Owning a small business is equally stressful and rewarding. Still, many owners struggle to find time to do everything they need, including daily administration, employee management, payroll, networking, marketing, and crisis management.
In this blog post, we’ll explore how bookkeepers can take on business owners’ administrative burdens by preparing reports, managing finances, using online tools and software, and more.
What does a bookkeeper do?
A bookkeeper’s job is to maintain accurate records of all finances associated with your business. A good bookkeeper will take that one step further as an advisor who helps you make better business decisions to drive your business. It’s in their best interest to make your business a booming success because if your business grows, their business grows.
In short, bookkeepers:
- Correctly record your business income, expenses, and transactions
- Reconcile your accounts and financial records every month
- Keep your business compliant with provincial and federal financial & business regulations
Bookkeepers also provide you with standard reports such as:
- Income statement (or a Profit and Loss Statement), which outlines your business’s income vs. expenditures throughout a specific period (usually by month, quarter, or fiscal year).
- Balance sheet, which is a snapshot of your current financial positions. In its simplest form, the statement outlines your current and non-current assets (cash, accounts receivable, inventory, etc.) and liabilities (accounts payable, debt, unearned revenue, etc.)
A good bookkeeper has a good sense of business
There are many perspectives on how to manage the key responsibilities we listed above and the difference in results can be quite drastic.
Bookkeepers with varying degrees of business sense will manage your books with different focuses and levels of detail.
There are 3 primary areas of focus:
1. Amount of detail
Too much detail can cause inefficiency, redundancy, and even confusion. Too little detail can create risk, liabilities, and misleading information.
There is a unique balance between these 2 scenarios, specifically where each piece of data being recorded has its purpose and is aligned with the goals and metrics of the business.
2. Book structure
How your books are structured (including the accounting file setup and general ledger design) affects the accounting administration and the value (evaluation) of your business and exit strategy.
Your net worth, as displayed on your balance sheet, can vary depending on how your general ledger is designed. Your decision on how the accounting is setup for projects, multiple locations, different departments and even different product lines or services should be aligned closed to your exit strategy and evaluation plans.
3. Custom reporting
The accounting industry is often said to provide little value to management because we’re reporting history not forecasting the future (which is quite true with standard reports). However, you can’t manage what you don’t measure.
The key to successful reporting is to enable decision making, which means that each report should be able to answer specific questions that are driving management decisions.
To create reports that enable smart decision making, your bookkeeper needs to know and understand:
>What your business goals and metrics are
>What type of decisions do you need to make
>What the deciding factors you must consider are
Then, your bookkeeper should be able to design reports that give you a driving dashboard to grow your business.
You wouldn’t drive a car without the dashboard that tells you how much gas you have, when you need service, and how fast you’re driving. So, why would you drive your business that way?
A small business bookkeeper’s 7 primary duties
There aren’t enough hours in the day to grow your business, run your business, serve your customers, supervise your employees, and manage a mountain of paperwork. The tasks a bookkeeper can take off your plate can help alleviate the administrative and uncertainty strain you might feel as a business owner.
Here is a list of duties a good bookkeeper can do to help your small business:
1. Manage your accounts’ day-to-day
Bookkeepers will keep track of all transactions coming in and going out of your business accounts. Typically, they’ll manage your accounts using software like QuickBooks Desktop or Sage50.
However, modern bookkeepers will use online software like QuickBooks Online or Xero. Using an online portal cuts down on data entry time and gives you an access point to see your books in real-time. You can also have multiple team members working at the same time without the costly headaches of traditional servers.
2. Reconcile your accounts regularly (at least monthly)
Account reconciliation is a fancy term for balancing your books. Your bookkeeper will compare various records (e.g., your income vs. your deposits or expenses vs. payments) to ensure that money coming and going balances out.
Reconciliation is one way bookkeepers keep your business records accurate and up-to-date. By keeping their finger on your business’s financial pulse, your bookkeeper can also flag any inconsistencies between your books and accounts and solve the problems quickly.
3. Prepare monthly reports
A significant part of bookkeeping (other than records management, of course) is reporting. Your bookkeeper will send you monthly reports with all your prepared financial statements and various analyses to help you gauge the state of your finances (and the health of your small business).
If you have a modern bookkeeper (i.e., one using online software for record-keeping), it’s likely that they’ll set up a custom dashboard in your accounting portal for you to review at any time. They’ll highlight the most important facts and figures for you, so you can understand exactly what’s happening with your finances without getting bogged down in spreadsheets.
4. Keep your business compliant
Government regulations can cause major headaches for any business because there’s a lot to keep track of (and they don’t exactly make it easy for you to understand). Trust your bookkeepers to keep you compliant. They’re experts at navigating complex regulations like tracking, filing, and paying government remittances on payroll or sales tax.
The last thing you need is a red-stamped envelope from the CRA full of penalties. It’s your bookkeeper’s job to ensure that doesn’t happen.
5. Maintain records of your cash balance
When you trust your bookkeeper with the keys to your finances, they will give you a crystal-clear picture of your business’s cash balance. With this snapshot, your bookkeeper can forecast the cash expected to come in and go out, which means they can flag any expected shortages.
When your bookkeeper takes a proactive approach, you can problem-solve in advance and make arrangements to counteract cash shortages.
6. Manage accounts receivable (create and issue invoices)
If you have a business (like a law firm or general contracting) that relies on invoices to collect money from customers or clients, you can outsource the creation and delivery of invoices to your bookkeeping service. This way, you focus your time on running and growing your business and serving your client base, while your bookkeeper worries about collecting your accounts receivable.
7. Process payroll
Your business can’t run without employees (that includes you), and it’s crucial they’re paid (and paid on time). Leave it to your bookkeeper to process and reconcile your payroll to ensure:
>Your wages are paid accurately and on-time,
>Appropriate taxes and benefits are deducted,
>And vacation and over-time are paid or banked.
Additionally, your bookkeeper will also ensure that you get paid. If you’re not sure how much you should pay yourself as a small business owner, your bookkeeper will happily advise.
Cut yourself some slack and let your bookkeeper support you
As we said before, you don’t have time to do it all. You also don’t have to do it all. You can take control of your work-life balance by offloading some of your more tedious administrative tasks.
When you entrust a bookkeeper to manage your finances, you don’t need to worry about making financial mistakes that might negatively affect your business or employees. You can redirect your focus on your customers and your business growth goals.
Need more information about how bookkeeping services can help your business? Learn more on our bookkeeping page.