bookkeeping services for small business
Beyond Balance Sheets: How Bookkeeping Services for Small Business Empower Dreams 
Author: Akansha Nikalje
Date: November 24, 2023
Category: Bookkeeping

Running a business involves juggling various tasks like sales, inventory, team management, and finances. Small business success relies heavily on meticulous transaction records. While you don’t have to handle everything yourself, ensuring accurate records is crucial. Consider hiring a professional bookkeeper like E2E Accounting for support. Yet, as a business owner, grasping basic bookkeeping concepts remains vital. Why is bookkeeping so crucial for small businesses?

A) Importance of bookkeeping services for small businesses

If you are running a small-scale business, you must know that bookkeeping is crucial to your business’s growth. Effective bookkeeping and accounting services can help you understand your business’s financial security and make informed decisions. It will also help you track your income and expenses, remain compliant with all the essential regulations, pinpoint the areas where you can improve and avoid unnecessary expenditures, and file all your reports and taxes on time, avoiding penalties. If your bookkeeping is improper, tracking and reporting will become impossible. Here are some advantages of how bookkeeping can assist your small business:

1. Help Your Business Accurate

Making informed decisions for your business is only effective if you are maintaining accurate financial records.

For example, you want to prepare a budget for the next six months and forecast your sales, the very first thing you need to know is:

–        Your sales during the previous six months

–        Your current sales

–        Your previous budget and forecast

It will help you understand whether you have achieved your forecasted sales based on those budgets.

Gathering all this information requires recording each and every transaction and keeping all your receipts up-to-date, accounting for every last cent. Only by appropriately maintaining your books can you easily retrieve the data whenever needed.

If you do not have enough time to do bookkeeping every week or even monthly, you can hire a professional bookkeeper like E2E Accounting who will perform this task for you.

2. Help Your Business Make Profit

When your bookkeeping is properly maintained, it helps you understand the precise profitability of your business. These details can be acquired and analysed from the financial statements. Analysis of the financial statements can also help you understand your business cycle, observe trends, and compare the growth rates of your business across periods.

Thus, you need to know how important bookkeeping is for your business. Now is the time to adopt the smart solution for your business by hiring expert bookkeeping services for small businesses who can simplify the entire process for your small business and save money.

3. Help Your Business Save Time

Bookkeeping and accounting are considered as the back-bone for every business. It is also advisable to do this task on a daily basis, if not daily at least every week. If you think that you are juggling between several business operations including your bookkeeping, and you are not getting enough time to focus on the growth and expansion of your business. One of the smart things you can do is hiring professional bookkeeping services, like E2E Accounting. 

B) Several advantages of professional bookkeeping services for small businesses are:

  1. Real-time reporting: Your bookkeeping will be done on time, and you can get the real-time reports with accuracy and compliance, which can help you make informed decisions for your business.
  2. Time and Focus on Core Business: One of the most significant benefits is that it will help you free up your time and you can focus on other core operations and growth of your business.
  3. Cost-Effective: Hiring professional bookkeeping services, like E2E Accounting for your small business is also cost-effective, and you also do not have to hire an in-house bookkeeper and purchase any accounting software.
  4. Maximise Cash: Managing your cash flows are one of the biggest concerns for small businesses. So, it is important that you pay close attention to your cash flows. If you want to improve your cash flow and keep track of your cash moving in and out of your business, maintaining your bookkeeping accurately and on time will help you. Professional bookkeeping services will always maintain your records up-to-date.
  5. Keeping track of your funds: Lastly, you also do not have to keep on adding capital every time. Wherever there is a lack of enough funds, you will be notified, and you can take necessary actions of adding capital either by taking out a loan or on your own.

Basic Bookkeeping Practices For Small Business

As we know, bookkeeping is the backbone of your accounting and financial systems. Inaccurate bookkeeping can hamper the growth of your small business. Though there are many accounting software that can help ease your bookkeeping work. However, any data recording error can lead to inaccurate financial statements. Basic bookkeeping practices involve the following activities:

1. Recording transactions

Bookkeeping and accounting involves several day-to-day tasks, such as categorising and recording all your transactions in your system, running payroll, and managing your accounts receivable and payables.

2. Using Advance Software For A Systematic Approach:

While recording the transactions, adopt a consistent method, either manual bookkeeping or accounting software such as Xero, QuickBooks, or Excel spreadsheets. Refrain from mixing two approaches; this will lead to inaccuracies in your bookkeeping, as there are chances of missing transactions or incorrect recording.

