Financial tips and best practices for companies and teams who want to
get ahead on their bookkeeping and taxes.
Did you know that, according to recent statistics, accounting is the most crucial area for businesses in terms of automation? It’s followed only by marketing and sales. In short, it pays to invest time in choosing bookkeeping software that benefits your business.
It's no secret that bookkeeping is a necessary part of any business, big or small. But did you know that there are a variety of software options available to help you manage your books?
In this complete guide, we'll walk you through the different types of software and how to choose the right one for your business. So whether you're just starting out or you're looking for an upgrade, keep reading to learn more.
Bookkeeping software is an accounting software program that helps businesses track their income and expenses.
While most big businesses and corporations have accounting teams that manage their finances, smaller businesses and freelancers benefit greatly from bookkeeping software.
Why? You can usually purchase it as a standalone program or as part of a suite of business applications. While it doesn’t entirely do away with the need for a bookkeeping service or team of accountants, it can certainly help.
Bookkeeping software typically includes features such as:
Ultimately, what’s so attractive about this type of software is that it’s user-friendly. This is a huge plus for business owners who aren’t accountants or bookkeepers.
Likewise, bookkeeping software can save businesses time and money by automating many of the tasks associated with bookkeeping, such as preparing financial statements and reconciling accounts.
If you’re thinking about starting a business, or if you have recently started a business, you may be wondering if you need bookkeeping software.
The answer to this question depends on a number of factors, including the size of your business, the number of transactions you expect to process each month, and the level of detail you need in your records.
There are many options available when it comes to bookkeeping software, so it’s important to do some research to find the option that best suits your needs. Mostly, this comes down to checking out the pricing.
In general, bookkeeping software can save you time and money by automating tasks that would otherwise be done manually. However, an experienced bookkeeper can do that, too!
Which one is right for you? If you’re planning on expanding significantly, hiring a bookkeeper can help. They’ll keep track of compliance issues and ensure your records are solid.
However, if you’re still a freelancer or sole proprietor and don’t plan on growing anytime soon, bookkeeping software might be a great, simple solution for you. This is especially true if you’re on a strict budget.
Bookkeeping can be complicated and time-consuming, but with the right software, it can be a breeze. And in 2022, there are tons of software out there that can make your life a whole lot easier.
Here are some of the different types of bookkeeping software and their features.
You install this type of bookkeeping software on your computer and you access it through an icon on your desktop.
This is unlike a mobile app or web platform. However, the software still includes all of the features you need to keep track of your finances, including income and expenses, invoicing, and payments.
You access this type of bookkeeping software from a web browser. It is often more affordable than desktop bookkeeping software, and it offers many of the same features. However, it may not be as comprehensive as some of the more expensive options.
This type of bookkeeping software can be accessed on your smartphone or tablet. It is often more affordable than desktop bookkeeping software, and it offers basic features.
However, mobile bookkeeping software is going to be the least comprehensive option. This is simply due to the fact that it’s hard to access in-depth analytics and data from your phone. However, for basic invoicing and financial tracking, it’s fine.
When it comes to bookkeeping, bookkeeping software can make the process much easier. Bookkeeping software can keep track of your finances, provide reports and analysis, and automate many of the tasks associated with bookkeeping.
Here are some of the main features to look for when choosing bookkeeping software.
One of the best bookkeeping software features to look out for is ease of use. Look for bookkeeping software that is easy to use and navigate.
The last thing you want is to waste time trying to figure out how to use the software. If the software is going to cost you hours of wasted time (and ultimately money) to learn to use then it might not be worth it.
Make sure the bookkeeping software you choose offers automatic updates. This way, you can be sure that your financial information is always up-to-date.
The goal of bookkeeping software is to automate processes for you. The last thing you want to have to do is worry about regular software updates and doing them manually.
Look for bookkeeping software that offers powerful reporting and analysis features. This way, you can get a clear picture of your finances and make informed decisions about your bookkeeping.
However, mobile bookkeeping software is going to be the least comprehensive option. This is simply due to the fact that it’s hard to access in-depth analytics and data from your phone. However, for basic invoicing and financial tracking, it’s fine.
There are a lot of bookkeeping software programs out there. How do you choose the right one? Here are six things to consider.
Deciding on bookkeeping software for your business can be a daunting task, but it's important to carefully consider the size of your business when making your decision.
For small businesses, there are a number of software programs available that are designed specifically for businesses with a limited number of employees and transactions.
