What are the strategies in bookkeeping?
When you are running a business, it seems like the bills are always piling up and making it hard to maximize profitability. If you want to have extra cash on hand after the expenses are paid, then you need to be looking at options to reduce your spending and increase your income at the same time. Today, we are sharing tips that you can use to reduce bookkeeping costs, which will help your profitability goals.
In operating an enterprise, you must record all your transactions for effective operations as well as existence. Regardless of whether your books are on paper or being managed by means of a software program, or you seek the services of an accounts outsourcing company, it is essential that the technique serves the purpose well and is readily available when required.
Without appropriate bookkeeping strategies, your company is exceptionally vulnerable to legal difficulties and cash flow problems. Bookkeeping is performed to keep track of your business, and for easy tax processing, whenever required. Your business books are important components of your business since, without them, your numbers could get twisted in cluttered sheets.
The “Old School” Method: Accounting Firms
Hiring an accounting firm or a CPA to help you with business finances is the oldest and most traditional accounting solution out there. These guys offer great benefits over the DIY self-method—like the fact that you’ll barely have to lift a finger and you’ll also be privy to expert insight (pending they’re qualifications of course).
Of course, there are also some drawbacks such as higher fees and slow turnaround times. Many of these places charge high hourly fees for consultations which can make it difficult to set a steady course for your monthly budget, not to mention their services can often be “behind the times” in terms of integrating technology.
The “Semi-Traditional” Method: DIY Software
DIY software is an increasingly popular option, giving business owners a great platform to go its lone wolf. Companies like Quickbooks provide robust software that can help facilitate advanced accounting functions. Not only are many of these types of tools extremely helpful, but they can also save money when it comes to hiring a traditional accountant. Although this is a great option for accountants, it may not be optimal for business owners.
Having a good piece of software doesn’t make you knowledgeable about the Australian tax code, regulations or requirements. Business owners can miss out on deductions, disqualify themselves as a compliant business, and face ATO auditing through improper tax filing. Having taken an accounting class in college is no substitute for the wealth of knowledge an accountant brings to the table.
Even if you feel confident enough in your accounting, there is still the consideration of time. Anyone who has started a business knows that they will soon find themselves being pulled in lots of different directions. Bookkeeping is a time-consuming task—business owners need to ask if reconciling transactions is the best use of their time.
The “Fully Automated” Method: Software as a Service
The third and final option is online bookkeeping service. This hybrid option provides the best of both worlds, giving users access to customized software as well as a dedicated bookkeeper. Instead of having to reconcile your transactions, a bookkeeper (accountant) will do it for you. Some of these services, offer unlimited consultation at no hourly cost. Instead, they prefer the more modern “Netflix” model of a monthly flat-rate fee. This gives business owners comfort, knowing they can reach out for advice without fear of incurring extra costs and make more accurate monthly budget predictions.
This option offers all of the good (and more) of the aforementioned methods without the bad. The hybrid mixture of cloud-based tech combined with a human element of a bookkeeper takes away the headache of navigating tax law and entering data—while still providing a high touch high tech solution.
Accounting Stratagems for Small Businesses
Design your monthly budget prudently. As elementary and most crucial advice, planning your finances can help you save a lot of cash. Tracing your periodic budget is ideal for allotting your financial plan efficiently. Write down all chief specifics for your financial happenings. Once you have documented all of your expenditures, you can compare it with your income. Examine your budget and eradicate unnecessary financial costs that won’t gain you anything for the company.
Owning the right Bookkeeping Software
To execute effective bookkeeping strategy, the first and foremost thing is the software used for bookkeeping services. Choosing the right accounting software doesn’t have to be scary the way it sounds. Every bookkeeping software purpose is to make a small business owner’s life easier. Every person should select the software which not only helps the process automate and but optimize the financial processes. As a bookkeeper, time is very precious, and one should select a tool which can help in saving time, more efficiently and easier to manage all clients in one place. We should look at the skill, growth, use, technical ability & features. In crux, it will give us under-mentioned results-
- Can manage multiple businesses with a single login
- Should suit your requirement and nobody else
- Should have a time-saving feature such as bank feed
- Smart, Quick and easy to get started
- Cloud-based access (i.e. anywhere)
- Easy to share the MIS reports
Take professional bits of help to file the Tax Return.
