Keeping track of and managing business transactions is one of the most laborious aspects of owning a business. That’s why most business owners turn to accounting firms to handle their finances for them. However, aside from helping them make sense of the financial data, many businesses also need help organizing and recording their day to day transactions.
A competitive and reliable accounting firm should extend their services to bookkeeping. If you have an accounting firm and are thinking of offering bookkeeping services, here are some basics you need to know.
3 Top Qualities of a Competitive Bookkeeper
It's common for businesses to outsource tasks to bookkeeping and accounting companies. But before consumers will believe in your service, you must be qualified and competitive. Here are some of the most important characteristics that a bookkeeper should have.
Professional training and experience
Being a professional bookkeeper is easier than being a certified public accountant. You don't need to take and pass a licensure exam and get a college degree to be a professional bookkeeper. You can be a professional bookkeeper by attending training sessions and getting certifications.
However, expanding your knowledge of tax laws and accounting regulations is always useful. There will be some instances when your clients will inquire about these topics, and it will be a positive nod to you when you can answer their questions properly.
There will always be issues to arise in the financial service industry. However, you can't let these problems delay your work. As a professional, your clients will rely on you to provide solutions. If you can't provide a straightforward solution to your clients, never leave them hanging.
If you don’t have a concrete solution, at least give your clients different options so you can discuss them together and come up with an answer you can agree on.
Time management and organization
Bookkeeping may seem like an easy task of recording transactions but it requires an individual to be very organized. You can’t simply write down data as you see fit. Bookkeepers need to categorize them so the accountant can easily analyze these data points. Furthermore, time management is essential to be a bookkeeper.
Businesses perform hundreds of transactions every day and bookkeepers should be able to catch up, unless they want those receipts to pile up. Late bookkeeping also means late generation of financial reports for the business.
What are Bookkeeping Tasks Expected From Your Firm?
If you want to start offering bookkeeping solutions for small businesses, here are some of the basic roles and responsibilities that your clients should expect from you. Take note of these!
Organize all business transactions
The primary role of bookkeeping firms is to organize and record all financial transactions. Firms are in charge of recording every sale, expense, credit, and transaction in a business. These records are prepared so accountants can make sense of the data to determine the overall health of the business.
Bookkeepers also ensure that every data entry made in books is valid and complies with government taxation laws.
Managing and keeping track of things are the strongest features of a bookkeeper's skill set. Bookkeeping firms can also offer a dedicated team of experts to handle inventory management for a business. They can help track the number of products and categorize which products are often sold faster and which tend to stay long in storage.
They should also help see the expenses a business uses and if there are discrepancies. With the data they have on hand, bookkeepers can extend their suggestions to help a business get on top of inventory.
Preparing financial statements
Financial reports and statements can tell if your business is in good shape or if there are areas it needs to focus on. In addition, monthly financial statements can help administrators and business managers keep track of business metrics and help them create plans, strategies, and budgets for the business.
Here are the common financial statements every bookkeeping firm should produce.
- Balance sheets. A company's financial health over a certain period is outlined in its balance sheets. A company's assets, liabilities, and equity are broken down in this document.
- Income statement. The revenue and expenses for a certain period are shown on the income statement. Monthly, quarterly and annual income statements can be prepared by bookkeepers.
- Cash flow statements. This document shows where and how the money circulates in a business. The money used can be categorized as operating activities, investments, and financing. Cash flow statements can show a business’s capabilities to run short or long-term.
Keep the bookkeeping system up-to-date
Writing data entry manually is the traditional way of bookkeeping. It's a slow process, it’s time-consuming, and it’s prone to errors. If several companies outsource bookkeeping to your firm, your services should be efficient. There are numerous bookkeeping software available to use to help you streamline your processes.
These make data entry quicker and more accurate. Developing a system for your clients means most of their business processes will be automated too.
Basic Terminologies For Online Bookkeeping Services
Bookkeeping and accounting go hand in hand when running a business. Both tasks are essential to keep a business running smoothly. With that, here are some terminologies you need to familiarize yourself with so you can do your duties as a bookkeeper properly.
The things that a company has, both material and intangible, are referred to as assets. These assets are recorded in balance sheets to keep track of the business’s cash flow. Here are a few of the most typical business assets.
- Accounts receivable. These are the funds you receive from customers who buy goods or services from your company. A bookkeeping service specialist is in charge of sending invoices to ensure all payables are collected on time.
- Cash account. This is the money that the business has on hand and money in their business bank accounts.
- Fixed assets. Fixed assets are things clients buy for their business that are intended for long-term use and will not be converted to cash immediately. These assets can include production equipment, company space, and land.
Liabilities pertain to everything a business owes. Here are some examples.
- Accounts payable. Account payables are the bills businesses need to pay their suppliers. A dedicated bookkeeper should be diligent in paying these payables to avoid fines and delays. Sometimes being ahead of the due date gives discounts on a client’s monthly fee with the suppliers.
- Loans payable. This is an account that keeps track of the loans or money a business owes from banks which they used to buy property, equipment, or things necessary for the business to operate.
Every company transaction should be recorded only once in single-entry bookkeeping. This can appear as a positive or negative entry depending on whether it is an expense or sales. This bookkeeping method is best for small business owners because they don't have complex transactions.
At most, single bookkeeping entries contain bank statements, sales and expenses records, and taxable income.
Most bookkeeping companies offer double-entry bookkeeping for their clients. In this method, transactions are recorded in two columns which are categorized as credit and debit. This method is best for complex accounting transactions and is usually done through bookkeeping software.
Cash-based accounting is ideal if you are doing bookkeeping services for small businesses. In this accounting type, you record every sale and expense as you exchange them for money. Receipts are crucial for this method because this is how bookkeepers validate the entries in the ledgers.
Accrual basis accounting
If the business offers credits to customers and uses credits to pay suppliers, accrual accounting is the best method to use. In this, bookkeepers record every transaction, even if the money transpires at a later time. This bookkeeping method is best for tracking and organizing a business's accounts receivable and payables.
Outsourced bookkeeping services are increasingly in demand because of the increase in small businesses. But to become a trustworthy bookkeeping service, you must serve your clients accurately and in a timely manner. Finances keep the business going, and messing them up can be very bad for your clients.
If you have an accounting firm with small business expertise, you can continue to offer your tax filing services, payroll services, and more while letting us handle bookkeeping services. Unloop offers partnerships with accountants to allow you to continue your accounting practice, while we take care of the books.
Book a call, partner with us today, and learn from online bookkeeping experts!