Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Small business owners are often strapped for resources when prioritizing other business expenses over the need to track finances effectively. This is the main reason why many are hesitant to sign up for a bookkeeping service. Adding to the limited budget are the beliefs of many small business owners about bookkeeping that are not quite right.
Busting the seven most common myths about these services will assure you that you are making an intelligent decision. This decision can benefit your business eventually. So, what are some of the most common myths about bookkeeping services? Keep reading to find out!
Myth #1: Bookkeeping can be done by just anyone.
The first and one of the biggest myths about bookkeeping is that it is only about data entry, which makes many think it can be done by anyone or even by the business owner himself. However, bookkeeping is more than just entering data. They are also in charge of these rigorous tasks:
- Organizing all financial documents, receipts, and invoices
- Contacting customers to collect payments
- Making payments to suppliers
- Reconciling bank transactions and data on the books
- Ensuring all data in the books are accurate
- Noticing red flags on time to inform you, the management
- Reporting to the accountant in time for financial reports and reviews
This is serious work, which trained bookkeepers can handle better.
Myth #2: Bookkeeping is only for huge businesses.
Some small business owners conclude that there is nothing much to track with their finances and believe that bookkeeping is only for huge businesses. However, even the smallest businesses get a lot of transactions. When it's tax season, those who thought they did not need help end up cramming to catch up with the transactions they made in the past months.
Skip the same hassle by knowing that bookkeeping and accounting are essential to any small or big business. It is an industry best practice to set up bookkeeping and accounting as early as possible so that you can keep track of your finances right away.
Myth #3: Accounting software can do the job.
There is plenty of accounting software and reliable ones like Quickbooks Online and Xero. And indeed, they do a lot to make one's bookkeeping and accounting tasks more manageable because of these functions:
- Income and expenses tracking
- Time and project tracking
- Reports generation
- Bank connections and reconciliation
- Tax monitoring
- eCommerce integration
Despite the hi-tech features, bookkeepers still need to do the following:
- Recheck all the details to ensure accuracy.
- Set up the categories.
- Create privacy settings.
- Customize details required to generate reports and more functions that need human assistance.
A trained bookkeeper familiar with bookkeeping software is the most qualified person to do these.
Myth #4: Sharing financial information with third parties is worrisome.
Financial data is challenging to share. Business owners, especially startup businesses, find it problematic to share their finances with accountants in-house and online bookkeeping services. Possibilities of hacking, data breach, or data theft are some of the worries occupying business owners' minds.
The solution to this is a keen eye on hiring in-house accountants and researching first about the bookkeeping services company you will be partnering with. Also, ensure that you get into a signed contract with a detailed part about data confidentiality and the possible repercussions of non-compliance.
Myth #5: Bookkeepers are not needed all year.
The myth that bookkeepers are not needed all year comes with the belief that it is okay to cram bookkeeping just before the tax season. In Canada and the US, people should pay taxes in April unless the tax bureau announces changes. With that, tax crammers track all finances only around January-March.
While this practice works, the chances of making mistakes and paying taxes late are higher because the bookkeeper has a whole year to backtrack. If you are doing the bookkeeping yourself, without prior experience and training, the task is even impossible to do. Having a bookkeeper track all financial transactions monthly is the ideal practice.
Myth #6: An accountant and bookkeeper are the same.
This is the myth that business owners should bust about bookkeepers and accountants. A bookkeeper's task is different from an accountant's as theirs include tracking all expenses and income. They also ensure all details in books are organized and categorized. Thanks to their organizational skills, all documents, invoices, and receipts are in their proper place.
Meanwhile, the accountant makes sense of all the data acquired by the bookkeeper by turning them into relatable and easy-to-understand reports. They also give financial advice and plans. You can even get forecasts and simulated finances in all your business plans.
The two, together, make a great financial team.
Myth #7: Having bookkeeping assistance is expensive.
Hiring another team member as a bookkeeper or signing up for a third-party service may seem an additional expense. Nevertheless, you will realize what a worthy investment it is because you saved time and effort doing it yourself when tax season comes.
You can choose whether to have an in-house bookkeeper or rely on accounting and bookkeeping services. You can hire a full-time employee and pay them monthly, giving them the same benefits like vacation leave, health insurance, and training. Or you can pay monthly fees for a third-party bookkeeping service with no other costs.
Try Unloop's Bookkeeping Service
So, what's stopping you from signing up for a bookkeeping service with complete trust? Hopefully, it is now clear that these seven myths are nothing but misconceptions. In reality, sound bookkeeping is an essential part of any business. It can be done better by a professional bookkeeper with the proper training and tools.
Furthermore, sharing your financial data with third-party providers is as secure as keeping everything in-house. And finally, hiring a trained bookkeeper doesn't have to break the bank—by paying monthly fees only, they can save you time and money in the long run.
Ready to get started? Contact us today here at Unloop! We are a team of bookkeepers prepared to assist you with eCommerce bookkeeping, income tax, and sales tax computation. We have the most reliable bookkeeping and accounting software like Quickbooks Online, Xero, Hubdoc, and A2X, which all contribute to the accuracy and efficiency of your work.
We would love to discuss more of our services with you, so if you are interested, do not hesitate to give us a call at 877-421-7270. Talk to you soon!