Do You Need A New Bookkeeper?

A bookkeeper is going to be an essential entity of your business. They are responsible for ensuring that the financial aspect of your business is well taken care of. Some examples of tasks that a bookkeeper needs to carry out include filing tax returns, lodging timely payments, keeping receipts and releasing correct reports. In short, a bookkeeper makes the life of a business owner easier. However, when a bookkeeper fails to deliver on the tasks it promises, it is about time you rethink things.

A business owner may need to face the consequences of hiring an efficient bookkeeper if the problem is not addressed right away. There are warning signs that allow a business owner to identify the signs of an inefficient bookkeeper.

1. Financial reports are not submitted in a timely manner.

The financial report is one of the paperworks that a bookkeeper needs to keep an eye on. This report is time-sensitive because this is where business owners determine which direction their business is heading. When this essential report is not submitted in a timely fashion, the business owner is denied of the chance to go over it. When late submissions become a habit, you need to find out the underlying causes for these delays. Is it the lack of resources that deter a bookkeeper from submitting reports? If so, both bookkeepers and business owners must explore viable solutions.

2. The bookkeeper does not schedule a meeting to discuss financial reports.

An access to the financial report is important so you will keep track of your financial activities. When there is lack of information, a business owner will not know about the steps that need to be done in order to resolve bookkeeping issues. You have the right to know about the details of the financial report so you will be confident that ATO receives correct and accurate information about your business. Scheduling a meeting also allows you to correct mistakes, which can wreak havoc on your business especially when it comes to filing tax returns

3. Your bookkeeper is no longer committed to your business.

Commitment is important for a bookkeeper to succeed in carrying out bookkeeping tasks. Without commitment, a bookkeeper will feel as though the daily task is an obligation. When a bookkeeper is committed to helping your business get bookkeeping tasks done, a business owner will no longer have to worry about them.

4. Frequently receiving mails from ATO.

When mails from ATO are received frequently, you need to conduct your own investigation so you will know what really is going on with your bookkeeping task. Essential details must be handled properly and recorded on a regular basis. You may need to schedule an appointment with the bookkeeper so you will know what is going on with your finances. If they cannot provide satisfying answers, you may need to look for a more reliable bookkeeper to do the job. Your business is more likely to suffer if you are going to allow an inefficient bookkeeper to take care of your financial activities.

Essential Qualities Of A Modern Bookkeeper

Studies show that 78% of businesses will switch to cloud operation by 2020. At present, approximately 65% of small businesses are already using cloud applications. While cloud applications can make daily bookkeeping tasks fast and easy, the future roles of bookkeepers are still open to question.  Now that more and more businesses are considering cloud software as a welcoming relief, are businesses going to say goodbye to traditional bookkeeping?

If bookkeepers are going to view these changes from a more positive perspective, they will consider this as an opportunity to step up. Just because modern bookkeeping sets the pace does not necessarily mean that bookkeepers cannot build upon the role. Bookkeepers can remain valuable if they prepare for the changes happening in the bookkeeping industry.

What does it take to be a modern bookkeeper?

1.    Knows the ins and outs of cloud applications
In modern bookkeeping, bookkeepers are expected to be tech-savvy because they are going to use cloud applications, collaboration tools and other accounting applications most of the time. Using cloud applications differs from the traditional data entry role. A bookkeeper needs to be familiar with the functions of cloud applications because timely and accurate reports are going to be necessary.

2.    Substantial bookkeeping experience
Continuous learning is important in modern bookkeeping because dealing with basic bookkeeping task does not last forever. A bookkeeper needs to learn advanced bookkeeping techniques to keep up with the changes taking place in the industry. When a bookkeeper is exposed to various types of businesses, skills are not just limited to basic bookkeeping.

3.    Formal training
Since bookkeepers are more than just data entry clerks, formal educations are also essential in becoming a modern bookkeeper.  Aside from specialized training, a bookkeeper needs to have accounting and finance degrees to excel at modern bookkeeping. These bookkeepers will be dealing with Quickbooks, Xero and other bookkeeping applications most of the time and familiarisation with these applications are required.

4.    Following best bookkeeping practices
Bookkeepers need to learn the business’ Key Performance Indicators (KPI’s) so actionable reports are created. When bookkeepers are well-aware of the advanced techniques to employ to make the system as efficient as possible, the best service is provided to clients.

