Proper bookkeeping is a critical aspect of business operations. Accurate accounting not only allows for quick decision making but also helps with staying on budget and avoid overpaying on taxes.
Who do you get to help you with this? A bookkeeper!
Here are 10 tasks that a bookkeeper can do for your business:
- Record financial transactions
- Reconcile cash accounts
- Accounts receivable and accounts payable management
- Account for backup on necessary expenses
- Process payroll and payroll tax forms
- Sales and use tax filing
- Maintaining accuracy and historical data in GL
- Adjusting GL entries
- Producing financial statements and providing commentary on differences
- Tax planning
What do these tasks mean?
1. Record financial transactions – this is a very administrative heavy part of the job. All transactions coming into the company and going out of the company are recorded in this phase.
Did you receive a deposit into the bank?
A bookkeeper will identify what the deposit is for and then record it accurately within your accounting system.
Do you need to order something from a vendor?
A bookkeeper will issue a purchase order for those items to help maintain a proper paper trail on all items on order to ensure that projects stay on track.
2. Reconcile cash accounts – this is part of the administrative work but it also requires a lot of problem solving and due diligence on the part of the bookkeeper.
Did you prepay for rent, insurance policies or estimated taxes? Depending on the circumstances, the bookkeeper would then classify it as a prepaid expense, an asset on the balance sheet, until a portion of the expense is realized and then expensed.
Why is this important to track and note in this blog post? A lot of businesses prepay for these items. If the business is seeking funding, proper classification of all assets is critical for showing how healthy a business is.
3. Accounts receivable and accounts payable management – inflow of money and outflow of money are extremely important to businesses. This is called cash flow. It’s important to maintain cash flow to keep the business running.
Do you have clients that have not paid you? Do you have invoices that you haven’t paid? A bookkeeper will organize all of the items that are outstanding and construct a hierarchy of importance and organize your cash flow to accommodate all items that need to be paid.
4. Account for backup on necessary expenses – did an employee use their personal vehicle travel to a client office and get reimbursed for the mileage? A bookkeeper would ensure that proper documentation was obtained for that expense reimbursement.
Did you pay for something on your company credit card? A bookkeeper would ensure that all necessary documentation was obtained for that expense as well.
5. Process payroll and payroll tax forms – paying employees, yourself, and the necessary taxes to the correct agencies is a must. However, it’s one of those tasks that if done improperly can lead to a lot of issues down the road. This is where a bookkeeper’s expertise and attention to detail is extremely important. My team handles this for clients and has a specialist dedicated just to this.
6. Sales and Use tax filing – If you have inventory then you need to make sure you are tracking your inventory use correctly. You need to file taxes on what you sell directly to the consumer and what is sold to a distributor. You also need to make sure you have sales and use tax certificates on hand for those that are exempt and that the tax filings are paid on time so penalties are not assessed for late payments. My team handles this for our clients as an add-on service and have a specialist dedicated just to this.
7. Maintaining accuracy and historical data in GL – Knowing where you started is key to showing the health of a company. Do you need to know where you purchased something from 3 years ago since you are finally out of the product? Do you need to see customer order trends to plan your inventory? Do you need to know how much you spend on employee benefits to make sure you are maximizing the deductions available to you on your taxes? Accurate historical data in your general ledger accounts is key to obtaining the answers to all of these questions.
8. Adjusting GL entries – There are two types of adjusting entries: accruals and deferrals. A bookkeeper will identify necessary entries based on historical data and tax planning. For example: did your company incur interest on a loan but not record it? Then an adjusting entry to accrue for the interest expense needs to be made. Deferral entries are another type of adjusting entry. These entries are made to break up a particular expense or amount of revenue over a set period of time. There are many different scenarios as to why these entries need to be made to maintain accurate accounting records – your bookkeeper will be able to explain to you.
9. Accounts receivable and accounts payable management – Do you ever wonder why you don’t have money coming in to pay your bills? Do you ever wonder where a bill is and why your bank account shows a lower balance than your accounting system? It all comes down to accounts receivable management (the billing of your clients) and accounts payable management (your vendor bills). Accounts receivable management goes beyond doing the billing/invoicing for your clients. That’s just the first step in the process. The tedious step is ensuring that your clients are paying you for your services. That’s where making calls to clients to find out why they aren’t paying the invoice: didn’t receive it, the invoice was wrong but they forgot to mention it to you, they paid it but the check got lost. This is all part of accounts receivable management.
The same goes for accounts payable management. You know that you have your website hosting on autopay but you don’t see it in your accounting system. You know that you have a few bills due soon but you also have payroll and another large loan payment due – mapping out cash flow management with the inflows of cash and the outflows of cash is all part of accounts payable management. This allows a business to be liquid and able to take advantage of opportunities that come their way.
10. Tax planning – This is a major necessity for businesses to ensure that they are not paying more in taxes than necessary. What does this mean? It means taking a look at the year as a whole and seeing where you need to spend money, where you need to not spend money and take advantage of investing opportunities to keep more of the money that you earn. Who wouldn’t want that!?!
These are just some of the tasks that bookkeepers, and my team and I, do for our clients. If you are going to operate as a business and not a hobby you need to keep accurate books. You need to be able to make decisions quickly and with accurate data. These are the basics of what we can do for your business and what should be done on a daily, weekly, monthly and quarterly basis.
Want to know how you can have all of the above and have your business running like a well-oiled machine? Hit “Book A Free Call” above and we can discuss your specific needs and how Balanced Ledger can help you!