The term 'bookkeeping' covers the processes involved in keeping accurate and up to date financial records of a business. When proper methods are used, it helps the business to effectively manage cash flow, as well as keep an eye on profits and losses. This in turn will help the managers to find out where they are losing money, and to develop plans for the future.
Bookkeeping is often thought of as the most important part of a business. Without it, there would be no way for you to keep an eye on the financial stability of your company. You will lose track of who you owe money to you, and who owes money to you, and you are more likely to get into debt. The heart and soul of a business is based upon cash and income, and without keeping your books up to date, this would be near impossible to keep an eye on.
Why Hire a Bookkeeper?
Bookkeeping can be time consuming, especially if your business sees a lot of action. Hiring a bookkeeper means that, rather than allocating regular time to sit down and keep your accounts up to date, you can instead invest that time into other areas and aspect of your business which may need a little more attention.
There are quite a few people out there who don't like the thought of hiring a professional, because they don't want the added bookkeeping fees. They believe that bookkeeping fees are ridiculously high, and are an unnecessary added expense. Why pay for someone else to do a task that you can do yourself?
To begin with, bookkeeping fees aren't actually that high. They are moderate fees, and could save you a lot of money. On top of that, most people lack the knowledge needed to successfully keep their books. Bookkeeping is often more technical than it looks, especially if you have a lot of entries to include.
If you include just one wrong entry in your accounts, then you could mess the whole system up. Not only will it affect that one ledger, it will affect the entire account. If you notice that there is something that doesn't add up, then it can take a long time to fix. You will usually have to go back through and start again, and that will waste a lot of valuable time. If you don't notice that something is wrong, then it can affect your profit and loss for the year, as well as affecting your tax returns. A wrong tax return can lead to high fines. Paying a small bookkeeping fee will ensure that it all goes smoothly.
There are a few people who have been doing their own accounts for years, perhaps even decades, and they intend to continue to do so. It is worth remembering, however, that rules and regulations regarding finance change quite regularly. You could end up facing fines simply because you were not aware of a certain change. Professional bookkeepers, however, keep abreast of any changes in financial rules and regulations.
Bookkeeping fees generally aren't as high as everyone expects. They tend to be charged on an hourly basis, which means that the more work you put in yourself, the less you have to pay.
There are some companies and individuals who don't keep any form of accounts themselves. Then, at the end of the year, they will take all of their statements and receipts along to a bookkeeper and ask them to sort it out. This process will take hours to do, often days or weeks if there are missing records, and thus the bookkeeping fees can be very high.
By keeping basic records yourself, you will save a lot of money on bookkeeping fees. Rather than it taking days for the books to be collated, it could instead only take a couple of hours. This also means that you will have been keeping up with the financial state of your business, and will know more or less what is going on.
Don't get put off by the idea of paying bookkeeping fees; they are not an unnecessary expense, like so many people think. Paying a small bookkeeping fee is much better than having to pay a large fine because there was an error in your accounts or your tax return.