These programs typically offer a basic set of features, such as the ability to track income and expenses, create invoices, and run reports. For larger businesses, however, it's often necessary to choose a more robust program that can handle a greater volume of data.
These programs typically offer more advanced features, such as the ability to track inventory levels, manage payroll, and generate financial statements. No matter what size business you have, there's a bookkeeping software solution that's right for you.
When choosing bookkeeping software, consider how user-friendly the software is. After all, you will be spending a lot of time using the software, so you want to be sure that it is easy to use and navigate.
One way to judge how user-friendly a piece of software is is to look at online reviews. Another way is to download a free trial version of the software and try it out for yourself.
By taking some time to assess how user-friendly the software is, you can help ensure that you choose a product that will meet your needs and make your bookkeeping tasks easier.
When choosing bookkeeping software, there are a few important features to keep in mind. First, the software should have invoicing capabilities. This will make it easy to bill customers and keep track of payments.
Second, the software should have time tracking capabilities. This will allow you to track how much time you spend on each project and ensure that you are billing correctly.
Finally, the software should have the ability to generate reports. This will allow you to see how your business is performing and make necessary adjustments.
By choosing software with these features, you can streamline your bookkeeping process and get more out of your data.
When choosing the best bookkeeping software for your business, also be sure to consider the ongoing costs associated with the software. Many software programs require a monthly or annual subscription fee, and some also charge transaction fees.
In addition, you may need to pay for training or support in order to use the software effectively. As you compare different software programs, be sure to ask about all of the potential costs so that you can make an informed decision.
Not only do you need to find software that meets your specific needs, but you also need to make sure that it will provide quality customer support.
When choosing bookkeeping software, look for a company that offers 24/7 customer support. This way, you can be sure that someone will always be available to help you with any questions or issues that you may have.
After all, this is what you’re paying for. If you don’t receive timely support, it’s going to make a whole lot more sense to go ahead and pay a bookkeeping business for regular support.
Additionally, read online reviews of the software to get an idea of the quality of service that you can expect.
When choosing bookkeeping software, it's important to consider whether you want to try out a free trial or demo first. Both options have their own pros and cons, so it's worth taking the time to evaluate which one is right for you.
Free trials typically give you access to all of the features of the software for a limited amount of time. This can be helpful if you're trying to decide whether the software is a good fit for your needs.
Demos, on the other hand, usually only provide a limited number of features, but they can be a great way to get a feel for how the software works before committing to a purchase.
Ultimately, you should be able to try the software before fully purchasing it, though. We never recommend purchasing software before using it. And we definitely don’t recommend signing a long contract before testing anything out either.
Bookkeeping software can be a great way to keep track of your finances, but it's important to use it effectively in order to get the most out of it.
If you think that using bookkeeping software is the best option for you compared to hiring a bookkeeper or accounting firm then you’ll want to ensure you’re using it correctly.
Here are three tips to help you do just that.
Bookkeeping software can track your income and expenditures, help you manage your budget, and even prepare your tax return. However, bookkeeping software is only as effective as it is up to date.
Regular software updates not only improve bookkeeping software performance but also add new features and fix bugs. As a result, it is important to keep your bookkeeping software up to date in order to get the most out of it.
You can usually set bookkeeping software to update automatically, or you can update it manually when new updates are released. Either way, make sure to keep your bookkeeping software up to date so that you can keep your business finances in top shape.
Tracking your business' progress is important to ensure that it is heading in the right direction. There are various bookkeeping software programs available that can help you to track your income and expenses, as well as your inventory levels.
By keeping track of these things, you will be able to see how your business is performing and make any necessary changes. For example, if you see that your expenses are increasing but your income isn’t, you may need to cut back on some of your costs.
Alternatively, if you see that you are not selling as much as you expected, you may need to adjust your prices or marketing strategy. Tracking your progress will help you to ensure that your business is on the right track and making progress towards its goals.
No one likes to think about the possibility of their computer crashing and losing all of their hard work, but it happens.
That's why it's important to back up your data regularly. Bookkeeping software can help you keep track of your finances, customer information, and inventory. Losing this data can be a major setback for any business.
In learning about choosing bookkeeping software for your business it's important to assess if that's the right option for your company or not. Ultimately, this type of software is great for super small businesses and freelancers. However, if you have employees and manage more than a few thousand dollars in revenue monthly, there are other options.
