Bookkeeping is a time taking and strenuous task. It refers to recording each and every financial incident on daily basis to create a database. This database will be used by accountants and other stakeholders to produce financial reports and file tax returns. This task needs heavy resources and time. A small organization may not be able to integrate this task in-house. Outsourcing this task becomes the most viable option.
Even for a small organization, bookkeeping matters. It provides stakeholders a clear picture of the current financial status of the organization, thus assisting to make more informed decisions, driving the growth of the organization. This article aims to clarify expectations from bookkeeping services.
What do Bookkeeping services provide?
Bookkeeping services offer a wide range of services and can be tailor-made for a specific organization. But there is a middle ground. The most basic task they perform are:
Record Financial Transactions
The most basic task of a bookkeeper is to record the financial transactions on a daily basis to produce a database. These transactions can be recorded in a single entry to double entry format. Choosing the right format depends on the nature of the organization.
Single-entry bookkeeping offers simplicity over functionality. It is sometimes referred to as an incomplete financial system. As the name suggests, all the financial transactions are recorded in one log. It only represents inflow and outflow and is prone to reduce the transparency of the transactions.
Double-entry bookkeeping is a more go-to format. Many businesses use this format. As the name suggests, for every transaction, both debit and credit are logged side by side. In any transaction, both credit and debit must be equal, hence it provides an opportunity to find errors in recorded data, thus increasing the accuracy. It also improves the transparency of the transactions.
Account Receivables and Account Payables
Account Receivables are a set of invoices recorded by the bookkeeper to keep track of the money that a third party owes to you. That is keeping track of revenue-generating sources. These can be banks, companies, or customers to whom you sold your goods or services.
Account Payables are a set of invoices recorded by the bookkeeper to keep track of the money that you need to pay to a third party. It mainly focuses on keeping track of due dates so as to manage the payment schedule without causing much financial trouble. It helps one organization to pay using the “Just in Time ” concept and also create a healthy credit relationship with your supplier or banks.
Reconcile Bank Accounts
This refers to comparing the books of accounts prepared by the bookkeeper to the bank statements generated for every transaction. This helps to find any data entry errors and also increases the accuracy of the recorded data. This enables the accounts and other stakeholders to create more accurate financial reports, thus assisting in making more informed decisions.
Payroll Services
Human Resource is one of the most important pillars for any organization. Paying them on the correct date with the correct amount will ensure the efficacy of the human resource. Bookkeepers take on the responsibility to calculate the salaries with deductions if applicable to ensure that net salaries are paid on time.
Compliance with laws of the land
Compliance with the laws of the land for an organization act like a shield against any legal actions. Bookkeepers are also responsible to update the books of accounts to make them compliant with ever-changing laws. The process of borrowing funds from any financial institution will become less hassle-free.
Benefits of a Bookkeeping Service
Focusing on what’s important
Bookkeeping services provide stakeholders the trust to outsource all financial tasks enabling the in-house workforce to focus on more core operations like marketing, maintaining customer relationships, production, and management. Allocation of resources is very important for small organizations.
Compliance
As mentioned above, compliance with local regulations will ensure the safety against any legal actions from regulators. Bookkeepers will update the books of accounts to comply with the ever-changing regulations. Outsourcing this task will save resources for staffing an in-house compliance team.It also empowers the organization to borrow funds more easily.
Filing Tax Returns
When the books of accounts are error-free and are compliant with new regulations, then filing tax returns will be stress-free. Bookkeepers do not actually file tax returns but empower the accounts to file them by providing them error-free compliant data.
Conclusion
Bookkeeping services offer financial assistance not by providing funds but by increasing the efficiency of the funds utilized. They assist the stakeholders to take a more informed decision. Empowering the stakeholders to focus on what’s important is also a key role of Bookkeeping services.
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