Bookkeeping may sound like a yawner when compared to the excitement of sales, the creativity of marketing and the thrill of harnessing new technology. But this time-honored activity remains one of the most crucial of all business tasks. Giving it the attention it deserves will contribute to your continued success.
Hiring a professional bookkeeper to handle your books can do far more for your business than simply plug in ledger entries. A bookkeeper who maintains accurate records can:
- Help you attract investors.
- Give you a clear picture of your financial situation.
- Help you compare your budget vs. actual expenditures.
- Help you avoid cash-flow problems.
- Facilitate tax preparation and reduce the likelihood of an audit.
Can you do it yourself?
If you're just launching a business or running a part-time venture, you may be able to handle bookkeeping duties yourself. If so, take the task seriously and get some basic training.
Know the types of bookkeepers
Compare differences between a full-charge bookkeeper, certified bookkeeper, general bookkeeper, assistant bookkeeper or freelance bookkeeper. Certified bookkeepers have passed a national exam and have at least two years' experience. On the other end of the spectrum, an assistant bookkeeper has up to one year of experience performing basic bookkeeping functions.
Evaluate your needs
Determining which tasks you need your bookkeeper to handle will help you narrow the field. Among other responsibilities, a bookkeeper may be charged with recording all transactions in the general ledger, accounts payable, accounts receivable, bill payment, payroll, filing payroll tax returns, tax services and bank reconciliation.
Hire a professional
Hiring the right bookkeeper can help your business in many ways.
Choose an automated system
No matter which kind of bookkeeping professional you hire, you'll need to set up a bookkeeping system. Most small businesses use accounting software or Web-based programs to facilitate bookkeeping.
Use double-entry bookkeeping
It's generally accepted that a bookkeeper should use the double-entry bookkeeping method. This means that for every transaction listed, there needs to be a credit and a debit listed in order for your ledgers to balance.
Use bookkeeping to help with tax prep
Having a bookkeeper who maintains accurate records can be a real boon at tax time. With proper record-keeping, preparing and filing your taxes will be less of a chore and an audit will be less likely.
Avoid bookkeeper fraud
Anytime you place one person in charge of your financial books and check register, there's a potential for fraud. Implement a system of checks and balances to avoid fraud, such as having your bookkeeper write checks but having someone else sign them. Ask for frequent reports and take the time to analyze them.