A common question many new small business owners ponder over is the difference between bookkeeping and accounting. The answer is simple: bookkeeping is the first step to accounting. Without keeping books and records, accounting would be a nightmare. Accounting takes the numbers diligently maintained by the bookkeeper and analyses and interprets them to make detailed financial reports.
Why Is Bookkeeping Important for Small Business Owners?
Bookkeeping is essentially the practice of documenting, classifying and organizing all financial records of your business. Recording every transaction, no matter how little, to making spreadsheets and maintaining a proper filing system – all of it comes under bookkeeping. An efficient bookkeeping system is important to keep your business organized for tax season and have information readily available when required for financial planning. The bookkeeping system can be a saviour as it keeps documentary evidence vital in tax audits and court cases.
Small businesses are suggested to have a good bookkeeping system from the beginning. As your business grows and your company expands, it will become difficult to handle the documentation and work out financial strategies without any information in hand. Thus, it is better to hire a professional bookkeeping service and start duly organizing your business papers and records immediately. Regularly updating your books keeps you on top of your company’s financial activities, helping you spot and take action on any monetary issues.
What All Does a Bookkeeper Do?
At first glance, this might seem to be an easy, straightforward job. However, bookkeeping is a time-consuming activity that requires patience and trustworthiness. Whether physical paperwork or digital documentation, sorting, classifying and storing your financial records is a skilled job. The job profile of a bookkeeper includes the following:
- Recording and maintaining every financial transaction, including revenue and expenses
- Submitting bills to clients and following up with overdue accounts
- Making timely payments to suppliers, associates and other support staff
- Preparing, balancing and storing general ledgers
- Taking care of the company’s banking activities, including timely repayment of credit card and loans
- Establishing a payroll system for employees to ensure timely payment of salaries and reimbursements
- Filing sales tax returns and payroll-related tax forms on time
Summing up, a professional bookkeeper manages a seamless flow of cash across the business while keeping a check on delays. At any given point, your company ledgers tell you how much net cash is in the business and inform you well ahead if liquidity is drying up.
DIY Bookkeeping for Small Business Owners
When you first set up your business, you might have enlisted the help of family members or close friends for various tasks, including sorting your financial papers. Or perhaps you do it yourself? We understand that you might be doing this to save on costs and to maintain confidentiality, as business financial details are sensitive. However, as your business grows, you will be required to do more important tasks such as securing funding, handling operations, taking managerial decisions and creating strategies to expand the business. In such times, juggling so many things at once will be difficult. Hiring a bookkeeping service might turn out to be a cumbersome process. Investing in one today is better than waiting for a more opportune time tomorrow.
A good bookkeeping service can help your business use the latest software to keep your financial records streamlined and in order. The files can be stored on the Cloud without taking up extra space in your office for physical paperwork. It also makes filing and looking for specific information quicker and easier. The amount of money a bookkeeper can save in late payment penalties and tax audits far outdo the amount you pay for bookkeeping.
Contact DDL & Co. in St. Catharines for Your Bookkeeping Needs
Hire a professional bookkeeper to outsource your bookkeeping requirements so that you can give your business the attention it needs. At DDL & Co., our trained and experienced bookkeepers can provide services to care for all your bookkeeping needs. To learn more about how DDL & Co. can provide you with the best bookkeeping expertise, contact us online or by telephone at 905-680-8669.