The best option for small yet growing businesses? Bookkeeping services tailored to fit your business' needs.
At Kleanbooks, we offer just that. We have a team of dedicated, experienced tax and accounting professionals who will work to understand your business. They can maintain your books, run your payroll, and manage your taxes.
Think this might be a better option for you than bookkeeping software? Schedule a free live consultation now!
If you're like most business owners, bookkeeping probably isn't your favorite thing to do. In fact, it can be downright daunting and frustrating. However, with 82% of businesses failing because of cash flow issues, bookkeeping is something you don't want to overlook.
If you find keeping accurate books a bit too taxing, consider outsourcing to a bookkeeping company. A bookkeeping company will help you stay organized and on top of your finances so you can focus on what you're good at, running your business.
The problem is, with so many bookkeeping firms, finding the right one for your business can be a tad difficult. This begs the question, how do you find the best bookkeeping company for your business?
In today's post, we'll be highlighting some tips on how to choose the right bookkeeping company for your business.
Bookkeeping describes the process of recording, classifying, and summarizing financial transactions. In doing so, businesses can get crucial information for making business decisions.
The bookkeeper enters into the accounting system all records of an entity's transactions. This includes sales receipts, invoices, payment vouchers, and collections. Once these documents are brought into the system, the bookkeeper organizes and classifies them.
After bookkeepers classify all transactions, they will then summarize them in reports. The reports show how much money the business has earned or spent over a period of time. This information is useful to management when making decisions about where to allocate resources.
With that out of the way, let's now look at how you can pick the best bookkeeping firm to organize your company's finances. When looking for a bookkeeping service, there are a few factors you need to consider to find the best one for your budget.
Before finding a bookkeeping company, establish what exactly your business needs from a one. This will help narrow down your options to agencies that can meet your specific requirements. A few things you need to have down pat include:-
You'll be better placed to find the right bookkeeping service once you have the above information at hand. So, get all the prerequisite information before you start looking for a bookkeeping firm.
The bookkeeping industry is quite competitive, and new companies are always springing up. While it's not necessarily a bad thing, you should be wary of working with a bookkeeping company that doesn't have much experience.
It would be best if you chose a bookkeeping agency with at least five years of industry experience. That way, you can leverage their hands-on bookkeeping experience and benefit from their high-quality bookkeeping services.
It's worth noting that experience in bookkeeping means a lot more than just the number of years the agency has been in service. It also means how many clients the bookkeeping company has had under its wing. As such, ask to see the company's portfolio to get a good idea of who you're dealing with.
Naturally, you'd want the right qualified professionals to handle your business's books. As such, you want to make sure that the bookkeeping company you're planning to hire has a diverse team of experts. This includes CPAs, bookkeepers, and accountants on its payroll.
These professionals will work together to deliver high-quality bookkeeping services. You can check the agency's website to see the qualifications and experience of their bookkeeping team.
A bookkeeping company with a rich team of experts is more likely to offer quality bookkeeping services as compared to one that doesn't.
Checking a bookkeeping company's performance history will help you know whether they're up to the task. The last thing you want is to hire a bookkeeping firm that doesn't have a good track record.
Reputable bookkeeping firms will be more than happy to furnish you with copies of their portfolio. With some, you can easily find their portfolios on their websites. Check whether the bookkeeping firm has worked with some of the big names or with other companies like yours.
Reviews and testimonials are first-hand accounts of previous clients' experiences with the bookkeeping company in question. These reviews and testimonials let you learn volumes about the bookkeeping company you have in mind. You can learn about their bookkeeping services, team, client support, and what makes them stand out from the rest.
When checking online reviews, pay attention to both the positive and negative ones. In most cases, a bookkeeping company with more positive than negative reviews is a good sign that they offer quality bookkeeping services. A word of caution though- don't just take the bookkeeping company's word for it.
It's not uncommon for some bookkeeping firms to write their own reviews and dupe unsuspecting clients. That's why you also want to check out reviews on authority review sites like Yelp or the BBB. At least they have verified, honest, and unbiased reviews.
Bookkeeping involves handling super-sensitive data from different companies. It would spell bad news for the companies should their data fall into the wrong hands. That's why it's important to find a bookkeeping company with a robust data security setup.
The bookkeeping company should have state-of-the-art security features to protect your data from prying eyes and hackers. They should also have a sound data backup and recovery plan in place to safeguard your data in case of an emergency.
