Bookkeeping is the foundation of your financial records. From that foundation, you’ll build your accounting strategies, taxes, business plans, budgets, and more. That is why bookkeeping is so important, and outsourcing your bookkeeping to a pro will greatly benefit your bottom line and your strategic growth. But, what does that all mean? Let’s start with what we mean by “Bookkeeping.”
What is Bookkeeping?
We often get asked what it is exactly that a bookkeeper does. Bookkeeping is simply keeping the general ledger of accounts updated, recording your business’s debits (costs or expenses) and credits (income). In the old days, this was all kept up on a double-entry system in a literal accounting book, hence ‘book’ keeping.
The key to successful bookkeeping is recording your transactions on the proper accounts. We don’t mean bank accounts. What this means is that expenses are recorded as expenses, not cost of goods. Our goal is to help you avoid the most common bookkeeping mistakes, which in turn cause errors in reporting and make tax filing more difficult.
Here are some other common bookkeeping mistakes:
- Not keeping the books in the first place: Face it, bookkeeping isn’t likely very high on your list of things you’d prefer to be working on right now. You’re not alone. Many entrepreneurs let their books fall behind.
- Not reconciling accounts: Make sure your books match your bank records.
- Mixing Personal and Business Expenses: While we advise against mixing the two in the first place — get separate bank accounts — the mixing of the two still happens. The mistake comes in not accounting for each properly.
- Overlooking small or cash transactions: Taking cash from a bank account, receiving cash payments, paying subs in cash — all can cause problems in the books.
- Not using a cash budget and matching up the two: You (hopefully) created a cash budget for the year. Well, you can’t really use it if you don’t run your books properly, and that can cause problems with cash flows.
Benefits of Outsourcing Your Bookkeeping
Just like working with a tax pro has benefits, working with a bookkeeper will also greatly benefit you and your business. Here are some common benefits of outsourcing your bookkeeping:
- More time for you to work on the strategic planning of your business.
- Your books are likely to be more accurate, reconciled, and current.
- Your books will be regularly updated, allowing you to run key reports.
- Your bookkeeper can often save you money by identifying tax breaks and keeping the books to take advantage of those.
- Keep your financial records safe. Hiring a temp or a part-time employee exposes you to privacy risk with your books.
- You’ll be able to keep up with growth. As you grow, your books will grow and become more complicated. Outsourcing bookkeeping will scale with your growth.
Get A Quote on Bookkeeping Services
Check out our Back Office Accounting system. We’re happy to walk you through a live demo and show you the benefits. We are also happy to get you a quote on being your business accountant and outsourced bookkeeper. Call ASCEND today at 888-297-3321 to get started.