Mostly it has been observed that individuals or corporations file the tax returns on their own. But when we have investment income, a first time home buyer, own a rental property or own a small business in that scenario, one should visit the tax professionals. Professionals shall always make sure and help in terms you are getting all credits & deductions one deserve.
At the same time as a business owner, you are supposed to give more attention to the business rather than putting an effort in crunching the numbers. Account Consultant can help any corporate in resolving day to day issues.
Outsourcing the account doesn’t mean entirely “hands-off”
Though the account has been outsourced to the bookkeeper that does not mean the owner is free from the responsibility. Occasionally which means may be monthly or quarterly one should visit the accounts. As an owner, one should know in terms of the number where the company stands. The basic number includes trends in overall business profit/loss, expenses, trade receivables, payables, profit breakups per customer. An accountant can also give direction or indication to the owner where his company stands on a particular day.
Document Bookkeeping Process
The decision of outsourcing bookkeeping services partially or a whole of its processes can be taken only after a review of the organization’s business needs. Before deciding to outsource the process (i.e. bookkeeping), the company should decide control mechanisms. Control of processes is essential so that an organization does have in-house check and balance of the process in place.
Expense Receipts Record
Corporate should keep expenses receipts reason being the same will help for deductions while computing tax return. At the same time, it’s important to have an expense receipt to track the spending record. Gathering the expenses receipts and keeping them in safe custody is an important part of filing taxes. Corporate must have documents like sales bills, receipts, deposit slips.
The expenses receipts matter a lot in bookkeeping, and for that Effective Bookkeeping, Services Strategy is important for your financial services.
Always keep a tap on Receivables.
A good account receivable ensures timely invoice raising and collection to ensure an effective cash flow system in a company. In other words, it’s very important to keep track of each invoice and its status in terms of payments, whether paid fully or partly.
Receivers are not limited to receive payment, at the same time finding the reason for a payment not released against any invoice.
Always work in a team along with the bookkeeper.
Every entrepreneur should have a good relationship with accounts like any other business partner. An Owner should not visit the bookkeeper only at the time of closing or at the time of tax filing only. Hire a Bookkeeper can give insights which can become a game-changer for any corporation.
Effective Business Strategies for Reducing Bookkeeping Costs
Organize Your Finances
Staying organized is the foundation for financial success. If your receipts are scattered, and you can’t keep up with the payments that are due, then you will be wasting time trying to find the right paperwork. Plus, missed payments result in late fees and interest charges, which increase the overall amount that is paid each month. There’s no question that good organization can save you both time and money.
When your bookkeeper is working on your transactions and financial reports, they can only work on the documents that are provided. It doesn’t matter if you have an in-house bookkeeper or outsourced bookkeeping services… you are paying more than necessary for their time if they are spending hours sorting through a mess of paperwork.
The key is to implement a system right now so that the bookkeeper is provided with all of the necessary information for each transaction. For example, if you buy something and receive a receipt, take 10 seconds to make a note on the receipt to document the purpose of the purchase. Invoices that are paid online should be noted with the date of payment and the method that was used for payment.
If you are looking for ways to cut bookkeeping costs, then talk to your bookkeeper about the way the information should be presented. As a financial expert, your bookkeeper will offer suggestions and advice that will streamline the workflow and allow the bookkeeper to maximize the time spent on the project. The goal is to have a system in place that provides the bookkeeper with the information necessary to keep your books up to date, which requires organization at every step.
Use Proven Computer Software
Leveraging technology can be an effective way to organize your finances and avoid unnecessary busywork. For example, a document management system can be used to keep track of your receipts so that you no longer need to keep a shoebox full of random paperwork. Snap a picture of the receipt, then store the image in a cloud-based folder. This file can be shared with your bookkeeper for tracking purposes.
One other benefit of a document management system is that you can always find your receipts if needed in the future. Sometimes, it can be helpful to refer back to transactions that happened in the past to compare costs or evaluate overall spending for the day. This information is just a click away and can be accessed online, without the need to dig through piles of paperwork in the filing cabinet.
Accounting software should also be used if you are looking for ways to reduce bookkeeping costs. For example, this cloud-based software system can pull in the transactions that move through your credit cards and bank accounts. You can create categories that automatically file recurring transactions. Your bookkeeper will spend time evaluating the transactions that are coming through and auditing the system to ensure that nothing is missing.
