Bookkeeping is important because having a seamless system of organization in place for recording all of the inflows and outflows of capital in a business is essential to keeping that business successful.
This system needs to be efficient in keeping a record of all transactions, when they happened, and for what reason.
Bookkeeping is also important for certain accounting functions. For example, good bookkeeping helps prepare for tax season, get external funding, in decision-making, with auditing, and much more.
When tax season arrives, a business with an efficient bookkeeping process will usually be less stressed and pay fewer taxes. This is because business owners won’t need to scramble to look for old receipts that the IRS needs to prove their previous expenses.
Also, if a business needs a small loan, banks will want to see its financial statements to know whether they should approve one. Having your books in order will ensure the bank managers that you are an organized professional and someone they can trust with their money.
Lastly, bookkeeping allows managers of the business sufficient data to discern where resources should or should not be allocated. Budgeting helps managers make informed decisions so that funds are distributed to the correct places with the highest return on investment.
Can bookkeeping be done remotely?
Yes, it can, and it has become an increasingly popular choice to outsource your bookkeeping needs online. Deciding to go with a remote bookkeeper typically costs less and you have a better chance of finding a bookkeeper with specific knowledge of your business.
Can I do my own bookkeeping?
Yes, especially if your business is small and has few transactions. The dilemma is do you have the extra time to complete your books accurately and regularly. You must weigh the value of your time as a business owner with the cost of outsourcing your bookkeeping.
Does Shopify do bookkeeping?
Shopify is an online e-commerce platform that is used to build online stores to sell products. They do not offer the service of doing your bookkeeping on your behalf. Whether you are making five figures or just a couple hundred dollars a month, it is important to keep track of all your business’s finances, especially come tax time.
Once you decided to begin your business and created your Shopify website, you may not have even considered the bookkeeping aspect. Before long, you probably realized the bookkeeping process for Shopify users can be complicated. You need to track your sales, most likely from multiple payment processors (like PayPal and Stripe), along with any returns, chargebacks, fees, etc. You should also always be aware of your inventory levels; you do not want to run out and not be able to deliver to your customer.
The good news is there are bookkeeping software options available that can connect with your Shopify account, such as QuickBooks Online and Xero. Even with these automated programs, there are still steps you need to take to make sure your books are accurate, including reconciliation. Depending on your annual sales, it might be best to outsource the task to a bookkeeping service like Remote Books Online.
How do bookkeeping services work?
Getting started with a bookkeeping service is usually a pretty painless process. The hard part is the research you have to do to find a bookkeeper who is knowledgeable about your particular industry and that can provide client reviews showing they are reliable, experienced, and responsive to all communications. Once you decide on which bookkeeping service you want to go with, they will most likely ask you questions about your business’s accounts, such as how many you have and the volume of transactions each account sees. Once they understand your specific needs, they can get started.
If you use accounting software already, you will have to get them access to it. If you do not use anything yet, they can set up an account on your behalf. Utilizing accounting software automates some of the bookkeeping process, saving you money. You will also need to send your bookkeeper any banking statements, such as checking account or credit card statements and loan documents, so your accounts can be reconciled regularly. Your bookkeeper will use all the information you provide to create your financial statements, typically the income statement (aka profit and loss), the balance sheet, and the cash flow statement.
Outsourcing your bookkeeping needs to a bookkeeping service allows you to have the confidence your financial records are up-to-date and accurate, without you having to complete the meticulous process yourself.
How do I start my own bookkeeping business from home?
Starting your own bookkeeping business from home is fairly straightforward. The first, step is you have to have some type of business plan. This plan should include your goals for your new business, what services you will provide, and who your target market would be. Having a solid plan is key to creating a solid foundation for your business.
Once you have a plan, it is time to come up with a business name. Once you decide, register that name. Also, open a business bank account under that name to separate your business and personal finances, as you know is quite important to the bookkeeping process.
What bookkeeping software are you going to utilize? Once you decide, it is highly recommended to become a certified user of that software.
To offer your services, you have to have an idea of what you are going to charge for those services. Come up with the pricing for each service and maybe think about combining certain services for a package price.
You have a plan, a name, your set up and certified with your software choice, you have the pricing outlined, and now it is time to market yourself! Create a website, pay for advertising, use word of mouth, or whatever you decided in your business plan. It does not matter how you choose to get your name out there, just that you are actively working at attracting customers.