Below is a list of a few popular accounting software you can consider based on your needs and preferences. To help you make an informed decision on which one you should opt for, we have outlined the benefits of each software.

  1. Identifying Transactions: Classification of your transactions is a crucial task and must be done correctly. Otherwise, it can lead to incorrect recording of transactions. Based on this classification, you must record all your financial activities, such as sales, expenses, purchases, loans, and payments using the below software.

a) FreshBooks:

FreshBooks is one of the best accounting software for small businesses in the UK.

b) Xero:

Xero is also one of the popular options for any advanced analytics and robust platform security keeping your business data secured and healthy.

c) QuickBooks :

QucikBooks is a budget-friendly accounting software. It is one of the cheapest options for payroll solutions in the industry.

d) Oracle NetSuite :

Oracle NetSuite is an accounting tool which is ideal for growing businesses as it provides exceptional add-ons and integrations.

e) Sage :

If your business is VAT registered, Sage software helps you in getting your VAT submissions right with its MTD-ready platform and improving your cash flow.

f) Wave :

Wave software is considered as a convenient pick generally for small businesses. This software provides a superb payroll feature and has a user-friendly interface.

g) Zoho Books :

Zoho Accounting is a beginner-friendly software solution. It has a great inventory tracking feature and project management tools.

h) Bonsai:

Bonsai is one of the best software for streamlining invoicing with templates and automation. It also offers your clients global payment options.

i) Melio :

Melio is ideal for accounts payable solutions. It lets you invite team members and accountants to your account for free.

j) Xendoo :

Xendoo is also one of the excellent eCommerce accounting services. It provides a dedicated bookkeeping team and monthly reports.

1. Recording Details: Make sure that you are recording all the necessary details for your transaction, such as date, description, amount, and the accounts that are affected. It will help you locate any transaction quickly for your future reference. 

2. Maintaining Accuracy: You must regularly reconcile all your cash and bank statements for your records. It will help you locate any discrepancies in your balances.

However, if you feel that you need more time from your business and doing regular or even monthly bookkeeping is difficult for you, seek help from professional bookkeeping services for your small business. They will take up your bookkeeping task and ensure you follow necessary compliance and regulations. These practices will help provide you with a clear overview of the financial health of your business.

3. Organising financial documents

Maintaining all the documents, such as invoices, receipts, bank statements, etc, is an essential part of bookkeeping, whether from the future reference perspective or audit perspective or based on statutory compliances. Therefore, all the documents must be appropriately maintained. You can adopt the following strategies for effectively organising your documents:

  1. File Management System: You can create a filing system for all necessary documents and categorise them based on invoices, receipts, bank statements, and other financial documents. You can organise them based on date, type, or category. However, make sure you are consistent in naming your folders, so they are easy to locate.
  2. Digital Storage System: You can also consider digitising all your documents for easy access and backup. One of the best methods is to use cloud storage or accounting software. It can help you securely manage your files. However, make sure that you are consistent in naming your folders, so they are easy to locate. Also, ensure timely backups to safeguard your financial data against loss or damage.

C) Types of Bookkeeping Services for Small Business

While doing bookkeeping services for small business, it is necessary to understand which bookkeeping system will work best for you. Generally, there are two types of bookkeeping systems:

–       Single-entry bookkeeping system

–       Double-entry bookkeeping system

Here is a comparison of both systems, which can help you decide which method will work best for your small business.

1) Single-entry vs. double-entry systems

 Single EntryDouble Entry
OverviewIt is a straightforward method. In this method, every transaction is recorded only once without offsetting entries.This method records every transaction twice: once as a debit and once as a credit. It ensures that both the debits and credits match, providing a comprehensive view of a business’s financial health and minimizing any errors.
SuitabilityThis method is suitable, especially for small businesses with less complicated finances. Sole traders, freelancers, or those with a small business with few transactions use this method.This method suits larger businesses or those with more complex financial transactions.
Insightful ReportingThis method provides minimal insights into your financial health as there is no tracking of any information in detail relating to your assets, liabilities, and equity.It provides a more detailed overview of a company’s financial position, thus aiding in making informed decision-making and conducting accurate financial analysis.

