Bookkeeping

What different approaches are there to bookkeeping?

When you are responsible for running a company, it may appear as though the bills are constantly piling up, which makes it difficult to achieve maximum profitability. If you want to have some money left over after all of your bills have been paid, then you need to consider ways to both lower your expenses and boost your income at the same time.

This will allow you to have some additional cash on hand. Today, we will discuss ways in which you can cut the costs associated with bookkeeping, which can assist you in achieving your goals regarding profitability.

When running a business, you are required to keep a record of all of your transactions to ensure the company’s continued existence and efficiency.

It doesn’t matter if your books are kept on paper, are maintained by means of a software programme, or whether you seek the services of an accounts outsourcing firm; what matters is that the method fulfils the purpose efficiently and is immediately available when it’s needed.

Your firm is at an extremely high risk of running into legal trouble and having trouble with its cash flow if it does not have adequate bookkeeping strategies.

Bookkeeping is essential for maintaining an accurate record of your company’s financial transactions and facilitating the preparation of your taxes when they are due.

Your company’s accounting records are essential components of your company since, without them, your figures could become jumbled up on sheets that are too cluttered.

The “Traditional” Approach: Using Accounting Companies

The most time-honored and standard approach to accounting issues is to seek the assistance of a certified public accountant (CPA) or an accounting firm when dealing with a company’s financial matters.

These individuals have numerous advantages in comparison to the do-it-yourself approach, such as the fact that you won’t have to make much of an effort at all and that you’ll have access to expert advice (presuming, of course, that they are qualified).

There are, of course, some negatives associated with this option, such as greater fees and slower turnaround times. Many of these establishments charge high hourly rates for consultations, which can make it challenging to chart a steady course for your monthly budget.

In addition, their services are frequently “behind the times” in terms of integrating technology, which can make it even more challenging to chart a steady course for your monthly budget.

The “Semi-Traditional” Approach, also Known as Do-It-Yourself Software

close-up-busy-businesswoman

Do-it-yourself software is becoming an increasingly popular choice that provides proprietors of businesses with a wonderful base from which they may operate independently.

Firms such as Quickbooks offer feature-rich software that is capable of assisting in the performance of complicated accounting activities. Not only are many of these kinds of tools highly helpful, but they may also assist save money when compared to the cost of using a conventional accountant.

This is an excellent choice for those who work in accounting, but it might not be the best choice for those who run their own companies.

Even if you have a reliable piece of software, this does not mean that you are informed about the rules, regulations, or tax codes in Australia.

By submitting their taxes in an incorrect manner, business owners risk losing out on potential deductions, being disqualified as a compliant business, and being subject to audit by the ATO.

There is no way to replace the extensive body of information that an accountant brings to the table with only having completed a college accounting course.

There is still the issue of time to take into mind, even if you are secure enough in your accounting skills. Anyone who has ever attempted to launch their own company is well aware that they will quickly discover that they are being tugged in a variety of different directions.

It takes a lot of work to keep accurate books, therefore owners of businesses need to consider whether or not reconciling transactions is the greatest use of their time.

The Method Referred to as “Fully Automated”: Software as a Service

A bookkeeping service that may be accessed online is the third and last choice.

Users of this hybrid solution have access to specialised software as well as a professional accountant, providing them with the best of both worlds in one convenient package.

A bookkeeper or an accountant will reconcile your transactions so that you won’t have to worry about doing it yourself. Several of these providers provide unrestricted consultation at no additional charge per hour.

They favour, rather, the more contemporary “Netflix” approach, which entails a flat-rate monthly payment.

The knowledge that business owners may seek assistance without the risk of paying additional fees and make more accurate projections regarding their monthly budgets provides them with a sense of comfort.

If you require help with your bookkeeping, you can give us a call on (03) 8568 3606 or email us on [email protected].

This alternative provides all of the benefits (and even more) that are associated with the aforementioned approaches, minus the drawbacks. The burden of deciphering tax legislation and entering data is removed thanks to a hybrid solution that combines cloud-based technology with the human element of a bookkeeper.

Despite this, the solution nevertheless provides a high touch high tech solution.

Strategies for Accountancy Employed by Small Businesses

Create a responsible plan for your monthly spending.

The most fundamental and essential piece of guidance, managing your finances can assist you in saving a significant amount of money.

In order to apportion your financial plan in the most effective manner, tracking your periodic budget is ideal.

Put everything that’s important to know about your financial situation down on paper.

After you have recorded all of your expenses, you can then evaluate this information in light of your income. Review your spending habits and identify any costs that aren’t contributing anything to the success of your business so that you can cut them.

Having access to the Appropriate Bookkeeping Software

In order to put into action an efficient bookkeeping strategy, the software that is utilised for bookkeeping services is the first and most important factor.

The seemingly daunting task of selecting the appropriate accounting software doesn’t have to be as stressful as it may sound.

The goal of any piece of accounting software is to simplify the life of the owner of a small business.

Every individual ought to select the programme that not only helps the process become more automated but also improves the efficiency of the financial procedures.

As a bookkeeper, your time is quite valuable; therefore, you should choose a tool that may help you save time, work more efficiently, and find it easier to handle all of your clients in a single location. It is important for us to consider the features, as well as the technical ability, growth, and utilisation. In essence, it will yield the results that have been listed below:

  • Can handle many companies using a single login to the system should only satisfy your needs and not those of anyone else
  • Should be equipped with a function that saves time, such as bank feed
  • Smart, Quick and easy to get started
  • Access through the cloud (i.e. anywhere)
  • The MIS reports are simple to distribute.

Utilize the expertise of a professional when filling out your tax return.

Mostly it has been observed that individuals or corporations file the tax returns on their own.

However, if we have income from investments, if this is our first time buying a home, if we own rental property, or if we operate a small business, we should consult with tax professionals.

When working with professionals, you can rest assured that they will assist you in claiming all of the deductions and credits to which you are entitled.

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.

Any corporation might benefit from the assistance of an Account Consultant in resolving day-to-day challenges.

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 an in-house checks and balances of the process in place.

Expense Receipts Record

Corporations should keep expense receipts reason being the same will help for deductions while computing tax returns.

At the same time, it’s important to have an expense receipt to track the spending record. Gathering the expense receipts and keeping them in safe custody is an important part of filing taxes.

Corporations must have documents like sales bills, receipts, and deposit slips.

The expense 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 receiving 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.

Hiring a Bookkeeper can give insights that can become a game-changer for any corporation.

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 a 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 busy work.

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

casual-business-man-working-with-laptop

Every time a mistake is made in 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 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
  • Benefits
  • PTO 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 mean 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 creating 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.

Scroll to Top

Learn how we've helped businesses just like yours