It's worth noting that cyber-attacks are set to cost the country a whopping $10.5 trillion by 2025. A single data breach could mean lots of money down the drain for your company. You shouldn't compromise even the least bit when it comes to the bookkeeping company's cybersecurity.
Bookkeeping has changed a lot over the years, with technology playing a big role in its transformation. You want to find a bookkeeping company that is up-to-date with the latest bookkeeping technologies.
Find a company that has invested a considerable amount into automating as many bookkeeping processes as possible. This not only saves time but also reduces bookkeeping errors. Some of the bookkeeping technologies you should look for include cloud, catchup bookkeeping, mobile bookkeeping, and data analytics.
Apart from being up-to-date with the latest bookkeeping technologies, the company should also have a good understanding of your business's technology stack. They should know how to integrate their bookkeeping software with your company's existing software.
A bookkeeping company that understands and makes use of technology is more likely to offer quality bookkeeping services as compared to one that doesn't.
Although it's difficult to quantify trust, you need to find a company that you can trust. Schedule an in-person consultation with the company reps and figure out whether they're people you can trust.
You can also tell whether a bookkeeping company is trustworthy based on how long they've been in business and the number of clients they have. Chances are that a bookkeeping company that has stayed in business for a long time and has many clients must be doing something right.
Also, take note of how the company communicates with you. Are they prompt in replying to queries and do they fulfill their promises? Find a company that you can communicate with seamlessly and lives up to its word.
You want a bookkeeping company that's transparent with you from the get-go. The bookkeeping company should give you a detailed breakdown of their bookkeeping services and what they entail.
They should also show you how much their bookkeeping services cost, without withholding any hidden charges. The pricing should be in line with the quality of bookkeeping services they offer.
A good bookkeeping company should also give you a clear idea of what to expect from their bookkeeping services. They should set realistic bookkeeping goals and let you know whether they can achieve them. This transparency will go a long way toward helping your company make well-informed decisions about its goals.
A bookkeeping company with a fast turnaround time will help give you the edge over your rivals. That's because you'll be able to get critical bookkeeping data and information quickly. You can use it to make informed business decisions faster.
What's more, a bookkeeping company with a slower turnaround time is more likely to make mistakes. Also, the longer it takes them to complete bookkeeping tasks, the higher your bookkeeping costs will be. When looking for a bookkeeping service, a fast turnaround time is non-negotiable.
Use the information above to find the best bookkeeping company for your specific business. Remember to explore all your options before making your final pick. If you're looking to take your company to greater heights, then settle for nothing but the best!
Lucky for you, the best bookkeeping service is only a phone call away. Contact us today for professional and expedient bookkeeping services.
Are you pondering the idea of hiring a bookkeeper or an assistant? Do you know the difference between the two? It can be hard to see the difference between a bookkeeper and an accountant, so we're here to help.
Read on to find out the difference and have a better understanding of the bookkeeper vs. accountant debate!
Bookkeepers and accountants are often mistaken for each other. Both are useful and helpful with financial planning, analysis, and mapping. Although the two have similar functions, they are actually quite different!
Bookkeepers record a business's financial transactions and operations. This is a daily task, meaning that a bookkeeper includes themselves in the business's internal operations.
A bookkeeper has to record day-to-day transactions in a consistent manner. By doing so, the bookkeeper will get useful financial records to help with operations and success of a business.
Bookkeepers are not necessarily required to have a license. Many bookkeepers, however, will get a correlating certification. These certifications will provide the bookkeeper with more credibility.
A bookkeeper performs the following tasks:
The most important function of a bookkeeper is to maintain a general ledger. In doing so, the bookkeeper is able to record sales and expenses in an organized manner. A general ledger can be come in different forms such as an Excel Spreadsheet or even a piece of paper.
Bookkeepers come in several shapes and sizes, which could make it hard to select the bookkeeper that is right for you. If you are stuck on which bookkeeper to hire, make sure they meet your criteria!
Does their bookkeeping system match your accounting system? Bookkeeping services can operate on several different types of software. The five best accounting softwares are QuickBooks Online, Xero, FreshBooks, QuickBooks Self-Employed, and Wave.
Other great softwares are Melio, Stripe, Gusto, and Bill.com. It is best to find a bookkeeper who uses your current software or one that would at least be compatible.
How much does the bookkeeping cost? Make sure to compare the features and services of each bookkeeper. Price can correlate with the software system that you choose.