5.    Ability to understand modern bookkeeping
The best bookkeeping practices are not necessarily found in books. This is why a bookkeeper with entrepreneurial spirit will be able to understand modern bookkeeping and deal with the challenges that it may bring. A modern bookkeeper must have the ability to use social channels to engage with potential clients.

Why DIY Bookkeeping Is A Big No-No?

Bookkeeping is a task that demands accuracy because the financial information is used for analysing the financial standing of a business. Taking on all your bookkeeping practices can be a problem in the long run especially if you do not have sufficient knowledge and training. Bookkeeping tasks should be left to a bookkeeping professional to ensure that everything is in order. One of the problems that business owners will face due to DIY bookkeeping is poorly submitted financial data. It is difficult to resolve ATO queries if your financial data indicate potential problems.

Common DIY Bookkeeping Problems:

1.    Losing records. Business owners often lose track of important receipts, which are used for filing tax returns and claiming for GST. These receipts need to be recorded regularly so you can present a detailed record to ATO in case they need it. When you resort to DIY bookkeeping, these important things are overlooked.

2.    Unable to deal with bookkeeping software’s complexities. While the basics of bookkeeping software can be learned, there are still some complexities of bookkeeping software that you need to tackle so you will know what needs to be done. When there are underpayments on your tax returns, the tax office will penalise you for it. However, you can save yourself from the stress that the process gives when you leave your bookkeeping software to an expert.

3.    Missing deadlines. Another way DIY bookkeeping can wreak havoc on your business is when you fail to lodge your tax payments on time. It is easy to keep track of important payment dates if you have a bookkeeping professional to deal with them. A bookkeeper will be the one to schedule and track due date so the necessary paperwork is completed on time.

4.    Cannot track expenses. It is difficult to identify the receipts relevant to your business and tax deduction if you have missed out on tracking your expenses. Even in petty cash, you need to make sure that you know where your money is going. If you do not keep receipts, you just cannot claim for every receipt you have. This is going to create chaos in your business.

Business owners may think that hiring a bookkeeper is costly, but running a business without a bookkeeping professional spells more trouble. Before you decide on considering DIY bookkeeping, think about the advantages of having a bookkeeper to complete the task. You will not worry about your expenses and tax payments because a bookkeeper will take care of them.

What Are Considered Good Bookkeeping Practices

When it comes to running your business successfully, you need to incorporate good bookkeeping practices, which should be completed regularly. These practices are going to help you identify and fix problems before they take a toll on your business.  When these practices are followed on a regular basis, they become a habit and soon you will notice that your tasks are getting easier as you master these practices. The last thing that business owners want to do is worry about their bookkeeping practices. For those who have just started a small business, bookkeeping seems like a new concept and it may take time before you get a grasp of the bookkeeping practices. However, when you know why good bookkeeping practices must be followed, you will make it a point to incorporate them in your business.

The benefits of good bookkeeping practices:

•    Monitor the failure and success of your business regularly. Without following good bookkeeping practices, you can always make yourself believe that your business is still doing well. However, you will realise the importance of bookkeeping when you discover that your business is not doing good. Bookkeeping allows you to obtain timely and accurate information. You will know if your sales are increasing faster or if the expenses are too high based on your sales level. You will also have an idea if your expenditures do not appear as expected.

•    Make sound financial decisions. A bookkeeper can give you recommendations based on what they see on the financial report. Before a decision can be made, evaluating the financial consequences must be kept in mind. You will never know the financial impact of a course of action that a bookkeeper provides if you do not have a financial report. A financial report tells you where your business is headed. Is it time to hire another salesperson? Do you have a profitable product line?

•    Bookkeeping procedures are put in place. Before you obtain bank financing, a banker needs to see your financial statements including the cash flow budget, balance sheet and income statement. These statements can create an impact on your requested loan. You will also have to prepare your bookkeeping documents and procedures so the bank can verify if you are running your business in a professional manner.

•    Prepare an accurate tax return. Every business is required to file an income tax return and make timely payments of income taxes. Good records are essential in preparing your tax return and it also allows you to provide accurate information. When you have poor records, your business will have the tendency to overpay or underpay taxes. Good recordkeeping can help prevent chaos in bookkeeping.

•    Obtain other sources of capital. If your business is expanding, you need a partner that can help you with expansion. A prospective business partner wants to take a look at the status of your business and being familiar with the financial picture is one way for them to gauge if you make a good business partner. Suppliers and creditors will also require your financial records because they can use them as basis for identifying your credibility as a borrower. These sources of capital are less likely to put their trust in you if you have poor financial records.

