5 Bookkeeping Habits That Make Business Thrive

Your finances must be regularly tracked if you are running a business. Otherwise, you can put your business at serious risk. If you want your business to survive and thrive, it is imperative that you have good bookkeeping habits.

1. Have a professional prepare your tax returns

Business owners are not only focused on one aspect of managing the business. This is why most savvy entrepreneurs choose to outsource work to ensure accurate results. If you have a trained financial eye, bookkeeping processes can be easily monitored. If there are discrepancies, bookkeeping experts can correct or improve the data before it reaches you. Preparing tax returns on your own may not be a good idea. It is because there are technicalities that you might not be fully aware of.

2. Document bookkeeping processes

It is also a good habit to document your processes. This way, you will be able to gain a better understanding how bookkeeping processes should run. As your business grows, you will also be able to prevent confusion as everyone is in the same direction. Good bookkeeping should be consistent.

3. Choose the right software

Never skimp on the bookkeeping program you are going to use because it can help you get things done in an accurate and timely manner. In choosing the right software, you should focus on your business needs. Sophisticated software that is not aligned with your business objectives will be a waste of money. Ask for recommendations and get ample training before deploying the new system.

4. Keep an eye on your reports

Although you need to hire a bookkeeper and accountant for your financial reports, this does not necessarily mean you should go entirely hands off. You still have to keep yourself involved by reviewing reports and checking what is going on with your business. You need to have basic understanding of business numbers including trend in expenses, profit, profit per customer, accounts receivable and many others. Knowing the basics of accounting can help you monitor the health of your business.

5. Keep receipts

You need to know how much you are spending on your business and keeping receipts should be considered a habit. If you are not mindful with your cash expenses, it is easy to get confused with business numbers. Receipts serve as your backup statement. Some business owners may even keep a notebook to log cash expenses they incur. You can also download accounting app which enables you to snap pictures of your receipts so you do not have to keep the paper copies.

3 Bookkeeper Mistakes To Avoid

While majority of bookkeeping tasks tends to be repetitive, it does not necessarily guarantee error-free results. When mistakes become habitual and the bookkeeper does not make a conscious effort to correct, you are about to face a more serious problem with your business.

You might have dealt with more complex transactions that require a bookkeeper’s expertise, but you only paying fees and penalties because the bookkeeper did not finish the task you assigned. As a business owner, you need to remain vigilant so you can spot the mistake before it worsens.

Business owners are expected to have basic knowledge of bookkeeping or accounting to know what is going on with the transactions. If you do not know how to manage your money, you are not far from going broke eventually. You do not have to acquire the skills of your bookkeeper or accountant to fully understand the information they dish out. As you learn the ropes, you will begin to gain a basic understanding of how bookkeeping works.

Bookkeeper Problems and the Solutions

1. Not addressing the task at hand: The problem starts when your bookkeeper is habitually taking essential tasks for granted. When the tasks are not being addressed, it can either be due to limited time or inefficiency. This can be avoided by checking with your accountant how much time they estimate should be spent on a weekly basis in order to finish the task. You will also have to provide the right resources to ensure that the job is completed successfully. Make sure your bookkeeper keeps you abreast of the unfinished tasks regularly so you will know which work has been prioritised and which ones need extra attention. Being aware of the progress of the task you assigned will help you determine if your bookkeeper needs additional hours or resources.

2. Not recording or archiving: Your bookkeeper is required to keep all your invoices and receipts for legal purposes. In theory, receipts must be filed and archived between 5 and 10 years. This enables you to support your case in case you need to sue or you are sued. If your bookkeeper keeps on forgetting about filing or archiving essential receipts, you need to create a document filing system. It will also be a great idea to go paperless so you can save office-space. Choose a bookkeeper that will give you access to the information you require especially for tax filing.

3. Not coordinating with your accountant: The task of your bookkeeper differs from the task of your accountant, but this does not mean they cannot work together. In fact, if 90% of bookkeeping tasks are repetitive, the bookkeeper should collaborate with your accountant when dealing with 10% of complex tasks.  When your bookkeeper is not coordinating with your accountant, it can result in various problems such as payroll and superannuation errors. Make sure a strong line of communication is enabled between your bookkeeper and accountant so both parties can complete tasks and prevent costly mistakes.

Five Questions To Ask Your Bookkeeper

A business owner has the right to obtain information from the bookkeeper to find out if the business is still doing well. Your business may be in the right direction, but it can be a different thing once you scratch beneath the surface. If a business owner fails to check the records from the bookkeeper, it may be too late before you find out that you are falling behind your tax payment schedule and do not have a steady cash flow. This is indeed very unfortunate for a business owner, but the main problem is due to the failure to monitor the activities of a bookkeeper. As a result, you become clueless as to why your business does not give you the outcome you are expecting.

1. Is it possible to reconstruct reports so they are easy to read and aligned to my needs?

When you are reading financial reports that you cannot easily interpret, it is as though your head is in the clouds. Business owners may take time to obtain basic bookkeeping techniques and when they do, bookkeepers are expected to renovate reports so that they are much easier to read. If you find it difficult to read reports, your bookkeeper should be open to revising them.

2. Are my bookkeeping packages tailored to the needs of my business?

Bookkeepers should be aware of the needs of your business. Just because they are providing bookkeeping services does not necessarily mean that one size fits all. It is also their obligation set up packages that perfectly fit the industry your business is involved in.

3. Can you think of a way to reduce business expenses?

Due to inefficiencies of bookkeeping services, a business owner may spend more than usual. If a bookkeeper does not see the underlying issues of a business, the financial aspect of your business will sure suffer. Your bookkeeper should provide you a range of plans to reduce cost.

4. Are you speaking to my accountant on a regular basis?

A bookkeeper is not the only person responsible for the business finances but the accountant as well. This is why a good bookkeeper should liaise to the accountant to confirm updates. When a bookkeeper communicates with the accountant at least twice a year, they will be able to capture changes that took place in your business. The accountant will also give guidance and advice if there are changes made to the system.

5. What processes and systems have you created for my business to run smoothly?

These days, business owners are keeping up with the changes in bookkeeping. With that said, a bookkeeper should be able to recommend a system that will promote efficiency in every business transaction made. The use of bookkeeping software can make a huge difference not only in terms of getting the job done but also in ensuring that accurate information is entered.

These questions are going to be helpful in setting your expectations as a business owner. You will be able to know if a bookkeeper can provide your needs and help you achieve your goals.

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.