When you start a business, you can afford to take on every role, but as your enterprise continues to grow, you cannot afford to do everything. One very critical role/task that needs dedicated attention is bookkeeping; you have to get a staff to handle this role, and this professional is known as a bookkeeper.
Although they might not be the face of the company/business, it is safe to say that their role is a critical component in the engine of the business because they help to keep the business healthy financially. When trying to scale a business, you must take your bookkeeping very seriously; this is because every cent and dollar counts. A reliable and skilled bookkeeper will help ensure that the company books are in order, among many other functions.
In this article, we will explore the role of bookkeepers in growing businesses and why you need to have a competent and reliable professional for this role.
What Do Bookkeepers Do?
Bookkeeping is essentially maintaining up-to-date and accurate records of the financial transactions of a business. This entails recording every financial detail, such as payments, receipts, purchases, and sales, in the accounting system of the company. These are the records that enable accurate financial reporting and filing taxes.
The following are the tasks carried out by bookkeepers in specific terms:
- Recording every financial transaction, including payroll, income, and expenditures.
- Keeping and reconciling accounts in the general ledger.
- Managing account receivables and preparing invoices.
- Handling account payables and making sure that payments are made on time when due.
- Managing the processing of payroll.
- Assisting in cash flow management and budgeting.
- Preparing profit and loss reports.
- Making sure that the company complies with tax laws and finance regulations.
Benefits of Having a Reliable and Skilled Bookkeeper
A new business can lump several roles and duties into one position, but once the business begins to scale, there arises the need for separation of roles. The following are some benefits to be derived from getting a reliable and skilled professional to fill the role:
Accurate and Up-to-date Financial Records
When you have a skilled and reliable professional in this role, you are assured of accurate and up-to-date financial records. This is important because you need the records to make informed decisions. You can see at a glance your profit and loss and where to make adjustments in order to control costs and make more profit. With the records also, you can decide whether to take out a business loan to scale further and generally take calculated risks.
Enhanced Management of Cash Flow
One of the reasons why businesses fail is due to poor cash flow. But with a competent bookkeeper, business receivables and payables are properly managed, which helps the business owner to have a good grasp of the inflow and outflow of cash. This knowledge helps ensure better forecasting such that overdrafts and late payments can be avoided.
Time Management and Efficiency
When the task of bookkeeping is off the table for the owner of any business, they can focus more on other aspects of the business without being bogged down by all the complexities and details that come with finances. They can look for growth opportunities, strengthen customer relationships, and innovate for more success.
Tax Readiness and Compliance
Tax season can be quite stressful and can be more so if records are not up-to-date and accurate. However, with a conscientious bookkeeper, records are categorized accordingly, which reduces errors leading to audits and penalties; it also ensures that there are no missed deductions.
Insightful Reporting
The job of a bookkeeper is not just to record financial transactions; the highly professional ones go above and beyond to generate insightful reports. These reports help business owners monitor business growth and also make important and strategic decisions.
Difference between Bookkeeper and Accountant
Although some people interchange the use of the job titles bookkeeper and accountant, the two roles are not the same. While both roles have to do with numbers, a bookkeeper is like the administrator of these numbers; this means that they maintain daily records and ensure that company books are up-to-date. Accountants, on the other hand, use these ‘books’ that have been curated and maintained by bookkeepers to provide in-depth analysis, file taxes, and proffer strategic financial advice.
Choosing the Right Bookkeeper for Your Business
Having established the importance of these professionals in growing businesses, it goes without saying that you need capable hands for this role. The following, therefore, are tips to help you make the right choice for your company:
- Look Out for Industry Experience– More than the basic bookkeeping qualifications, you need to look out for experience in your industry. Every business has specific needs when it comes to different roles, and this is no exception. So, make sure the person has the requisite experience for the industry you are operating in.
- Make Sure They Are Skilled in the Use of Accounting Software– Technology has come to stay in every aspect of running a business. Therefore, ensure that your prospective hire is familiar with different accounting software and more so, skilled in the use of your preferred platform.
- Attention to Details – You cannot have accurate ‘books’ without attention to details. So, find a way of determining whether your applicant pays attention to details, as seemingly little errors can cause significant damage.
- Look Out for Trustworthy Candidates– Since this person will be privy to all your financial details, you must ensure that they are trustworthy. Ask for and obtain referrals and testimonials that attest to their credibility.
- Strong Communication Skills – Make sure you get someone with good communication skills that can explain reports and concepts clearly. They must also be able to work well in a team.
Conclusion
The role of a bookkeeper in a growing business cannot be overlooked, as we have seen in this article. We have pinpointed their usefulness and also shared tips on how to choose the right fit for your company. You can either choose to employ an in-house bookkeeper or outsource to an agency. No matter your preference, the tips shared here will help you make an informed decision.
