Are you a small business owner affected by the COVID-19 pandemic? Have you been trying to keep up with the continuous changes and increased competition in today’s global marketplace? If this is the case, then you should constantly improve your financial status. In this way, you can sustain your business and ensure its growth. Like what large business owners do, outsourcing accounting services for small business can also be an option. Thus, you can streamline your processes and reduce costs.
With globalization, business owners—small, medium, and large ones—can hire virtual assistants or accountants who can efficiently perform these tasks.
Types of Accounting Services for Small Business
All business owners know that accounting is a crucial function. They are also aware of the good effects of outsourcing accounting services on their business. Thus, they hire accounting experts to maximize profits.
Many companies offer accounting services for small businesses. They also help these businesses grow. There are various forms of these services, some of which are described below.
1. Tax Accounting Services
This type covers income tax returns. Accountants who specialize in taxes know the different tax fees in various areas. They use accounting and bookkeeping tools to maintain and even enhance their efficiency. They also provide virtual bookkeeping services. For example, they use QuickBooks Online and QuickBooks Live. Through these tools, they save time and do their jobs well.
2. Financial Statement Preparation
Accountants prepare and explain financial statements. For example, they generate a company’s income statement, cash flow statement, and balance sheet. Thus, they help business owners make sound decisions in running their business.
This type is a common service for startup and medium businesses. Bookkeepers record daily expenses. They also make financial analysis. Like accountants, they prepare vital documents. They also use accounting software to track financial records.
4. Bank Reconciliation
Through this service, business owners can ensure that all financial transactions are found in their books. They can also determine if there is a risk of fraud.
5. Payroll Processing
In this type of service, accountants properly compute employees’ salary. They submit correct withholding taxes. They also pay state and federal payroll taxes.
6. Accounts Payable
This service includes sorting and organizing bills, as well as making payments. By managing accounts payable, accountants help avoid errors such as missing a payment. They also prevent making double transactions and paying illegitimate bills.
7. Accounts Receivable
This service helps business owners receive timely payment. It also increases their collection rates. In addition, it ensures fast invoice processing.
8. Forensic Accounting Services
Through this type of service, accountants review a company’s financial activities. In this way, they ensure compliance with regulations. They can also accurately spot missing slots in entries. Working with law enforcement agents, they serve as a lookout for tax discrepancies, malpractices, and other illegal activities, such as fraud, tax evasion, and embezzlement.
Basic Bookkeeping versus Full-Service Accounting
In the early stages of small businesses, business owners mainly focus on complying with state and federal regulations. They also want to make sure that they pay their bills and get paid. They need to record their transactions and maintain accurate payroll.
After some time, they shift their focus on the need for timely and accurate financial reports. Thus, they hire employees with various skills, such as advanced bookkeeping. They also need experts on accrual-based accounting and management. They must have a team member with expertise in managerial accounting. With these, they can make wise decisions.
As a business owner, you should know your specific needs. Is it basic bookkeeping for compliance? Or do you need full-service accounting for increased profits, improved cash flow, and growth? Both functions require different degrees of effort, expertise, and cost. So, which one should you choose: basic bookkeeping or full-service accounting?
What Bookkeepers Do
In bookkeeping, bookkeepers generate data about organizational activities. They record financial transactions like purchases, receipts, sales, and payments. In addition, they use software such as QuickBooks or Xero, to monitor their entries, debits, and credits. They may also perform any of the following tasks:
- Process payroll
- Release invoices
- Perform stocktake
- Maintain accurate records
- Deal with foreign currency transactions
- Ensure compliance with state and federal laws
- Prepare financial statements and accountants’ books
- Manage accounts payable, accounts receivable, bank feeds, and cash flow
What Accountants Do
In accounting, accountants convert the generated data into information. They verify, analyze, and use data to prepare reports and conduct audits. They also make financial reports, such as tax returns, income statements, and balance sheets. In this way, they can provide information as a basis for forecasting, observing business trends, and creating growth opportunities. They can also give finance-related advice. For example, they can ask business owners to minimize spending money to manage cash flow.
