10 most frequently asked questions about bookkeeping
Bookkeeping is an essential part of any business’s financial processes. From ensuring all record keeping is up to date to submitting important documents on designated tax deadlines, it can mean the difference between running a business smoothly and struggling with keeping up to date with the much-needed financial admin.
Understandably, when starting up a business, you might have several questions about bookkeeping, what it entails, why you would benefit from employing a professional bookkeeper and important considerations regarding the bookkeeping process.
In today’s blog, we take a look at 10 of the most frequently asked questions about bookkeeping and their answers.
Let’s start with certainly one of the first questions that would normally be asked.
1. What is bookkeeping?
The process of bookkeeping is centred on filing and keeping track of all financial transactions that a business undertakes. Typically, a bookkeeper would often create a summary of these activities to serve as a guide on a business’s financial health. Their tasks would also include compiling invoices, facilitating the payment of bills, getting tax returns ready for applicable deadlines, keeping a close eye on important financial indicators specific to a business, and in some cases also advising business owners on financial strategies.
2. What are the core responsibilities of a bookkeeper?
In a nutshell, bookkeepers are tasked with entering data as well as bank reconciliation – especially when it comes to small businesses.
Other core responsibilities of a bookkeeper include:
- Monthly reports;
- Following up on accounts (received and payable);
- Filing taxes;
- Putting together yearly reports for profits and losses as well as balance sheet reporting;
- Assisting business owners with their budgets and forecasting;
- Advising on the best software to use for specific business needs;
- Providing training for staff for bookkeeping best practices as well as bookkeeping software; and
- In some cases, acting as liaisons for accountant meetings, as well as act on behalf of their clients when it comes to engaging with tax authorities.
3. Is bookkeeping and accounting one and the same concept?
Although there might be some overlap in certain cases, it is important to know that accounts and bookkeepers might work together, but their expertise and skill sets are not exactly the same.
Bookkeepers take care of businesses’ daily financial recordings, performing quality checks as well.
On the other hand, accounting encompasses analysing, reporting and summarising the information that they receive from bookkeepers. Their reports provide snapshots of how businesses are performing financially, as well as which portion of tax they are liable for.
Therefore, both a bookkeeper and an accountant can help you reach financial goals – see them as a team in tandem with providing important data that informs key business financial decisions, as is the case with yearly financial reports and tax returns.
4. Do I need to have both an accountant and a bookkeeper?
Because of their diverse responsibilities, it is important that you consider both positions when it comes to keeping your business’s financials
Where a bookkeeper will ensure that your record-keeping stays up to date, your accountant uses the data they gather from the bookkeeper to measure your business’s performance and growth, and will provide insight into how you can maintain a good trajectory.
5. Should I only consider local bookkeepers to work with my business?
Thanks to technology and many bookkeeping processes being online-based, several bookkeepers can provide services virtually – which is definitely a bonus if you want only the best professionals working with your team and do not mind working with service providers located in proximity of your business.
That being said, for some companies, having someone close enough to pop in for face-to-face meetings might be preferable.
So, choose the arrangement that works best for your business.
6. How will having a bookkeeper benefit my business?
Over and above minimising time constraints, your bookkeeper can help ensure that your business is compliant with all legislation. Your bookkeeper will keep abreast of any changes in laws, including those pertaining to payroll and taxes.
A bookkeeper can additionally provide a bird’s eye view of your company’s financial health and advise whether you need to refrain from certain business actions that could put your business at financial risk.
Therefore, when you partner with the right bookkeeper, you get that support for your business that stretches further than just logging data – you truly get someone in your corner that can help answer the questions you have about various financial processes for your business.
7. Are bookkeepers expensive?
The big consideration when it comes to hiring a bookkeeper is, of course, the cost of his or her services. That being said, many bookkeepers offer flexibility in the packages that they offer – therefore, if you only need their services for a couple of hours a week, you can discuss and work out a package that best works for your budget.
Discuss upfront what you are able to afford, and then decide on what would be feasible.
8. How do I choose the right bookkeeper?
One of the first indicators of seeking out the right accountant for your business, is to look for someone with experience – especially in the area of services that relate to your business. You need someone to understand the typical requirements for bookkeeping for your industry needs, so carefully review prospective bookkeepers that would suit your business.
Some key skills that you need to look out for, include the technology and software that they typically use for their bookkeeping tasks, as well as their attention to detail, their experience with credit and cash flow management, and their ability to do tax preparation and planning.
9. Are all bookkeepers BAS agents?
To become a verified BAS (Business Activity Statement) agent, a bookkeeper needs to have specific qualifications stipulated by the Tax Agent Services Regulations 2009 (TASR).
Therefore, if you want to employ a bookkeeper that can provide BAS agent services (which include, among others, Single Touch Payroll (STP) processing, EOFY reporting, superannuation and taxable payment reports), enquire whether they are registered upfront.
10. Why do I need a bookkeeper for my small business?
As you scale your business, you need every available moment to work on your growth and strategies to achieve your goals. However, when you become bogged down with day-to-day admin, you might end up spending more time trying to figure out financial processes and software – adding extra stress to your schedule that is likely overloaded.
When you employ an external bookkeeper, there is less stress on your already constrained schedule, and you can rely on a professional to handle those key financial or recording processes that you often do not have the time for.
Also, because most bookkeepers can provide service packages aligned with the budgets and needs of their clients, there is more than enough room to create a solution that will work for your company.
Have more questions about bookkeeping?
At Just The Right Balance, we can provide a variety of business solutions for your various needs. Contact us today at (03) 8592 8870 and let’s set up a consultation meeting –we would love to hear from you!