As a small business owner, having accurate and updated information on your finances is crucial in tracking the performance of your business. It also helps you make the best decisions to grow your business and protect yourself in case of an audit.
The truth is running a small business is not easy, and having to keep track of your finances makes it even harder, almost impossible. This is where a professional bookkeeper for small businesses comes in. Let’s take a look at who a professional bookkeeper is and the benefits of professional bookkeeping while making sure that all your business records are accurately documented.
What Does a Professional Bookkeeper do?
A professional bookkeeper is an individual whose duty is to monitor, analyze and document all financial activities of a business. They are in charge of small business accounting and strictly monitor a business’s cash inflow and outflow, including:
- Sales
- Purchases
- Dividend payments, and
- Debt repayment.
A professional bookkeeper is also responsible for identifying financial trends as they pertain to your business and analyzing how these trends can be utilized to promote growth. Additionally, they provide accurate and up-to-date accounting records, which can be analyzed to determine the financial state of your business.
Benefits of Hiring a Professional Bookkeeper
The benefits of hiring a professional bookkeeper for small businesses can not be overemphasized. They include:
Increased Productivity
With a professional in place to handle all your bookkeeping activities and other financial tasks, you and your staff can focus all your energies on other important aspects of the business. This can significantly increase your overall productivity as a small business owner.
Keeping Detailed and Updated Records
A professional bookkeeper would ensure your financial accounts are updated daily, weekly or bi-monthly, depending on the cash inflow and outflow frequency. With all your important financial information in one place, it will be easy to track every transaction and analyze every detail in the event you want to take a business loan, a financial audit, or sell your business.
Furthermore, a bookkeeping professional will ensure you do not miss any pending payments or financial commitments by putting measures in place to help you keep an eye on your invoices. These measures include:
- Sending out reminders if a bill is late
- Making phone calls to that effect, or
- Issuing a late fee penalty.
Drawing up an Effective Budget
A practical and effective budget is key to running a successful small business. A professional bookkeeper considers your potential earnings and expenses and uses this information to draft a budget that will effectively allocate funds to every aspect of your business.
A well-drafted budget ensures that all your expenditures are strictly tracked, thus preventing overspending that could lead to bankruptcy. It also ensures the smooth running of your business as no department will be underfunded.
Establishing a Good Rapport with Banks and Investors
In addition to this, creditors and investors require valid and authentic information about the financial position and value of your business before they give out loans or financial assistance. What better way to impress them than by having a well-organized financial record that shows that you are a credible and committed business owner?
With the help of a professional bookkeeper, you can show potential creditors and investors that you are knowledgeable about all aspects of your business. This will make them feel safer investing or lending financial assistance to you.
Preparing for Audits
A bookkeeper has the professional knowledge needed to help prepare your business for a financial audit. They ensure that all financial transactions are accurately recorded and up to date.
Furthermore, with the knowledge and information at their disposal, bookkeeping professionals ensure that you are compliant with all financial rules guiding businesses, especially small businesses.
Making Better Financial Decisions
A professional bookkeeper would utilize the knowledge and experience at their disposal to help you grow your business and make better decisions regarding your finances and earnings. By studying spending patterns and sales trends, they will help you to analyze your business income and expenses, as well as your overall financial situation.
Also, they can help you spot good financial seasons to make profitable investments and different ways through which you can create revenue when business is slow. This would ultimately help you save and make more money.
Conclusion
Professional bookkeepers are essential assets to small business accounting and small businesses in general. With accurate bookkeeping, you have practical information on the financial state of your business, such as your profits or losses and the best marketing strategies to utilize for growth.
Equipped with this information, you, as a small business owner, would be able to make informed business decisions to take your small business to the next level.