So, your company is growing and your business is expanding faster than you planned. Way to go! By now, you’ve probably figured out that success brings its own set of problems.
Consider the widening gap between your cash on hand and the amount of cash you’ll need to float your incoming purchase orders. Even if you aren’t experiencing a cash crunch, the recent influx of income means keeping track of all your accounts has become a full-time job in itself. Mismanaging growth can be just as harmful to the health of your business as a shrinking bottom line. Perhaps you’ve considered an online bookkeeping service but just really aren’t sure how to go about signing up for one or how to figure out which one will be best for you.
You’d be surprised at the number of companies—both up-and-coming and well-established—that use online bookkeeping services to free up time to focus on the business itself. There are also a lot of secondary benefits that come from these types of services that you may not have considered.
Let’s walk you through what you need to know about online bookkeeping services and what they can do for your company.
How is bookkeeping different from accounting?
Before you drop a bunch of money on bookkeeping services, let’s go over what bookkeeping is.
Bookkeeping, simply put, is the day-to-day process of tracking money in and out of your company. It differs from accounting in that the responsibilities of a bookkeeper are narrower in scope. You wouldn’t expect a bookkeeper to structure accounts to maximize tax savings, for example.
Accurate bookkeeping is crucial to most important business decisions, which is also why a lot of business owners will leave it to the professionals.
Bookkeepers categorize revenue generated, as well as company expenses. Both will play an important role in helping you determine how much your company is making and how your money is being spent.
What will a bookkeeper do for you?
First, you should know that there are tons of different bookkeepers and their precise methods can vary from one firm to the next, but the function of a bookkeeper usually stays the same.
Tracking of Everyday Finances
These individuals maintain a record of your company’s day-to-day transactions.
They collect records of purchases, payments, receipts, and sales. Whether you’re dealing with credit cards or cash money, the bookkeeper will be responsible for keeping track of every single transaction.
They can also help to ensure that your company’s bills and payroll are paid on time each and every week, every other week, or every month.
Maintaining a Daybook
It will be the bookkeeper’s responsibility to maintain your company’s daybook. Basically, a daybook is just a journal that details your company’s transactions your company on any given day.
In general, the activities will be laid out in a chronological order. There are several different types of daybooks, including the sales daybook, cash daybook, and the general journal daybook. With the right daybooks, you’ll always know what your company sold, how much revenue it generated, and what expenses you paid.
Finding the Right Bookkeeping Service for Your Business
Before you go out and start seeking out just any bookkeeping service, you really need to sit down and consider what type of services your company needs.
For instance, there are a lot of bookkeeping companies that offer payroll assistance, tax assistance, accounts payable, and accounts receivable. However, there are some companies that are capable of handling your whole accounting department.
Some bookkeeping services only offer cash-based accounting which won’t do you much good is your using an accrual-based method of accounting like most companies do. Also consider where they are located. A US-based company might be a better fit if your company does its business in the US. A Canadian bookkeeping service is probably going to be more familiar with the ins and outs of how to track taxes that are country or province specific. If you need 1099s at the end of the year, a US-based company might be the best bet.
Online bookkeeping services vs. offline bookkeeping help
Something to consider here is whether you want to hire an in-person bookkeeper that will work in your office or whether you want to use an online bookkeeping service. Online bookkeeping means transparency. You can see all of your records at any time. If you opt to go with online accounting software, all of your financial data is at your fingertips pretty much no matter where you are.
While it might be convenient to have a physical bookkeeper on hand, good online bookkeeping services have friendly, knowledgeable representatives that are available and easy to reach if something goes wrong.
Keeping everything online also means that your bookkeeper isn’t constantly neck-deep in papers. All of the information is well-organized in one place, which makes it easy to create reports and makes tax season a breeze.
Online bookkeeping also tends to be cheaper. You are only paying for the services you need instead of keeping on a full-time employee. You also don’t have to pay to put them through the entire new-hire process, which can be rather expensive, with all the requirements needed to ensure companies are hiring the proper people. The expense continues to grow, as you hire more people.
Honestly, most modern businesses would do better with a good online bookkeeper that can keep up with steady growth.