2) Choosing the right system for a small business

If you are still determining which system is best for your small business, you need to understand the complexity of your transactions. However, it is always best to use a double-entry system for better accuracy and insights. The double-entry system also fulfills all the regulatory requirements and is best for scalability, growth, and any financial needs in the future. Consulting with professional bookkeeping services for small business can also help you make the right choice based on your business’s specific needs.

D) Outsourcing vs. In-House Bookkeeping

Generally, many business owners are in two minds about whether they should outsource their bookkeeping to professionals or hire an in-house bookkeeper. It becomes hard to understand which is the best and most cost-effective method.

We have provided a comparison between outsourcing your bookkeeping and in-house bookkeeping.

Choosing Between Outsourcing and In-House:

When choosing which option is best, understand the size of your business and your specific requirements.

If your business is a small business with limited resources, the best option is to consider outsourcing your bookkeeping. It will provide you with the expertise that is required for your business. Also, your books will be maintained more efficiently. Outsourcing can also be cost-effective compared to hiring an in-house bookkeeper, and you need not purchase any accounting software, as your professional bookkeepers will process your bookkeeping, and provide you with the login details for accessing your books.

However, if you own a large company, you can choose to go with an in-house bookkeeper or outsource your bookkeeping. Both options suites you depending on your specific requirements. Combining both outsourced services and in-house services can provide you with optimal efficiency.

E) Bookkeeping Mistakes to Avoid for Small Businesses

As we know, bookkeeping services for small business is an essential element for your business. Even a minor mistake in bookkeeping can lead to inaccurate financial statements and analysis. Let us understand the common bookkeeping mistakes that can happen while you are doing your bookkeeping and how you can avoid these mistakes.

Common Bookkeeping Mistakes and tips to prevent them for small business:

Not Maintaining Records Properly: One of the biggest bookkeeping mistakes is not appropriately keeping your records. It can lead to inaccuracy in your financial reporting, difficulty tracking your invoices and expenses, and may also lead to compliance issues. Therefore, it is always advisable to maintain your records systematically, either digitally or in proper folders.

Mixing Personal and Business Finances: Mixing your personal and business expenses can lead to inaccuracies in reporting and affect your tax deductions, as you cannot classify your costs accurately. Therefore, it is always advisable to maintain a separate business bank account and avoid using it for personal use.

Backup and Data Security Measures: Failing to take timely backups or maintain effective data security measures can lead to data loss or security breaches. It can also take time to retrieve your crucial financial information. Therefore, it is always advisable to take timely data backups and maintain strong cybersecurity practices to protect your data.

If you are finding it challenging with your bookkeeping and feel that these mistakes can happen, consult a professional accounting and bookkeeping service provider for maintaining your bookkeeping to ensure accuracy and adherence to best practices.

F) Challenges Faced in Bookkeeping Services for Small Business

Specific challenges can arise if you plan to do bookkeeping for your small business or hire an in-house bookkeeper. Below are a few challenges that you can face while doing bookkeeping for your small business:

1) Technology Challenges:

Adapting to new accounting software or technologies can be challenging and may require professional training to become proficient. It will take a lot of your business time and effort.

Compatibility issues can arise while integrating the accounting software into your systems, leading to several technical challenges.

Yet another challenge that can arise is effective data security measures, which can constantly threaten your sensitive financial information.

2) Time Management and Resource Allocation:

Bookkeeping can be a time-consuming task and requires adequate knowledge and focus. Small businesses can have limited staff. Therefore, if there is no dedicated resource or you cannot give dedicated time for bookkeeping, it can lead to inefficiencies and inaccuracy.

Conclusion

To conclude, bookkeeping is about more than just recording transactions. Bookkeeping is also about providing financial insights, understanding the financial health of your business, making effective decisions, and ensuring all the necessary compliances are followed. Bookkeeping also helps foster your small business’s overall growth and success.

E2E Accounting is a product of Corient Business Solutions which is based in Coventry, UK. The Product offer a wide range of services, for small business which includes Monthly Bookkeeping, Tax Advisories, and Management Accounts. We aim to provide you with a complete understanding of your company’s financial performance, which can help you make crucial business decisions. We will review your company’s financial records then they get detailed information about your business. 

Bookkeeping and Accounting, being a complicated process, must be in safe hands. For any expert advice, you can contact our team of expert advisors to see how our bookkeeping and accounting services for your small business can help you.

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