Having a good financial tracking system is a must for every business owner. In addition, hiring a qualified bookkeeper is one of the best ways to increase your cash flow. Many business owners, however, make the error of managing their own books, which results in inaccurate bookkeeping.
If you're worried about the cost of hiring a decent bookkeeper, remember that not keeping up with bookkeeping can leave you with an even heftier price tag. In this article, discover the importance of hiring a bookkeeping service and how it can help you run your small business efficiently.
Definition of a Bookkeeper
As a small business owner, you may have asked yourself, “Why do I need a bookkeeping service?” or "What is a bookkeeper's job?" But, first, do you know the difference between a bookkeeper and an accountant?
Bookkeepers process and record financial activities, including payments, purchases, expenses, and more. An accountant or business owner will adjust the entries recorded by the bookkeeper before releasing the company's financial statement. Bookkeepers do the daily financial transactions of a company.
The Difference Between Accountants and Bookkeepers
You might ask, "What is a bookkeeper in accounting?" because the two careers look similar. However, a bookkeeper's job focuses more on recording transactions, while an accountant pays more attention to drawing conclusions about the business's finances.
Many small ecommerce sellers often find it difficult to distinguish an accountant from a bookkeeper. Although they share common goals, there are still crucial differences between them. So let's dig deeper into the differences between the roles of bookkeepers and accountants.
Responsibilities
Bookkeepers focus on recording and consistently collecting financial information. They record transactions, collect and file financial documents, keep track of cash flow, reconcile accounts, prepare financial statements, and provide other services related to accounting.
Meanwhile, accountants are experts in interpreting financial data and providing recommendations based on their findings. As a result, they can help you make better business decisions, avoid mistakes and save money, reduce your tax liability, cut costs, and more.
Required Education and Certifications
Bookkeepers and accountants have different education and certification requirements. Bookkeepers generally have a bachelor's degree in accounting or finance, while accountants have a master's degree in accounting or finance.
You can tell an accountant from a bookkeeper by the letters after their name. Bookkeepers with certifications from the National Association of Certified Public Bookkeepers or the American Institute of Professional Bookkeepers will have CPB or CB after their names. However, these certifications are optional for a bookkeeper.
Meanwhile, accountants can obtain the Certified Public Accountant (CPA) title after passing the Uniform Certified Public Accountant exam and meeting other criteria. To become a CPA, an accountant must have at least two years of experience as a professional accountant.
Skill Sets
Accountants and bookkeepers are used to dealing with numbers and financial data daily. But, aside from this, their skills also have some differences.
The best bookkeepers take the time to review their work, ensuring that every detail is right. This is a job that requires patience and great attention to detail.
An accountant has to be very organized, have good problem-solving skills, and pay strong attention to financial details. In addition, an accountant has to be able to think on their feet and come up with creative solutions when things don't go as planned.
Bookkeepers are not accountants; they don't have the same training to make complex financial analyses of business operations.
4 Ways a Bookkeeper Can Help Your Business
You might still be asking, "What does a bookkeeper do, and does it matter if I do my own books?" While it may be cost-effective to process and record all your financial transactions in the beginning, it may cost you a lot more in the long run, especially if you still lack an understanding of basic bookkeeping.
Here are some ways a good bookkeeper can help your business thrive:
Manages Daily Financial Transactions
Handling day-to-day financial transactions involves data entry. This is when bookkeepers start to track accounts. A certified bookkeeper's responsibility is to prepare invoices and send them to clients.
It is also part of their job to manage the accounts receivable ledger. Aside from this, a professional bookkeeper also handles accounts payable such as petty cash and other expenses.
Prepares You for Tax Season
A business needs to file its taxes on time. Tax deadlines are quite strict, but if you keep your bookkeeping up to date, you do not need to scramble during tax time.
If you have hired a professional bookkeeper, they can help you have accurate financial reports. This can save you precious time and prevent you from paying additional fines.
Processes Payroll
Although the services that a bookkeeper offers vary, some can help you with processing paychecks and tax payments. They can also help you with other human resources department functions, such as managing employees' timesheets.
Prepares Financial Statements for You
Perhaps you think that getting a good bookkeeper will cost you a lot, so you resort to doing your books yourself. However, the problem with doing your company’s bookkeeping is that an unqualified bookkeeper is prone to errors
How Much Does It Cost to Hire a Bookkeeper?
If you're seriously considering hiring a bookkeeper for your small business, the average monthly rate ranges from $500 to $2,500.
The cost of hiring bookkeepers depends on some factors:
- Geographic location
- Size of a business
- Type of bookkeeping services a business needs
- The bookkeepers' level of education and certifications
The cost of hiring one can also depend on whether a bookkeeper will be full-time or part-time, freelancing, or virtual.
Do You Need a Professional Bookkeeper for Your Business?
Now that you have everything you need to know about bookkeepers, imagine the amount of time and effort you'll be able to save if you have one who will handle your financial work.
When you hire a professional bookkeeper, you can spend your time and effort on other important matters for your business. Plus, the accurate information that bookkeepers provide can help you make solid decisions for your business's growth.
Still struggling and need support? Let Unloop help you with your professional bookkeeping needs. Book a call with us and start your journey to business growth today!