How do you do bookkeeping?
Bookkeeping is the process of tracking all of your business’s finances and generating financial statements to illustrate how your business is performing. A bookkeeper will start with gathering all the financial transactions for a specific period (daily, biweekly, weekly, etc.) and organize those transactions into journals. They will include the amount of the transaction, the date it occurred, and a brief description of what it was for. If the bookkeeper is following the double-entry method, they will enter each transaction twice, to represent a credit and a debit.
Once all of the transactions are organized and totaled, they will input the information into the general ledger and use it to create your financial statements. Bookkeepers will typically produce an income statement (also known as a profit and loss statement), a balance sheet, and a cash-flow statement. Each of these statements provides information on how a business is performing and where there might be areas to improve. Investors and Lenders will also use these statements to learn more about a business’s financial situation.
Bookkeeping is a lot of data entry and organizing, but it is important to know all the different methods and systems and to understand where each type of transaction should be recorded. Without proper bookkeeping knowledge, your bookkeeping data could be incorrect, providing you with bad information in your financial statements.
How does accounting differ from bookkeeping?
Bookkeeping is part of the accounting process as a whole, but there is a big difference between bookkeeping tasks and typical accounting tasks. Bookkeeping is the process of gathering, classifying, and recording all a business’s financial transactions. A bookkeeper is more like a data-entry position, but they must have the knowledge necessary to handle the books and be meticulous when it comes to recording the information. Your books need to be accurate and up to date to be of any use.
An accountant will then take the information the bookkeeper prepared and analyze and interpret it. An accountant uses their knowledge and expertise to offer their view on how your business is performing and what can be done to improve that performance. An accountant will also take care of all your tax needs using the information from the bookkeeper come tax season.
Having both a bookkeeper and an accountant is important and ensures the whole accounting process is being handled in the best way possible. An accountant has more education and certifications than a bookkeeper, so they tend to cost much more to hire. Hiring a bookkeeper for the bookkeeping and an accountant for the rest of the accounting process ensures your money is being well spent.
How much are bookkeeping services?
The amount you will have to pay to outsource your bookkeeping needs to a professional will depend on numerous factors. On average, a person can expect to pay $500-$2,500 per month for an hourly bookkeeper. You also can look for a bookkeeper or bookkeeping firm that offers the option of a flat monthly rate. Some firms offer services as low as $95/month, like Remote Books Online.
If your business is on the smaller side with only one or two accounts, you will pay a much lower amount. If you have multiple payment providers you go through (like PayPal and Stripe) and multiple bank accounts and credit cards, you can expect to pay more. The number of accounts you have and the number of transactions those accounts see every month play a big factor in how much you will be paying for bookkeeping services.
Another thing to keep in mind is whether or not your business needs extra services. If you know you will need services such as sending and tracking invoices or catch-up work on books that have fallen behind, you will have to inquire what those services will cost. The more work there is to do, the more it will cost to have it all done.
How much do CPAs charge for bookkeeping?
It is not uncommon for a business owner to accidentally let their books fall behind, there is a lot to juggle as a business owner! The one thing that you do not want to find yourself doing is paying a Certified Public Accountant, or any accountant really, to do your bookkeeping or catch-up work come tax time. An accountant will typically still charge you their normal rate to complete your bookkeeping. According to the Bureau of Labor Statistics, on average a bookkeeper makes $22 per hour, on the other hand, an accountant makes $37 per hour on average, but that number increases drastically based on certain qualifications, including earning the title of “CPA”.
An accountant goes through much more education and training than a bookkeeper. This is simply because bookkeeping is more of a data-entry type profession (although it does require specific accounting knowledge), and an accountant is trained to give you financial advice and guidance, along with filing your taxes and getting you all the deductions and credits you qualify for. So, although a CPA is capable of completing your bookkeeping on your behalf, your money would be spent much more wisely if you hire a bookkeeper for the bookkeeping and an accountant for your taxes and financial advice.
How much does online bookkeeping cost?
Many bookkeepers and bookkeeping services allow you to select which services your business needs, making the price for online bookkeeping vary. Depending on the number of transactions and accounts your business has, outsourcing your bookkeeping via the internet can cost anywhere from $95 per month to thousands of dollars per month.