Modern Bookkeeping: Is It Time To Make The Switch?

Modern bookkeeping has turned every business owner’s life around because it offers efficiency, speed and quality. A task that used to be done in hours can now be carried out within just a matter of minutes. The information becomes much easier to access and everyone can collaborate and contribute to make the system more efficient. It is indeed a whiff of fresh air for business owners who used to dread bookkeeping tasks.

Although most business owners have already turned to modern bookkeeping technology because of the benefits that remains unmatched by old-fashioned bookkeeping, there are still some who are still quite hesitant to make the switch. It is not just about the problem with switching to an unfamiliar bookkeeping territory, but ditching the old system and suddenly embracing the new approach.

If you are going to look at the big picture, you will discover the once untapped potential of bookkeeping back in the day when entrepreneurs settle for the sluggish and demanding manual generation that requires accuracy. Imagine spending gruesome hours for data entry alone and when details do not match the bookkeeper’s or the business owner’s data, you will have to redo the process. This bookkeeping ordeal had come to an end when modern bookkeeping technology became part of the picture.

Why would a business owner make the switch?

  • It simplifies daily bookkeeping tasks. One of the factors that make bookkeeping challenging is the accuracy that it demands. Business owners are dependent on the information they see on the financial statement and one wrong entry can affect the whole data. These days, the bookkeeping technology has come a long way, and this means that the tasks are simplified so the need for double-data entry is eliminated. Bookkeepers and business owners will notice a significant rise in productivity and efficiency.
  • Bookkeepers collaborate with client in real time. In the past, the only way a business owner could gather ideas and get updates on bookkeeping was during meetings since an integrated client portal was not yet available. With this approach, you need to dedicate your time and effort so all parties involved in the bookkeeping system will meet half way. By switching to modern bookkeeping, preparation and submission of reports are shortened. More ideas are also obtained because the clients and bookkeepers can access the portal.
  • The system is secure. Keeping important data secure and confidential is one of the problems that most business owners are facing. There are inevitable circumstances that can mar the bookkeeping process. For instance, computers become susceptible to hacking and virus infection and if the bookkeeping data are not secured, you can end up losing the important information. Modern bookkeeping technology has foreseen these possibilities. This is why a client is assured that data are safeguarded. Even with the possibility of data loss, you can have your data backed up so no time and effort are wasted.

Although it can be quite overwhelming to make that sudden switch, the benefits that modern bookkeeping provides are enough to convince even a small business owner to embrace changes.

Understanding Your Finances: Why Such A Big Deal?

The financial aspect of your business should be taken seriously because mishandling your finances can impact your business. Financial management includes accounting, bookkeeping, raising capital and cash flow management. Even if you are a small business owner, you need to make sure that your daily operations are monitored closely because one wrong move can make your business suffer. Although it is not a requirement for business owners to spend years studying the ins and outs of bookkeeping and accounting, understanding where money goes can make a difference.

3 Common Mistakes That Business Owners Commit When Handling Finances:

Careless spending. Avoid overlooking expenses because if there isn’t enough money to cover all of your business expenses, you will not be able to move forward. When you do not monitor your expenses, there is a tendency that it will pile up. When the time comes you need to make a payment for your bills, you lack financial resources to obtain cash from. Business expansion will not be impossible if you can deal with business expenses without worrying about falling behind your payment schedule.

Delayed payment of taxes. Taxes are essential to every business and it is important that you pay them in a timely manner. Since late payment of taxes can have a negative effect on your business, you need to create a financial plan in advance so you can keep track of your payment schedule and pay taxes.

Poor cashflow management. Managing your cashlow is also important and this should involve monitoring payment for insurance, phone, rent and many others. When you plan ahead, you will be able to know potential problems even before they arise. You should also be aware of cash flow gaps because they can also happen at some point.

Managing the financial aspect of your business is not an easy task especially when you need to take your financial obligations into consideration. Delayed payments are a sign that there is something wrong with your finances. You have to review or reassess your spending habits so you will know what could have gone wrong.

If you are struggling with your business finances due to mishandling your cashflow, it is time to identify the culprit behind because taking these problems for granted can have a negative effect on your business that is beyond repair. Your bookkeeper can help you put your business in proper perspective and help you maintain your cashflow so you can make timely payments and prevent your business from becoming a complete failure.

