So of course this is something we’d say, we’re a company founded on bookkeeping! However, we really believe this is true. Of course, everybody knows you need updated books for tax purposes, but why are they needed year around?
Let’s start with what a bookkeeper actually does. Every transaction that your business completes, needs to be logged. This means payments for services performed, expenses paid via check or debit card, loan payments made and more! Bookkeepers are tasked with keeping track of all of those transactions and allocating them correctly. This means we have to know what you spent your money on, what your customers paid you for, what amounts went to interest or principal on a loan, what money you put in or took out of your business, and more!
Now, you’re probably thinking that you can throw all of this into Quickbooks or another accounting software yourself and save yourself some money. While this may be true, the first question I always ask my clients is “Are you ACTUALLY going to do that? Or are you going to wait until year end when it’s overwhelming and rush through it?” And you can definitely do it at the end of the year, but wouldn’t it be nice to know monthly how much money you made, what you spent money on, what products are profitable, who owes you money, who you owe money, and how much is in your bank account (minus outstanding checks)?
So let’s dive into some of the details of bookkeeping and reporting. There are three financial statements that are important to your business.
- Income Statement (or Profit & Loss Statement): This is the one most people recognize. It lists all your money you took in from customers, and all your expenses and give you your “net income” or “net loss.”
- Balance Sheet: The balance sheet is a big picture view of your companies financial situation.This lists all of your assets (something of value or future value), liabilities (something owed to someone else), and equity. Equity a bit more confusing, but it is the total value of assets, minus the total value of liabilities. It includes net money that owners have paid into the company, retained earnings, and net income.
- Cash Flow Statement: The cash flow statement is separated into 3 headings: Cash Flow from operations, cash flow from investing, and cash flow from financing. This shows where exactly a business’s cash flow is going.
There are also other reports like Outstanding Accounts Receivable, Outstanding Accounts Payable, Outstanding Check Register, Bank Reconciliation Report, and more that a bookkeeper can produce!
Bookkeepers are also tasked with reconciling your bank account monthly. Think of this like balancing your checkbook. We make sure that a transaction didn’t get inputted into the accounting software incorrectly (like $1000 expenses instead of $100!), and that all transactions are in, and only in once!
Bookkeepers also can remit sales tax, pay bills, monitor customer payments, assist in creating a budget, run payroll and help make business decisions. Imagine taking these items off your plate, and knowing where your business is financially, and knowing at year end your taxes will be a breeze (and your accountant will love you!). Sound pretty good? We thought so.
Let’s get started on your books today!