Buying a business? Why you should consider outsourcing your bookkeeping.
Guest blogger Lael Haile
I'm always looking for content that is relevant to the kind of questions my clients are asking. This week I have asked my good friend Lael Haile to discuss bookkeeping. Lael and her husband have owned multiple businesses and she currently owns a bookkeeping business. She works with several businesses to help them keep their business in top shape. Here are the benefits that come with hiring a bookkeeper.
Why do I need a Bookkeeper??
Whether you choose to perform this function yourself or outsource bookkeeping is an integral part of managing a successful business. Here is an overview of reasons why bookkeeping is important for your small business.
Business owners need the ability to analyze the health of the business while also forecasting so you can make necessary adjustments.
You will be able to supply standard financial information to outside parties such as banks, investors, and landlords.
Well organized books will allow your accountant to make the best of your tax situation.
If you are ever in the position of being audited, having a clean set of books can make the process less painful and scary.
Whether you are in the beginning stages of starting a business or you have already jumped in headfirst, there are always areas that lack or need attention. One of the more commonly ignored areas is bookkeeping. This practice is one of the most vital elements of your business. First, it allows an in depth look into the health of the business and can highlight areas that are doing well as well as those that are not. Over time as you track revenues and expenses, you will be able to compare month over month and year over year. This allows you to analyze that data to pinpoint periods of growth decline. Being able to analyze that data can allow you to adjust staffing, purchasing as well as where and when to use your marketing dollars.
There may come a time in your business where you seek outside capital to grow the business. Those requests will always require a comprehensive look at the health and well being of the business. They will want to see current and past profit and loss reports as well as a balance sheet. Your profit and loss will show revenues minus cost of goods sold and expenses within a certain time frame and at the very bottom is where your profit resides within that time frame. This is different than a balance sheet which shows assets, liabilities and owners’ equity. The balance sheet shows to a bank or investor the health of the business and liquidity.
Finally, the thing no one wants to think about it is the potential of an audit. When you are a small business owner the potential for an audit can be a scary thing. It doesn’t have to be. There are ways to be confident your business will survive an audit.
Understanding business vs personal expenses.
Making sure all your filings are up to date.
Keeping and organizing receipts to prove expenses.
Understanding documentation required such as a mileage log.
Audits are not only limited to the IRS either. You can be audited from your insurance carrier for workman comp (these are typically based on payroll numbers), the unemployment office and the State either on income tax or if you sell taxable goods from the sales tax commission. If you are up to date on the books though it can be a fairly simple process.
When running a business you will find your strengths and weaknesses. Recognizing your weaknesses and outsourcing that will allow you the time to stay focused on generating revenue and looking at the big picture. Do yourself a favor and find a bookkeeper that can guide as you begin. If your existing business needs a little work, and experienced bookkeeper will help you get organized and help you find solutions. For my clients I try to look at all aspects of their business to see if there is technology or systems we can put in place to run thing more effectively.
If you are interested in a free consultation please feel free to reach out.
Pivot Professional Services LLC
Owner Lael Haile 3924 S Shimmering Way Meridian ID 83642 Ldhaile@gmail.com 208-695-0524
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