After years of back-breaking labor, you’ve finally managed to save quite some money to start a business. Now, you may not instantly recognize the need for bookkeeping services for small businesses, such as yours. As a budding business owner, who’s just starting out, it’s important to focus on the operations and marketing side of your business. Recording every financial transaction proves too much for you; it overwhelms any business owner at any given time. As challenging as it sounds, this task is not something you should completely take for granted. Let’s learn why.
What is a Small Business?
The definition of a small business differs from country to country, but general characteristics prevail in most of them.
- The owner runs the business. Family members and friends compose the management team, with one person handling the decision-making process. Entrepreneurs are more hands-on in the management and operations of the business than big corporations. They develop an intimate management-employee relationship.
- Small businesses have fewer functional specialists, such as full-time bookkeepers. The work is not that complex, and the owner takes over most of the functional tasks.
- The small business is an extension of the owner's character. Small business owners are passionate people, and their business is the culmination of their dreams and aspirations.
- Small businesses push innovation. Since ancient times, small businesses have played a crucial role in advancing our civilization. Small merchants paved the road in opening trade routes, from the Silk Road that linked China and Rome to the Spice Route that gave birth to the age of exploration. Today's successful businesses started as small businesses.
While innovation is the most vital point of a small business, its major drawback is that not all are destined to succeed. It does not take much to start a business; it’s staying in business that is tough. There are many causes why small businesses fail, but the most prevalent is the lack of managerial skills.
It is easy to begin a business, and the terms are not that big. People can choose any line of business they like, but a lot of times, they are not prepared to see it through. The duties can overwhelm business owners when they start to pile up. It creates a domino effect; they lose focus on other aspects of the business and begin losing money.
No one likes losing money, especially if it is working capital money. Most small businesses started with enough working capital to operate. Losing working capital money means you lose the ability to do your business. They will have no other choice but to shut down, and no one wants that.
Small businesses have different needs compared to massive conglomerates. Giant corporations need a more complex bookkeeping system while smaller businesses adopt a more straightforward approach.
Single Entry Bookkeeping
Simple bookkeeping for small businesses is often a single entry system. Small businesses often have straightforward transactions that make single-entry bookkeeping ideal. It is a cost-efficient solution in recording transactions. All you need is a cash book and a calculator or any spreadsheet program.
To give you an idea of what single-entry bookkeeping is, you record a transaction against a single category. From there, you can perform bank reconciliation or generate a profit/loss and a balance sheet report.
Bank Reconciliation
Bank Reconciliation, on the other hand, is where you match your financial statements to your bank statement. It is to ensure that there are no discrepancies for all the money your business makes. It also verifies the integrity of your financial statements, allowing you to address any data entry errors or overlooked transactions.
Profit/Loss Report
A Profit/Loss Report is a summary of total income and expenses during a particular period. Also known as an Income Statement or Statement of Operations, Profit/Loss Report measures the profit by ruling out the expense from the income.
Balance Sheet Reports
Balance Sheet Reports outline your assets, liabilities, and equity. To gauge a business, you will need a balance sheet report. It is one of the core financial statements. It gives you a realistic picture of how your business is performing.
If you are a small business, Single Entry Bookkeeping gives you everything you need. It is manageable, reliable, and it does not need much. You don’t need accounting experience and complex software. Easy-peasy, lemon squeezy, right?
With the relative ease of Single Entry Bookkeeping, it has its disadvantages. Frauds and errors are rigorous to spot, and you can carry them forward without notice. It also does not include accounts receivable, accounts payable, and inventory. You cannot generate balance sheet reports or income statements with just Single Entry Bookkeeping. Another disadvantage is that it is harder to track assets and liabilities, giving you a tougher time getting your business's actual financial standing.
Regardless of the advantages and disadvantages of Single Entry Bookkeeping, one thing is for sure; Bookkeeping takes a lot of time and effort to perform. Time and effort could be of much better use in operating and growing your business.
Bookkeeping Services For Small Business
Bookkeeping services comprise a team of experts offering various bookkeeping and accounting services for small businesses. They offer structure and consistency that make all the difference to the health of your small business. Increase your chances of success by employing the help of bookkeeping services.
Besides the essential bookkeeping functions, one of the sure-fire ways a bookkeeping service can help a small business is by devising a business plan. A business plan is a formal document that any small business needs before it begins its operations. It describes the definition of the business and how it can achieve its goals from marketing, operational, and financial standpoints.
From there, bookkeeping services can also help in the administration of your business. Bookkeeping services can oversee your payroll management as well as maximizing your tax deductions. You will have fewer things to worry about with the assistance of bookkeeping services.
How much do bookkeeping services cost?
Employing a bookkeeping service is more than just getting someone who knows to account and uses a calculator. It would be helpful if you had a bookkeeper who has the practical experience for your needs. A typical bookkeeping and accounting service fee costs around $500 to $2,500 a month, based on your transactions.
You will get a team of bookkeeping professionals in charge of managing your books. They will be in charge of holding an official record of your transactions as well as generating reports. A strong team of bookkeepers gives you the capability to customize the service to suit your needs.
Takeaway
Simultaneously running your operations and managing your employees can be daunting. To top things off, bookkeeping is in itself a tedious and necessary task. Hiring a bookkeeping service can relieve you of the burden of having to record every single transaction. You get to devote your time and focus to what matters most, your dreams.
Most small businesses are reluctant to bring in a bookkeeping expert because of the cost. While that is true, bookkeepers also need to eat. However, contrary to the assumption, hiring a bookkeeper can save you money.
Small businesses are great; they drive innovation and open opportunities to many people. Yet, small businesses fail because of mismanagement. Bookkeeping services help in ensuring the survival of your business.
Managing a business is difficult; managing a small business is more arduous. Small businesses struggle to stay afloat; they try to cut corners and skimp on what they believe as unnecessary expenses. But the reality is, most of these expenses are crucial.
Bookkeeping services offer small businesses a variety of benefits and advantages. They provide unbiased feedback on how your business is operating. By pointing out the pitfalls and coming up with solutions, bookkeeping services can take small businesses to new heights. Let them maximize their potential.
Save time and money by hiring a keen bookkeeping service to cater to your business needs. They increase the longevity and profitability of your business with a systematic and consistent approach to recording your transactions. It does not matter whether you are a small business starting or a seasoned corporation looking to expand. A bookkeeping service is crucial to any business's success.
Save yourself the burden of Bookkeeping and focus on what matters, following your dreams. Unlock your business's full potential and find success; use a bookkeeping service for your small business now.