Hiring a bookkeeper can help your business save money. Here’s how!
The job of a bookkeeper sounds a little simpler than it is. A bookkeeper records and tracks every single financial transaction made by your business on a day-to-day basis.
Bought some office supplies? Paid a utility bill? Received a bank loan or investment? It all gets recorded by your bookkeeper in a general ledger.
Through the analysis of this general ledger, you can monitor and understand the cash flow of your business. You can see where money is spent, and where it is received.
A bookkeeper helps you keep an eye on the finer details and see exactly where you could be spending too much money or even where you qualify for a tax deduction.
Ultimately, the bookkeeper’s job can be a tediously complex one. It involves the reading and conversion of substantial amounts of data into a more digestible format. Doing this allows accountants to analyse the financial data and advise on business decisions that can encourage growth or help your small business to survive.
So, what does a Bookkeeper’s job entail?
Bookkeepers are responsible for recording financial records so that accountants can create financial statements. Put simply, a financial statement is a written record detailing the financial behaviours of a business.
These financial behaviours have to be recorded in an easily understandable manner, so that financial analysis can determine methods for the stabilisation or growth of a business.
Generally, there are four types of financial statements produced by an accountant. These are:
- A balance sheet: a financial statement of a single point of time detailing a business’ assets, liabilities and the owner’s equity. The total assets of the business should be equal to the sum of the total liabilities and the owner’s equity.
- A statement of equity: this statement reports on the changes in the value of equity (assets with attached debts or liabilities). Equity is equal to the value of assets minus the liabilities attached to those assets.
- A cash flow statement: cash flow statements record the activity of cash in a given period of time. It details both investing and financing activities and can be used to understand how well your business generates cash.
- An income statement: income statements are also known as profit and loss (P&L) reports, a statement of comprehensive income or a statement of revenue and expense. Three different names for something fairly simple! Income statements detail the income, expenses and consequential profit for a stated period.
These four financial statements are the backbone for an accountant’s daily practice. Through these financial statements, accountants can give you a comprehensive and detailed account of the paths money and assets flow through.
Without the recording of financial transactions, accountants wouldn’t be able to create financial statements. Without those financial statements, you would have no idea how your business is running! You could end up wasting money investing when you don’t need to or buying supplies when you still have stock leftover.
Where can a bookkeeper save you money?
This one is pretty simple. A bookkeeper is an investment. They might cost you money upfront but they will help you find ways to save money in the long-run.
They’ll help you keep an eye on invoices (through accounts receivable) so you know where and when you should have money coming in.
They can help you see where you qualify for a tax deduction.
They keep their eye out for errors in bank statements that don’t match up with their records.
You’ll probably have to spend money on cloud accounting software anyway, so why not hire someone qualified to use accounting software who understands what it all means?
By hiring a bookkeeper, you would also save yourself time that can instead be directed towards helping your business grow. Time you would spend bookkeeping could be time spent attracting new customers and solidifying leads. This ultimately translates into real money. Every hour you spend recording a transaction could be an hour spent making sales.