Accountants differ from a certified public accountant (CPA). CPAs know more about tax codes; and in audits, CPAs can also represent you before the Internal Revenue Service.
Reasons to Outsource Bookkeeping or Accounting Services for Small Business
Accounting and bookkeeping are typically performed by a directly hired employee and even by small business owners themselves. But as a business owner, you should ask yourself if you are skilled enough to do these tasks. You should also know if your staff has the required skills to manage accounting tasks.
For these reasons, hiring a virtual assistant or outsourcing bookkeepers and accountants sounds just right. As experts, they can efficiently complete bookkeeping and accounting tasks. They may also charge lower rates.
Other benefits of outsourcing accounting and bookkeeping services include the following:
1. Save costs on accounting services.
By choosing to outsource accounting services for small business, owners can reduce their expenses and achieve good quality. Most outsourcing companies charge lower rates in large part because of lower labor costs at their location. Through outsourcing, small business owners can also save money. They can cut costs on salaries, taxes, office supplies, and benefits for full- or part-time staff. Thus, they spend money only on the needed services.
2. Eliminate time and costs spent on hiring processes.
By outsourcing these services, business owners can do away with the entire hiring process. They just need to look for virtual accountants and bookkeepers.
3. Save business owners’ time.
By outsourcing administrative tasks, such as bookkeeping and accounting, business owners can save their time and energy. They can also use their resources to create good strategies and thus boost revenue. They can also form a network by building relationships with their clients.
4. Work with expert accountants and bookkeepers.
Through outsourcing, business owners can hire accountants and bookkeepers with high levels of expertise at an affordable rate.
5. Scale accounting services easily.
Outsourcing accounting services for small business can help scale your business without causing any lag. For example, these service providers can provide extra workforce if two or more employees are needed to complete a task. Thus, you don’t need a tedious hiring process.
6. Apply accounting automation technologies.
Accounting service providers use automation tools, such as QuickBooks, Microsoft Dynamics, SAP, and Sage. They use these tools to save time and reduce risks. These tools help reduce human errors, generate real-time reports, detect and resolve potential issues in their early stages, and avoid internal fraud.
7. Have accountants as advisors.
As experts, accountants can give sound financial advice. They can come up with solutions that help enhance accounting efficiency.
Benefits of Hiring a Company for Bookkeeping and Accounting Services
Bookkeeping and accounting are vital aspects of a business. As a small business owner, you must follow basic accounting principles to succeed. By keeping records and assessing financial data, you can efficiently track your expenses. You can also find new growth opportunities. You can fulfill your tax obligations as well.
Here are some benefits of hiring a bookkeeper for your business:
- They help prevent errors, such as incorrectly entering data, mixing up expenses, and missing entries.
- Bookkeepers can assess the financial status of companies. Thus, companies can make good business decisions.
- They allow you to have more free time for your primary duties.
Accountants manage credits and debits. They also perform other tasks:
- By closely monitoring your accounts receivable, accountants can determine the trends of your client base. Thus, they help reduce costs by following up late payers.
- By making a detailed budget, they can spot inefficiencies within your operations.
- With their ability to spot changes in sales revenues and vendor costs, they can give crucial data on changes in your industry.
- By understanding your financial status, they can detect problem areas that likely hamper your ability to get loans.
Outsource Your Bookkeeping and Accounting Services
Outsourcing these tasks has many benefits. For example, doing so ensures cost-efficiency. It also provides flexibility in contracts and help you scale the number of functions of individuals. Since both functions are crucial to your business, you should work with financial experts who can devote effort and time on your financial needs.
Get Accurate Accounting Reports from Topnotch VA
Monitor your business finances with our accounting and bookkeeping services. We have experts who are trained to prepare error-free audit records and reports for you. Hiring from our pool of accountants and bookkeepers helps you take some tasks off your plate and improve your productivity. Check our accounting and bookkeeping services today or leave us a message.