Does the bookkeeping service match your business's accounting methods? If you are using the cash-basis method or the accrual-basis method, you will need to find a bookkeeping service that can match your method.
Do you need catch-up bookkeeping services? It can be hard to maintain and stay up to date on all financial records. If you need to get up to date in your record-keeping, a catch-up bookkeeping service will help get you on track. These services can cost a monthly fee.
Once a day or once a year? Certain bookkeeping services offer their services on a daily to a yearly basis. Based on the relationship and service you need, the timing of the services can be paramount.
Make sure to keep these bookkeeper tips in mind for when you need to hire a bookkeeping service!
The benefits of having a bookkeeper reveal themselves immediately. By having a bookkeeper to document and archive financial records, your small business can flourish.
Having a bookkeeper will allow you to receive detailed recordings that will help you maintain your business accounts. The records created by the bookkeeper provide an easy way to navigate financial statements.
Bookkeepers usually have lower service costs than accountants. If you are struggling and need help, a bookkeeping service could be a better option than accounting services.
Bookkeeping services create ways for you to track and organize your ledger or financial statements. Having an organized financial record can help you in the future by keeping all your information in order.
Bookkeepers offer in-depth balance sheets and reports, which give you the ability to predict your yearly taxes. Through the bookkeeper's detailed and organized files, you can prepare for and know the number of tax deductions.
Accountants analyze the records that bookkeepers create. Once a bookkeeper gathers the required information, the accountant will then draw conclusions on the data given.
Accountants have to receive extra education and can receive certifications. A common practice for accountants is to become a Certified Public Accountant.
Accountants achieve this through CPA exams and certifications. Accountants must have a specific amount of professional experience to get their CPA.
An accountant performs the following duties and tasks:
An accountant helps with several things. They can be responsible for providing insights and strategies for financial status. Accountants will dive into each aspect of your finances year round.
The best accountants create in-depth summaries of your financial scenario. The summaries will be easy to understand and comprehend.
A large role of an accountant is to prepare and file tax returns. With the help of an accountant, you will decrease your tax liability and how much you might pay in taxes. The accountant will also ensure that all tax information is correct and will provide updates to changes made along the way.
Similar to bookkeepers, accountants offer several different services. To make sure that you are receiving services that are a fit for your company, compare several accountants.
Ask for their Preparer Tax Identification Number. Having a PTIN is required by the IRS. Accountants who file federal tax returns for compensation must have a PTIN. But, other accountants who do not assist or prepare tax returns for compensation do not need one.
Require a law license or a CPA. Make sure that an accountant has their law license or a PTIN. In doing so, you can assure that they are willing to take an extra step and go further for you when you need them. Accountants need to take several exams to assure they are worthy of these licenses.
Take note of price. Each accountant is going to charge a different rate based on the services they provide. Make sure to compare the cost of each accountant's services that best align with your needs.
Look for memberships. If an accountant belongs to the National Association of Tax Professionals, the American Institute of Certified Public Accountants, or any other professional organization, they have good practices and ethics.
It is important to note that an accountant will back you in a time of need. If the IRS calls you into an audit, you want your accountant to be there. The best accountants will stand by your side when you need them the most!
These accountant tips will ensure that you can work with the best accountant for you!
Accountants are experts who attend and go through more school to gain certifications. An accountant's services can make a large difference for every small business. By offering help on wide variety of services, they will guide you towards better finances.
Having an accountant help you during tax season can save you time and resources. Having a professional do your taxes is a smart thing to do. Accountants will use their experience and education to file taxes and analyze necessary items.
An accountant will provide an up-to-date and comprehensive overview of your financial well-being. An accountant will also provide recommendations and strategies that are best suited for you.
Accountants can also help cut tax penalties, legal issues that may arise, and tax liability. Accountants can help compile financial evidence to help you in a legal issue if their help is needed. Accountants make sure to account for every number and not let a single-digit fall out of place, which ensures your safety from tax penalties.
Having an accountant or bookkeeper can help your small business in several ways. By receiving help from an expert, you ensure the highest quality for your business's finances!
Put plainly, accountants pick up where bookkeepers leave off. They use the data and information that a bookkeeper compiles. Once they analyze the data, they create audits, strategies, and create a path for financial success.
Bookkeepers are tasked with taking note of financial transactions. Accountants are then tasked with analyzing, communicating, summarizing, and interpreting the correlating data.
