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.
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.
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.
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.
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.
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.
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
Being a small business owner is like walking on eggshells. You need to monitor your business closely to ensure its survival inspite of the tough competition among business industries. Unfortunately, there are instances when business owners lose track of the most important areas of business management. Your business is bound to fail if you take bookkeeping for granted. Aside from bad bookkeeping there are other reasons businesses fail. For instance, overlooking errors can take a toll on your record-keeping practices. If your data entries are incorrect, other areas of your business will also be affected.
While small expenses may not hurt your business, habitually ignoring the task of keeping receipts can have a huge impact on your business. Small expenses are still part and parcel of budgeting and every item must be tracked so you know where your money has been spent on.
There is nothing wrong with focusing on the most important task that keeps the show on the road. However, constantly ignoring menial tasks such as bookkeeping may also get you into trouble and this can be stressful. Before the business opens, make sure you have a bookkeeping system so you can effectively keep track of other areas of your business without allowing a backlog to build up. Devote a specific day for reviewing both major and minor tasks.
Bank reconciliation is essential in bookkeeping process and just like other important tasks, this is something you cannot afford to neglect. Business owners should make it a habit to compare bank statements with accounting records to find out if there are errors that need to be corrected. Paying attention to bank reconciliation also prevent fraudulent activities that might be hurting your business if left unchecked. Business owners who fail to conduct bank reconciliation in a timely manner can lose thousands and make business suffer eventually.
The idea of setting up a manual set of books for recording your business accounts can be a tiring process and be more prone to errors. Aside from the fact that the process is time-consuming, you need to pay close attention to details for you to make sure that the data you enter are correct. Every business should invest in a good bookkeeping software package that is not only easy to operate but can also minimise the amount of time you spend on the most important bookkeeping task. Business owners should make an effort to learn to operate basic bookkeeping software to gain deeper understanding of the information on the financial statement that a bookkeeper prepares.
Your personal bank account needs to be separated from your business bank account because you can get everything mixed up if you do not kick the habit. A business owner may be faced with a tax problem if this issue is not addressed.
It is easy to overlook minor problems when you are too focused on the major areas of your business. However, bookkeeping is also essential because without it, your business will in chaos.
Bookkeeping may not be a business owner’s forte, but you still need to learn the ropes because the most important aspect of your business is at stake. When your finances are left unchecked, you can join the growing number of failed businesses due to the lack of knowledge in bookkeeping. While bookkeepers and accountants are the only ones that can survive number crunching, you can still prevent bookkeeping mishaps, but gaining basic understanding of how the system works. If you are completely clueless about the bookkeeping system, your head will be in the clouds every time you are presented with a pile of financial statements because all of which will look and sound Greek to you.
If you want to get an overview of your business’ profit and loss, the income statement is going to be your guide. Your bookkeeper presents the losses, net profits and sales revenue for the current period. You will also get the details of your expenses from this statement. The net profit or net loss is taken from the difference between the income and the expenses. A net profit is always good news to business owners.
Cash Flow Statement
If you wish to find out about your asset’s movement over a period of time, the Cash Flow Statement will give you the details you need. The statement has several categories: financing, operating and investing activities. The financing activities have to do with generating or paying debt. The operating activities refer to the tasks your business performs on a regular basis including making a sale. The investing activities are the purchase and sale of assets and buying a new location is a perfect example.
The balance sheets are important to bookkeepers and business owners because this is where profit and loss are demonstrated. While the balance sheets do not necessarily reflect specific investments of business owners, it is a good way to determine the available money. The balance sheets can also be used for predicting which direction your business is heading. They are known as the building block of bookkeeping and accountants refer to this statement in creating or analysing data.
• Assets refer to the business-controlled items. Cash and machinery are examples.
• Liabilities are the items that a company owes. Loans are an example of liabilities.
• Equity is the capital left after the assets have been utilised for paying off liabilities.
Bookkeepers and accountants also refer to these financial statements to provide recommendations. This way, a business owner will have an idea whether the business is still profitable. Business owners may sit down with the bookkeeper to discuss these financial statements.
It’s not deliberate. You had good intentions. Time runs away from you because you are busy running a business. Before you know it, it’s BAS time AGAIN and you know you’re going to have to spend the weekend getting it done.
It’s what we call “The Bookkeeping Monster!”
Now’s the time to free up your valuable time to spend on your business and not in your business.
Oh and also spend more time with your partner and family!!!