Do you really need a bookkeeper?

Owning a small business requires you to perform many activities. Various responsibilities fall within your purview, including sales, marketing, product development, and customer service. In light of this, it should not surprise that bookkeeping is frequently neglected. On the other hand, maintaining correct financial records is necessary for your company's success. There is a need for a bookkeeper in this situation.

When it comes to the success of any business, the most important factor is maintaining a close eye on your accounts and funds. On the other hand, you might discover that you devote more time to the upkeep of your records than you do to the operation of your company. "Do I need a bookkeeper?" is a question you should ask yourself occasionally. This article will explain the bookkeeper's functions for small businesses and the merits of employing one. In addition, we will offer advice on locating the most suitable bookkeeper for your company!

What is Bookkeeping?

Bookkeeping is the practice of recording and tracking financial transactions in chronological order of a business, as per the history archives, which are as far back as 7000 B.C. Traditional bookkeeping records were discovered in Sumer, Babylon, Mesopotamia, and Assyria (Xero, n.d). The essence of recording and tracking financials is vital for a business to grow. Many individuals running small businesses do their bookkeeping. However, running your business takes time and leaves you with several other responsibilities, such as logistics, product, service, marketing and endless everyday tasks. Unless you have a solid background or bookkeeping experience, we advise you to leave the part to the accountants. Now, why? Are you well versed with the A.T.O. business compliance requirements? Also, are you well versed with "Business Activity Statements," aka B.A.S.? If your answer is yes! Then you should consider this a career option if you are unsure and need help to keep up.

We will explore how bookkeeping makes your life easier and helps you save every penny worth in your business. The duties of a bookkeeper can be quite diverse, not just handling books. They manage financial transactions and must provide accurate and up-to-date financial information or statements. This not only helps business owners plan their future goals and strategies but also helps them manage their money in a much more efficient manner. As a small business owner, you know a bookkeeper's two essential foundational tasks – bank reconciliation and data entry.

What's the difference between a bookkeeper and an accountant?

Aren't they the same? No, they are not. The role of a bookkeeper is to record accurate financial transactions, document the ledgers and generate a financial report. More importantly, it is an administrative and transactional responsibility to keep the data accurate and structured. The numbers and the data generated are where the role of an accountant takes place. An accountant will help you to create a strategy and plan management that can prevent you from some very big losses that you may not even be aware of! There is no comparison between the two, as each has its duties and responsibilities. However, a business owner needs to handle their financials and accounts accurately. For more information, read on the difference between a bookkeeper and an accountant.

Top five reasons you need a bookkeeper

Having a bookkeeper handling your business offers several benefits. However, if you don't know how to get the best of your bookkeeper, read this. Some of the reasons are below.

• 1. Helps plan for the future

  
  The ability to understand your company's financial position better is one of the most compelling reasons to keep precise financial records. By doing so, you can determine whether it is time to expand, hire another person, or reduce your workforce to avoid problems with cash flow. Experienced bookkeepers can recognise trends that can assist you in capitalising on a circumstance, season, or event or avoid it altogether. As an illustration, if firms operating in your sector normally experience an increase in sales during the autumn season, but yours has not, a bookkeeper can assist in determining the reason for this and then suggest a solution to the problem.
  
  They pay close attention to details like these, ensuring that your budget is both practical and forward-looking. This assists your company in accomplishing both short-term and long-term objectives. If you are in charge of your books but still require some assistance, a competent bookkeeper can demonstrate how to develop helpful and detailed reports and teach you how to use these reports to create a budget and plan for the future.

• 2. Create an accurate budget

  
  Because it is much simpler to develop a budget, bookkeeping is an essential component of any organisation. Reviewing your financial resources and costs is straightforward when your income and expenses are arranged appropriately. You may construct a financial roadmap for your company if you have a budget. If you do not maintain books that are precise and up-to-date, it will be challenging to obtain an exact budget because it is primarily based on guesswork.

• 3. Helps with tax obligations

  
  Most of the time, your company is required to submit a tax return annually. If your records on your profits are properly organised, you won't have to worry about scurrying around looking for receipts and invoices. Bookkeeping ensures that all your files are properly documented.
  
  In addition, as a businessperson, your income tax deductions are also connected to your company. You must first have an understanding of the amount that your company received to be able to calculate how much money you made. Keep in mind that recordkeeping is also beneficial to your tax return.

• 4. Handle accounts payable and accounts receivable

  
  Generally speaking, the bookkeeper for your small business will handle payments on your behalf. It is possible to use this way to pay for petty cash, expenses, and invoices from suppliers together. Preparing and distributing invoices to customers is another one of the duties bookkeepers are responsible for. This ensures that payments are received promptly. A bookkeeper is responsible for a variety of tasks, including the management of ledgers for accounts receivable and the monitoring of payments that are past due.

How to know your business needs a bookkeeper

• 1. It is difficult to predict your cash flow

  
  Have you ever felt that you are supposed to receive money from customers but are unsure of how much it will be or when it will arrive? Alternatively, when it comes time to pay freelancers or contractors, do you find that you have no money in your wallet?
  
  You will require statements of cash flow. Using a cash flow statement, you may determine the amount of money you owe to other people and the amount others owe you. This is similar to a crystal ball in that it provides a glimpse into your bank account's future. If you have a suitable bookkeeping solution, you can obtain monthly updates on your cash flow.

• 2. Tax season is difficult

  
  If you fail to pay your quarterly estimated taxes substantially, the Australian Taxation Office will impose penalties on you. If you overpay them, you essentially provide them with a debt that does not incur interest.
  
  Paying your estimated taxes every quarter shouldn't be a matter of guessing. You may figure out how much money you need to set aside in your tax budget using various approaches; however, all approaches require you to know your typical monthly income. If your bookkeeping is out of date or you do not have financial documents, carrying out the calculation might be challenging.

• 3. You have seen a growth in sales, but your earnings have not

  
  The amount of effort you put into bringing in new consumers and ensuring that your existing ones are satisfied is completely in vain if you cannot increase your revenue. When your revenue grows but your earnings remain unchanged, you need to enhance your profit margins to make a profit. Obtaining financial accounts prepared for tax purposes from a bookkeeper can assist you in identifying areas in which you need to reduce expenses to increase your company's profitability.

• 4. Computer security problems

  
  You must have complete confidence in the safety and reliability of your personal computer while you are using it to monitor and save financial information. Over two hundred thirty thousand devices in over one hundred fifty countries were affected by the WannaCry ransomware assault in May of 2017. Data belonging to victims was encrypted by WannaCry, rendering it unavailable, and the cyberattacker demanded Bitcoin payments in exchange for making the data accessible once more.
  
  A loss of years' worth of financial information is a problem in and of itself. On the other hand, data conducted by MalwareBytes indicates that more than ninety per cent of personal computers in homes have been infected with spyware at some point. In other words, if you are keeping your books on your personal computer at home, there is a significant possibility that another individual has access to your company's financial information or will soon have access to it. To scan your computer, you can use free software. If it finds malware, it indicates that you either need to strengthen your security measures or hire a professional to handle the responsibility of ensuring the safety of your bookkeeping.

Conclusion

Business bookkeeping in Australia needs you to be well-informed if you want it to be a success. Here is why you shouldnt joke with the role of a bookkeeper in your company. This blog has answered the question of if you need a bookkeeper. Hiring a bookkeeper not only saves time and money but is also in compliance with the tax and other laws. If you are a small business owner and are unsure if your finances are on track, we at The Kalculators can assist you with your queries. Give us a call on Phone Icon Black Call us (08) 7480 2593 or book an appointment with us today.