Accounting/Bookkeeping
Successful small business owners are known for their resourcefulness and ability to multitask. These are commendable traits, but they can lead to burnout and professional missteps. This can be dangerous for business records, which require strict attention to detail.
Many business owners go to an independent bookkeeping service for that reason. Relinquishing control or placing trust in third-party software might be tough at first. Unless you’re an expert in the field, however, it’s safe to say that DIY bookkeeping has its limitations.
If you’re not sold on the idea of using a bookkeeping service for your small business, perhaps it’s because you’re not aware of the many benefits.
People from all backgrounds start businesses every day, training themselves in the basics of bookkeeping along the way. This is an admirable trait! However, as your business grows you may find that your Excel skills aren’t quite keeping up with the increasing workload.
You might start making mistakes without realizing it. You could be leaving out important information on financial statements, for example. This can significantly impact your business, especially if you have employees.
On the other hand, professional bookkeeping services are trained to deliver greater accuracy because they have more knowledge and are solely focused on one task. The results are more accurate and comprehensive financial statements.
Did you know you can commit accounting fraud by accident? If you fail to report an asset or write the wrong number for sales revenue, the government will assume you did it intentionally.
You might not even know that you’ve made a mistake until it’s too late. If a third-party bookkeeping service handles your financial documents, however, there’s no evident conflict of interest. This means any mistakes are easier to handle and don’t hit quite the same alarms. Additionally, bookkeepers are familiar with legal accounting standards and can ensure you comply with government regulations.
A tax deduction is a sum you can “write off” as a business expense. It is directly deducted from your taxable income, allowing you to pay less in business taxes.
Tax deductions are only possible if you follow strict guidelines provided by the Internal Revenue Service (IRS). It’s rare for small business owners to know every relevant tax deduction in their industry. That’s where a bookkeeping service comes in.
A bookkeeper’s job is to know which business expenses are tax deductible and give you a heads up when they apply to you. For example, advertising.
Most businesses run advertising campaigns or promotions, which of course cost money. Did you know that the money you spend on running a social media campaign, sending cards to clients, hiring a graphic designer, or printing brochures is 100% deductible? Much like more well-known “write-offs” such as employee meals and training, a good bookkeeping service can identify these money-saving opportunities.
If you didn’t consider these factors before, you were likely paying more in taxes than necessary.
Some small business owners prefer to have an in-house bookkeeper. While that’s convenient and has guaranteed benefits, it’s also the most expensive solution available.
It means taking on another employee and ensuring their salary, equipment, insurance, and health benefits. Not many small businesses have the need for such service — or expense.
By choosing to work with a bookkeeping service, you have the opportunity to redirect those resources to something else your business needs. Perhaps you need new equipment, or it’s time to increase employee salaries.
DIY bookkeeping means trying to find enough time in the day to log information, reconcile payments, and complete stacks of paperwork and do it all correctly. Time is a precious commodity for a small business owner, especially when you can spend it talking to clients or designing a new marketing campaign.
Dealing with bookkeeping tasks such as invoicing, expense tracking, payroll, inventory management, and financial reporting can be overwhelming and distracting. Even if you do find the time to devote to them, you might get bogged down by the stress.
It’s often much more prudent to take the limited hours in a day and use them for creativity and growing your business. A bookkeeping service takes these time-consuming tasks off your hands and give you your day back.
Modern bookkeeping companies don’t work with piles of paper or manually write reports in ink. Instead, they use sophisticated and streamlined online portals that maximize efficiency. This cloud-based technology allows cross-collaboration and instant access to a client’s finances.
Similarly, if you outsource financial management to a bookkeeping software, you still get access to phenomenal services and work with dedicated bookkeeping professionals.
It has never been easier to get quality bookkeeping service without hiring a full-time bookkeeper. Making the most of these innovations can be a solid business decision.
Financial reporting is a vital part of running a small business. Having access to balance sheets, cash flow statements, and income statements are necessary.
You’ll need these reports when applying for a loan or searching for new investors. Financial reports need to be created according to specific accounting standards, which is not something every business owner understands.
Even if you know about these principles in theory, there’s no guarantee your financial reports will reflect them. A bookkeeping service can provide comprehensive and accurate financial reporting, allowing you to get a clear insight into your company’s financial health.
When you choose to do your own bookkeeping or hire an in-house expert, you’re setting your business up for potential scalability issues.
Your business may grow too fast, and you’ll quickly find you’re unable to keep track of every financial record. On the other hand, employing a full-time bookkeeper with the idea of fast business expansion might turn out to be wrong.
These are not problems you have with a bookkeeping service. If a specific bookkeeping plan proves to be insufficient, you can upgrade it. The inverse applies to plans that are too comprehensive for what your business needs at the time.
Finally, a bookkeeping service can help you increase profits in the long term. All of the benefits listed above have a compound effect, but it boils down to saving time and brainpower.
Small business owners always have to think ahead, and even a tiny percentage in increased profits matters. If you outsource the burden of bookkeeping to a third-party service, you’re making your business more efficient, leading to great returns down the line.
Placing your trust in a bookkeeping service can be nerve-wracking. You might be eager to free up more of your time, but not before you are certain you can trust the company.
Whether you’re choosing an online service or outsourcing to a freelance bookkeeper, take note of the following tips:
Finally, if a bookkeeping service is not working out as you thought it would, you’re no longer obligated to give them your business. Move your business elsewhere until you find the service that caters to your company’s needs.
Many small business owners start their ventures with the pre-established plan of outsourcing bookkeeping. But not everyone is ready to let go of doing everything themselves.
When you’re starting a small business, you’re likely the boss, top employee, marketing expert, driver, customer service, and bookkeeper all rolled into one person.
There’s nothing wrong with that, as it’s how many great companies have started. But connecting with a bookkeeping service brings all the mentioned benefits and can be a transformative business decision.
If you’re ready to work with a reliable online bookkeeping service, consider starting a free trial with Swyft Books today.