After considering your wants and needs and having a great understanding in the the bookkeeper vs. accountant debate, you can start finding the financial expert best for you!
Contact us to get started with a bookkeeper today!
Did you know that there are more than 582 million entrepreneurs in the world?
Running your business is as fulfilling as it is nerve-wracking. From getting a chance to help your community to scheduling your work hours, starting your business allows you to be your own boss. However, there is more to owning a business than service or product creation and marketing.
While your products and services represent your brand, keeping tabs on your finances is essential in running a successful enterprise. This is why bookkeeping should be a priority for every business owner.
To effectively meet your company's bookkeeping needs, you need to know what can hinder your progress. Below are some business bookkeeping mistakes that you should be aware of and how to avoid them.
Inefficient business financial records management can lead to costly consequences. These include:
To avoid these issues, you need comprehensive and accurate financial management. This means keeping complete and up-to-date records of all your financial transactions. While it may seem like a daunting task, it is an essential part of business bookkeeping.
Having detailed and exact records will allow you to maintain normal and efficient operations within your company. What’s more, it ensures your business can keep up with a growing client base and adjust to necessary changes.
As a business owner, you may decide not to separate your personal and business finances, thinking it will save you time. But it can lead to more financial problems in the long run. When you mix your business and personal finances, it can be challenging to keep track of business expenses and income.
This can lead to overspending, missed deductions, and increased audit risk. Also, it prevents the protection of your personal assets in case your business experiences financial hardship.
Separating your business and personal finances with separate bank accounts can be beneficial. By having an account that only caters to your business, you have a clearer picture of your expenses and cash flow.
Apart from setting up a business checking account, you can also get a separate business credit card. Additionally, you can mark your business bank cards so you don’t confuse them with your personal cards.
Your inventory is an important asset that plays a major role in your ongoing business operations. It contributes to revenue generation. But if you manage it incorrectly, it can lead to a lot of financial problems.
Without accurate inventory records, you may not have the expenses and cost of goods sold allocated appropriately. This can inflate your gross profit and inventory assets. As a result, it can lead to cash flow issues.
A lack of detailed information can cause you to spend money on items that aren’t profitable for you. It also makes it difficult to manage your finances.
You can avoid this business bookkeeping mistake by ensuring you keep clear records of items in your inventory. The inventory information should include barcode data, SKUs, suppliers, and more.
Unless your business is located in a state that does not impose sales tax, you should never ignore your sales tax. If your business doesn’t stay up-to-date in sales tax collection and reporting, you may be subject to interest charges, penalties, and fines. In extreme cases, you may face criminal charges.
Aside from neglecting your sales tax, entering incorrect sales data can also mess up your bookkeeping. This is because inaccurate total sales can lead to the wrong amount of sales taxes due.
To ensure your sales taxes aren’t neglected, hire a bookkeeper. They’ll ensure you get correct and up-to-date reporting of accrued total sales and the exact amount of sales tax you should pay. What’s more, they’ll ensure you pay your sales tax on time.
Most businesses tend to keep petty cash on hand to meet small incidental expenses like office supplies. But just petty cash withdrawals are small and insignificant doesn’t mean you should neglect to keep tabs on them. It can lead to a lot of accounting mistakes down the road.
Without a clear record of where the petty cash is spent, you won’t be able to maintain accurate business financial records. Apart from leaving you with an incomplete and erroneous picture of your company's financial situation, it may also lead to wasteful spending, theft by unscrupulous employees, and faulty accounting.
This is why you should keep tighter controls over how your business uses petty cash. You can achieve this by setting a spending limit, knowing who has access to the petty cash, and keeping receipts for purchases made.
A simple solution can be to arrange them in a folder and keep them away in a designated drawer. Also, there are mobile applications that help in taking pictures of such receipts and organizing them accordingly.
Business operations are no longer just limited to full-time, on-site employees. Today, your company can have part-time employees, freelancers, and even consultants. In this case, it can be challenging for you to determine who is a staff member and who is not.
But part of managing business finances is being able to know the number of employees you have and the classification that they hold.
When you classify your employees the wrong way, it can lead to misfiling of taxes, tax penalties, and even lawsuits. Working with an experienced bookkeeper and labor and employment lawyer can ensure your finances are in order and maintain your business compliance.
One of the most common bookkeeping issues is creating overlapping categories for expenses. Maintaining a clear record of expenses is vital for more efficient bookkeeping. While most costs incurred at a business are usually straightforward, you can fail to enter expenses under the right category or create duplicate categories.
