Take some time and think about why you became an entrepreneur. Was it to be in control of your business, which you can’t get as an employee? So now that you are a small business owner, it is essential to take complete control of your business, which means knowing every aspect of your operation and cash. For that, you need books of accounts, which give you a clear picture of your sales, purchases, payments and receipts.
Bookkeeping is time-consuming. It could cost you way more than a professional bookkeeper’s fees if not done correctly. One wrong entry or wrong categorization can snowball into a significant tax penalty.
What Does a Professional Bookkeeper Do?
A professional bookkeeper creates a system to record every cash and bank transaction in the accounting software and file documentary evidence. The bookkeeper puts insights into the financial transactions to analyze trends and gaps.
In the short term, hiring a professional for a non-revenue-generating activity like bookkeeping might be an added expense. But a bookkeeper empowers small business owners with data that helps them make informed decisions.
Here are five reasons small business owners need the services of professional bookkeepers to stay ahead in business.
1. A Professional Bookkeeper Will Save You Time and Make You Productive
Each one of us has 24 hours a day. What differentiates a successful and an unsuccessful entrepreneur is how they spend these 24 hours. You can spend hours on DIY (do-it-yourself) bookkeeping, which may not be your strength and is prone to mistakes. Burning candles at both ends will wear you out and impact your business. A professional bookkeeper can maintain books in less time and more efficiently than you. –
This way, you can spend that DIY bookkeeping time developing business strategies like product development, marketing, handling supply chain, or simply relaxing. You can make your 24 hours more productive by leaving tasks like bookkeeping to professionals.
2. A Professional Bookkeeper Will Enhance Your Cash Flows And Avoid Late Payments
As a business owner, you are a part of a supply chain where you receive payments from your clients and make payments to your suppliers. A smooth and regular flow of payments from clients and suppliers gives the business the necessary liquidity. A professional bookkeeper facilitates this working capital flow by recording invoices and highlighting delays.
If you know beforehand about the delays and cash position of the business, you can act accordingly. For instance, Amy’s bookkeeper highlighted a 30-day delay in a client payment. She followed up with the client and secured the delayed payment.
3. Small Business Owners Can Make Informed Decisions and Identify Gaps
A professional bookkeeper brings insights into the numbers by reporting every transaction under the correct category. The books of accounts tell you,
- Spending and earnings patterns,
- Which segment has the most significant share,
- Is the business going over budget,
- Is cash drying up?
Such information on spending will help small business owners make informed decisions and control their spending. For instance, Amy’s bookkeeper alarmed her of the rising expenditure on marketing, which diverted her attention to optimizing marketing.
Bookkeeping goes beyond identifying spending trends to identify frauds or gaps. A professional bookkeeper even tracks petty cash expenses for day-to-day purchases, such as office supplies and bills. Moreover, the bookkeeper reconciles books of accounts with bank statements to identify gaps like unreported or incomplete transactions.
Identifying such gaps can help resolve them immediately before they snowball into a bigger amount. Ignoring reconciliation for extended periods could make the error harder to rectify.
4. A Professional Bookkeeper Smoothens Tax Payments and CRA Audit
When your books and documents are up to date, you are unlikely to trigger the Canada Revenue Agency (CRA) audit. But if you are unlucky and get selected in CRA’s random audits, you need not worry. A professional bookkeeper knows the CRA standards, the kind of documents and records the CRA requires, and how to present these documents in a pre-determined format.
Bookkeepers prepare books of accounts based on available documents and tag the documents to present them as supporting in a CRA audit or a lawsuit. The bookkeeper also helps the business owner stay on track with tax payments and claim deductions, which it has documentary evidence. A professional bookkeeper keeps original documents and creates more than one backup if the document is lost.
5. Complete and Accurate Books Help Small Business Owners Secure Loans and Equity Funding
A complete book of accounts helps small business owners track their cash flow and gain new debt or equity funding. Lenders and banks need assurance that they will get their returns, and accurate books of accounts tell lenders what kind of entity they are investing in.
These books also come in handy if you want to sell your business. Good financial records attract prospective buyers and even facilitate business valuation.
Contact KSSP Partners LLP in Markham for Your Bookkeeping Needs
A professional bookkeeper can help you give the right start to your business finances through well-organized records and insightful information. At KSSP Partners LLP, our bookkeepers can provide services to support your record-keeping function, whether you need partial or complete support. To learn more about how KSSP Partners LLP can provide you with bookkeeping expertise, contact us online or by telephone at 289-554-5997.