A good accounting program saves you money because you don’t have to pay for the hours of manpower required for manual data entry. Even though you will pay a fee for the software program, it is a fraction of the cost compared to the time and money required to calculate the financial reports by hand.
Separate Your Business and Personal Spending
Mixing business and personal spending complicate your financial tracking, making it difficult for the bookkeeper to sort through the transactions. One way you can save money on bookkeeping costs is by creating a separate account for your business transactions.
A clear-cut system to define business spending and personal spending will simplify the reconciliation of the accounts. Additionally, it takes less time to determine the right deductions that can be tallied when it is time to do your taxes each year.
Build-in Options to Scale in the Future
Cutting corners on your bookkeeping systems might seem like an effective way to save money right now. But you shouldn’t overlook the potential costs that will be accrued if you need to change accounting systems to scale your business in the future.
For example, it might seem like a good idea to select the cheapest accounting and bookkeeping system that will cover the necessities for your financial reporting. Even though this software might cover your bases right now, you will be facing bigger issues in the future if the software can’t accommodate the future growth of your company.
As a result, spending a little bit more right now could save you the cost of transitioning bookkeeping systems in the future. Instead of attempting a DIY system, bring in a team of financial experts who can offer advice about the right system designed to support your business growth in the years to come.
Use Technology to Improve Accuracy
Every time a mistake is made on your tracking and accounting, it costs time and money to fix the error. Even though errors are unavoidable, there are a few things you can do to reduce the potential mistakes that happen with your bookkeeping and accounting systems.
One effective solution is to leverage technology for the calculations and report generation. You can skip manual calculations and have peace of mind knowing your numbers are accurate and clear. Choose a system that delivers both financial intelligence and greater efficiency for your business systems.
Control Costs by Eliminating Waste
How much money is wasted each month and year due to payments and transactions that slip through unnoticed? You can offset the costs of accounting and bookkeeping services by leveraging the team’s skillset to reduce waste and unnecessary financial burden.
For example, your bookkeeper might be able to offer advice about reducing overhead expenses and improving the collection of Accounts Receivable. As a result, your income will go up, and you can cut out expenses that are no longer necessary for your business systems.
Not only will you have the option to reduce the amount of money that is spent, but these in-house changes can also affect employee productivity. Your employees will understand the importance of streamlining business systems and sticking to spending goals. So, the daily decisions of the employees will support your overall business efforts.
Hire Outsourced Bookkeepers and Accountants
There’s no question that you need bookkeeping and accounting services. Most business owners assume that the simplest way to bring these skills into the company is by hiring an employee. But you need to think about the fact that you aren’t only bringing on the burden of paying the person’s salary, but you also need to carry additional costs of having another employee in the office.
The fully-loaded costs will add up over time! Here is a quick overview of some of the expenses you will pay for a full-time accountant or bookkeeper:
- Salary or wage
- IT and equipment
- Office space and utilities
- Overtime pay
Many businesses are choosing to outsource accounting services to avoid the fully-loaded costs of bringing on another employee. Do the math, and you might be surprised to learn that it is easy to save thousands of dollars a month by hiring an outsourced accountant as an alternative to a full-time employee.
This method is not only more cost-effective, but many business owners also find it less stressful to tap into the expertise of an outsourced team. It feels good knowing that the service provider has relevant experience working on the financial reports for other small and medium-sized businesses. Outsourced accounting services means that you don’t have to worry about employee management or training. Instead, you can hand off the financial details with confidence knowing your accounting team is taking care of the necessary tasks to track your accounts and reports.
Many business apps integrate with various accounting software packages to give you enhanced results in a fraction of the time you might think it would take. For example, time-tracking apps track time on jobs/clients/business units, allowing you to increase your profitability. You’ll receive valuable data that can be used to produce future service proposals, run payroll, invoice clients, verify subcontractor vendor bills and determine what’s working … and what might not be. Similarly, suppose you have expense reports that need to be submitted or received for payment. In that case, there are very good apps that can sync with your bookkeeping software and significantly reduce the time spent to create or review those reports.
Accounting for small companies does not have to be complicated. If you take the correct steps initially, such as conserving your records and reviewing your financial reports, it will be much easier for you to stay on the right path. It makes it simple for you to foresee future finances for your company.