3 Techniques That Can Improve Your Bookkeeping Service’s Online Presence

Do you perceive strong online presence to be a costly and time-consuming technique? Have you ever thought of the importance of strong online presence to your bookkeeping practice? As a business owner providing bookkeeping services, you need to make sure that you are sending the right messages so you can attract clients and generate leads online. Improve your online presence with these techniques:

1.    Choose your social channels

Social channels are effective in improving your online presence because it provides prospective customers a time to connect and to know more about your company. However, when you use social media for connecting with your customers, you need to dedicate your time and effort to supply these channels with engaging and compelling content. If a visitor stumbles upon your company’s social media account and found nothing, the purpose of getting people to know your business will be defeated.

These social channels can help businesses promote services and share expertise. LinkedIn is one of the very effective channels capable of finding leads and networking with contacts on the same industry. It is also help to consider the social streams as this will help you determine where your efforts should be concentrating on.

2.    Drive Traffic

When it comes to finding the right formula to communicate to your new and existing clients, irrelevant information becomes a roadblock that you need to remove if you want a steady flow of customers to come knocking on your door. Most of your social media posts should be focused on driving traffic to your website. These posts must be carefully crafted so you can present your business in the most effective way. Blog posts should be given importance because you can link through to them using social media accounts. As a result, your audience will keep on returning to your website and engage with your business. They can also share your content with their own networks.

3.    Create engaging posts

Social media allows you to have a voice so you can communicate effectively with new and existing clients. Social media is an effective tool if you are going to take a strategic approach. Keeping your interactions meaningful and regular is one thing to ensure positive client engagement. You will need to create a basic quarterly plan so you will know when you should schedule them. It can either be weekly or twice a week. As much as possible, you should make it a habit to schedule posts ahead as something may come up that stops you from supplying channels with regular posts.

Since almost all businesses are going digital these days, taking advantage of social media channels to promote your business can make a difference. Regular interaction with your clients can take your business to the next level.

Why Bookkeeping Practice Needs A Niche

One thing that makes bookkeeping industry interesting is that anyone can become a potential customer.  Every opportunity that knocks on your door is a good sign for your business. Once income starts coming in, the next thing to do is to push your profits to the next level. Due to the competitions in the bookkeeping industry, it is important that you concentrate on a specific niche that will define the nature of your bookkeeping business.

When you establish a niche, you are promoting yourself as an expert in a particular area of bookkeeping. Your niche may be focused around an industry, type of business owner or a location. The downside of allowing your business to be part of a crowded industry is that potential customers will have so many choices and sometimes, your business can get lost in these choices. However, if they have a specific niche to focus on, you will be able to define your areas of expertise and give them an option to get the bookkeeping business that fits their expectations and needs.

Reasons a bookkeeping practice needs a niche:

•    When you consider creating a niche for your bookkeeping practice, you have more opportunities to determine an effective marketing approach that will work for your business. This marketing approach will give you the ability to have a unique selling point. As a result, you are targeting your customers and creating qualified leads.

•    You will be able to stand out online when prospects are looking for a specific service. If you are going to settle with generic bookkeeping service, you are most likely to be lost in the crowd because you do not have any unique services to offer.

•    Building a niche can also provide you attractive networking opportunities. This is also your time to build confidence in environments, which can generate referrals and better business. If you have done an impressive job on a specific area, you will become the go-to person when clients need help in a particular area of a bookkeeping service.

•    If you want to make it big in the bookkeeping industry, finding your niche can open the door to additional business opportunities. Not only will you become more involved in business and financial management but you will also have more time to concentrate on an area that will improve your bookkeeping service.

The thought of finding your niche can be overwhelming and your starting point may be one of the reasons you are deterred from pushing your business to the next level. Start by reviewing your client database. If you see any trends in the type of customers you have, focus on a particular industry where you can establish your niche.

You should also identify the kind of networks or relationships you currently have that you can leverage. If you have a connection in a particular industry, you should also join associations related in this network so you can expand your network. You can also find your niche if you focus on a particular service that you consider profitable. If you have high-paying clients, find more like them.

Is It Possible For Accountants And Bookkeepers To Collaborate?

When it comes to keeping businesses on their feet, accountants and bookkeepers have a significant contribution. Unfortunately, their services are deemed to be competitive instead of complimentary and this is the reason tension between these two camps build up. Why not offer the best of both worlds through collaboration?

