Bookkeeping is a critical activity that provides the foundation for a business’s financial health and growth. While many business owners handle basic bookkeeping themselves initially, as a company grows, it becomes essential to outsource to an expert bookkeeping service.
Proper bookkeeping is much more than just recording debits and credits. It is a detailed, methodical process that includes recording all day-to-day financial transactions, tracking accounts payable and receivable, reconciling bank statements, and maintaining a general ledger. Bookkeeping also involves preparing financial statements, managing payroll, and supporting audits and tax preparations.
In this article, written by Intention Enterprises we’ll provide an in-depth overview of the typical services offered by expert bookkeeping services, starting from daily transaction entry and culminating in high-level reporting and analysis.
Day-to-Day Data Entry
At the heart of a bookkeeper’s daily responsibilities lies the meticulous recording of all financial transactions. This includes:
- Inputting sales receipts and invoices.
- Recording expense receipts such as supplier invoices.
- Tracking payroll entries.
- Logging credit card and bank transactions.
- Documenting loan payments.
- Recording depreciation.
Bookkeepers execute these tasks using advanced bookkeeping software, such as QuickBooks Online or Xero, meticulously coding transactions to the appropriate accounts, ensuring future reporting accuracy.
Accounts Payable and Receivable
Effective management of accounts payable and accounts receivable also falls within the purview of bookkeeping service. Your bookkeeper will:
- Keep track of all outstanding supplier invoices and payments.
- Follow up on late customer invoice payments.
- Provide accounts receivable aging reports that detail unpaid invoices.
- Ensure timely payment of supplier invoices to capitalize on early payment discounts.
- Issue reminders and collection notices for overdue customer payments.
This proactive approach to accounts management not only improves cash flow but also secures favorable credit terms from vendors.
Expense and Revenue Tracking
As transactions are systematically entered, your availed bookkeeping service categorizes expenses and revenues into various accounts, enabling tracking and reporting by criteria such as:
- Product or service line.
- Sales representative.
- Geographic region.
- General ledger account.
This level of granularity allows for the extraction of financial reports that provide insights into your business’s performance from different angles and perspectives.
Bank and Credit Card Reconciliations
An essential task in bookkeeping involves reconciling your bank and credit card accounts. This process entails:
- Carefully comparing bank and credit card statements with your book balances.
- Matching up deposits, checks, and charges.
- Flagging any discrepancies for further investigation.
- Posting adjustments, such as bank fees.
Regular reconciliations not only ensure that no transactions are overlooked but also prevent errors that can lead to inaccurate financial records.
Many bookkeepers also handle payroll management, which encompasses:
- Calculating payroll amounts for each pay period, factoring in allowances, deductions, and net pay.
- Submitting payroll tax payments to government agencies.
- Filing quarterly and annual payroll tax returns.
- Issuing W-2s and providing year-end reporting.
Outsourcing payroll administration to a bookkeeping specialist typically results in faster, more compliant payroll processing and helps prevent costly tax penalties.
Financial Statements and Reporting
Leveraging the well-maintained financial records, your bookkeeper will prepare regular financial statements, including:
- Income statements.
- Balance sheets.
- Cash flow statements.
- Trial balances.
- Budget versus actual reports.
- Customized reports tailored to specific segments or time periods.
These financial statements offer valuable insights into your business’s health and trends, aiding strategic decision-making.
Audit and Tax Preparation Support
During annual tax preparations and audits, your bookkeeper serves as an invaluable asset by:
- Assisting in compiling the necessary documentation.
- Addressing auditor and CPA inquiries.
- Locating any missing transaction records.
- Providing clean, up-to-date books that reduce audit time and potential discrepancies.
This support streamlines the audit and tax preparation processes, ensuring they proceed smoothly.
While bookkeeping may appear as straightforward data entry at first glance, experienced bookkeepers provide immense value that extends far beyond basic debit and credit recording. By enlisting the expertise of a seasoned bookkeeper, you gain access to meticulous reconciliations, expertly prepared financial statements, efficient payroll management, invaluable support during audits and tax preparations, and customized reporting tailored to your business’s specific needs.
This guide is developed by
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