Without appropriate categorization of expenses, you are more likely to group the wrong items. As a result, it may lead to miscategorization or over-categorization of expenses.
For proper categorization, utilize general bookkeeping guidelines for standard categorizations and clean up your books. This way you can get a clear picture of your financial position and save a lot of money.
Bookkeeping for budget planning affects how predictive your forecasting ends up being. It makes it easy for you to solve problems when they come up. What’s more, you can use it to reduce your tax burden.
But if you fail to create a budget, it can be hard to control your expenditure. This can affect your bookkeeping records. You won’t have a clear understanding of your cash flow. As a result, you can end up overspending and fall into debt.
Additionally, inaccurate bookkeeping can lead to poor budget estimations in the future. To avoid messy bookkeeping records, you should create a proper budget. This will ensure that your books are in order so that you are on track to achieve your financial goals.
Bookkeeping has gone digital. You can now keep your records online via a local server or the cloud. Digital bookkeeping allows you to save time, cut costs, and keep consistent records. But improving bookkeeping systems comes with its challenges.
When dealing with the cloud, technical issues can arise. Your system may acquire a virus and fail. Also, you may face potential fraud from hackers. This can cause you to lose your financial data. Not having a secure backup means you won’t be able to recover your data.
Having backups is essential for your business to bounce back faster after losing your bookkeeping records. As a business owner, you should consider backups either on the cloud or on separate hard drives. In addition, ensure you keep your paper records safe.
Financial statements contain important information about your business’s health. It also helps internal and external stakeholders to make key management and investment decisions with confidence.
Another common bookkeeping mistake business owners make is neglecting to review their financial statements. This can cause you to make poor financial decisions. What’s more, it may throw off investors willing to invest in your business.
As an entrepreneur, make it a habit to go through your financial statements. If you don’t understand the cash flow statements, income statements, and balance sheets, ask your bookkeeper to explain everything. This will ensure you stay up-to-date on how your business is doing financially.
Failure to keep track of your expenses is a major business bookkeeping mistake. Not only can it create cash flow issues but it can also lead to inflated profits and increase the risk of an audit. It can also make you lose out on tax deductions.
To avoid these issues, it is important to keep timely and careful track of all your expenses as you accrue them. From employee salaries to costs of products and services, make sure each expense is traced back to the record books. This will also make it easy to trace your profits.
When you fail to reconcile your accounts, it leaves you running your business just off of intuition. This means you won’t be able to make informed data-based decisions. As a result, your business may fail.
Reconciling your books according to the recent bank statement is a fundamental task if you want to make ROI-efficient decisions. Ensure you carry out the reconciling every month so you can know the current state of your financial health.
With a regular and comprehensive reconciliation, you will be able to know how much money you have on hand anytime. In addition, you can discover any errors made by banks before they become major hurdles in your financial plan.
Some businesses make the mistake of throwing away a great number of useful receipts, especially if the amount is $75 or less. If you don’t keep your receipts, it can be challenging to file your business taxes. Also, it can be hard to back up the deductions you made on your tax return during an audit and may lead to fines.
One way to ensure proper bookkeeping is to save all your receipts. With a little organization, keeping receipts doesn't have to be stressful. You can file the receipts or take pictures of them on your phone and store them in Dropbox, Google Drive, or Evernote.
About 60% of business owners say they aren’t confident enough to maintain finance and accounting books. Most of these business owners try to maintain their books, despite having little to no understanding of finance.
While bookkeeping is vital in running a business, not everyone is good with numbers. You may not know how to record each transaction and it may lead to costly errors. This is why you should consider hiring a professional bookkeeper to sort out your business finances.
They have the needed skill set to perform accounting tasks fast and efficiently. You can also take a bookkeeping class to understand the fundamentals.
Once you hire a bookkeeper, it is essential to foster good communication with them. Ensure you involve and integrate them with the on-goings within your business. Not only can they keep track of your financial dealings, but they can also manage your budget, inventory, and payroll.
Also, make sure your bookkeepers have open communication with other employees. It allows them to speak directly to the concerned party when an issue arises.
As an entrepreneur, you cannot escape the task of maintaining your books. To avoid the aforementioned business bookkeeping mistakes, you should consider hiring Klean Books.
Our experts are dedicated to maintaining your books and providing accurate and timely reports that help grow your business. Get in touch to get a free live consultation.