When accountants and bookkeepers are working closely, essential information is fully reconciled. Business owners are also assured that the information is accurate. When incoming information is reconciled, it will be easy for accounting firms to focus on business-related issues such as cashflow, profit and business growth. There are several reasons for the gap between the accountant’s and bookkeeper’s work such as using the old accounting systems. When both camps see their roles as separate and there is lack of communication, there will be misunderstandings and friction.

Both parties must be aware of their roles in the business. Just because they have different roles to play does not mean they cannot work as a team. These days, accounting software can be used so bookkeepers and accountants can access the information at the same time. This makes collaboration and job tracking possible.

If there are problems that both parties may encounter, it is easy to track them once they access the same information through accounting software. The major roles of accountants include depreciation, company set up and ensuring that the best result is achieved at tax time. Bookkeepers are responsible for taking care of overflow work and bring up issues with the accountant before the year end.

Another benefit that a business owner can obtain when bookkeepers and accountants work together is efficiently generating leads through getting viable resources. When proactive approach is used, they can be a great team. With training and webinars, accountants and bookkeepers will have a clearer understanding of their roles.

How do bookkeepers and accountants position themselves?

•    Learn new skills. If there are gaps in your bookkeeper’s and accountant’s skillset, learning new skills will bridge the gap. It is not just enough that you are familiar with your responsibilities because you will also need to keep up with the technology. Accountants and bookkeepers should build on their IT skills so they can utilize accounting software effectively.

•    Consider complimentary services. Collaborative business relationships are effective in businesses because it helps the team offer referrals, share resources and give advice to make businesses grow. When there is a strong network, the business will also thrive.

•    Get to know the latest accounting technology. The first step to using accounting software is learning about the add-ons and features. Bookkeepers and accountants need to attend training sessions and utilise online training tools.

Collaboration also means embracing changes. Although technology advancements have made the roles of each party much easier, this does not mean that business owners no longer need bookkeepers and accountants. It will be convenient for business owners to work with accountants and bookkeepers if they work harmoniously. Each one has a purpose and no role is greater than the other. When businesses have a strong network, the goals that will encourage growth will be achieved.

Interpreting Profit And Loss Report

Business owners consider the profit and loss report important because it is one of the reports that can determine which direction the business is going. Numbers reflecting on these reports must be interpreted correctly and accurately as there should be no room for mistakes. The bookkeepers will be the one to make some recommendations based on the reports. When a business is losing or making money, a Profit and Loss Report will be a determining factor.

Unfortunately, not all business owners understand the importance of these reports until their business fails. Since interpreting numbers of the second nature of every bookkeeper, it is no longer surprising that they know how to read the profit and loss report.

However, not all business owners can interpret or read a profit and loss report. Some may assume that everything is going in the right direction, but when the report is interpreted, the business is losing money, which is not a good sign of progress. There are various areas of profit and loss report that need more than just a simple interpretation and seeing the numbers go up is not enough.

Net Profit or Net Loss

When the figure shown in the report is positive, it only means that the business is making a profit. A negative figure means that a business loses money. The net profit or net loss provides information of the total of income, less cost of goods sold or purchases less expenses.

Expenses

The expenses provide the figures for business expenses including the cost of goods sold. The expenses also show the categories based on your industry. It also includes the operating expenses such as power, telephone, rent and many more.

Income

The Income shows the total of invoices or sales, which you have invoiced over a certain period of time. The Income does not yet include the investment income because this only falls under a section referred to as ‘other income’. This category is found on the bottom of the report. The business’ income is also called ‘turnover’.

Gross Profit

The Gross Profit refers to the incomes less purchases and the Cost of Goods Sold. It is important that a business owner understands the markup percentages and this is what the gross profit provides. The markup percentages are expressed as a percentage of income.

Cost of Purchases or Goods Sold

The Cost of and Goods Sold are the total of all the expenses that the business has incurred. The expenses are the ones that have contributed to the income of your business. The purchases refer to the inventory items that the company has sold and purchased. The items for sale such as the freight charges are the Cost of Goods Sold.

It is not only the bookkeeper that should be mindful of the figures on the profit and loss report because business owners must also understand these reports. When business owners know how to interpret these reports, it is easy to determine when and how changes can be made if something is not working with regard to the financial aspect of a business.