider going paperless and digitizing all paper documents. Going paperless is not only good for the environment but good for your business. There are plenty of applications that can scan and read your receipts and upload to your banking records by simply taking a picture.
Lack of Time and Knowledge
As a business owner, you are skilled in many different areas. Most particularly in your line of business. However, unless your line of business is accounting, you may find yourself needing bookkeeping help.
Spending a large number of hours digging through the ins and outs of your financials is not efficient and takes you away from your business.
The best thing to do if you lack time and knowledge is to hire a professional.
Not only can they take bookkeeping off of your to-do list, but they are experts. The amount of time it takes you to do bookkeeping would take a professional half.
Ultimately, the time it takes to do bookkeeping really comes down to the number of transactions and accounts your company has monthly. Each transaction has to be added and each account has to be reconciled. Both of which takes time.
As a business owner, you have to ask yourself if spending time on bookkeeping is worth it? The honest answer is no. Your job is to deliver a service or product to your customers, maintain customer relationships, think of strategies to grow, manage employees, and more. Nowhere in that should you be bogged down with the tedious task of bookkeeping. Do your research, find a reputable bookkeeper, compare prices and consider outsourcing.
Other Bookkeeping Issues?
The issues you could have with bookkeeping spans beyond this list. Ultimately, the goal here is to address common bookkeeping problems business owners face and point out some possible solutions.
If you need bookkeeping help, it can almost always be solved by hiring a professional bookkeeper. They are equipped with the knowledge and time to keep your books and records accurate and complete. They are also available to answer your questions and address any concerns you may have.
Most bookkeepers offer “catch up services” that would be useful if you are behind.
Do you need bookkeeping help? Which areas of your bookkeeping function needs improvement?
Consider the bookkeeping services LYFE Accounting offers. Our dedicated bookkeepers work tirelessly to ensure all of your bookkeeping needs are met. Contact us today!