When you operate your own business, maintaining a detailed set of records is essential to managing a thriving business. The purpose for this recordkeeping is twofold. You must have accurate, updated records to file your taxes and you must have the ability to monitor the company’s financial performance. A key business operational requirement is maintaining a continual awareness of your working capital levels, both in the short and long term.
This vital information can be gathered by reviewing factors such as cash, investments, assets, accounts receivable, accounts payable, short-term debts, long-term debts, and equity balances. Having a clear understanding of these numbers helps business owners understand where their goals and priorities stand for next year. Most companies enlist the help of accounting software to help them manage their bookkeeping issues. These software options, in general, will allow the managers of the company to run a series of very simple reports to provide financial data to assist them in determining the direction and scale the organization can reach in relation to the amount of incoming revenue and cash collected less expenses and debt payments.
All current small business accounting software packages are designed with the ability for the small business proprietor to operate the software in a self-sufficient manner. These capabilities give business owners, especially ones that are accounting savvy, the opportunity to address all the various details associated with their business portfolios. However, this capability comes with a cost of time. While this self-service approach may work well in the beginning, it is very limiting and is a barrier to growth. However, there is an easier, more time-saving solution. Hiring a bookkeeper to take over the financial records management task means that you have a month-to-month picture of the various elements of your business along with less stress and more time to devote to growing the business. Listed below are some specific signs that a bookkeeper may be useful to a business owner and his organization.
Spending too much time on bookkeeping tasks while neglecting developing the business.
Not maintaining an up-to-date ledger of bank transactions, credit card transactions, and vendor bills.
Uncertainty about properly maintaining records.
Discovering severe complexities with your tax and compliance paperwork that is causing frustration or confusion.
The CPA is performing a variety of bookkeeping tasks while charging you rates of a tax professional.
Now that we have addressed those 5 details, let’s move on to better define the differences between a bookkeeper and an expert in tax law.
When you are considering what type of help is needed to support your business, you may want to consider these factors. A bookkeeper has a skill set which is more suited for those who need such tasks completed as billing, accounts receivable, accounts payable, payroll, preparing reports, and can do various types of journal entries. On the other hand, a CPA is formally trained on the topics like tax law, regulation, formal financial reporting, audits, and various other business topics.
Another major contrast between these two types of assistants is the level of training each of them receives in their respective fields. Bookkeepers’ training can vary greatly; some are college educated while others have only learned the proper policies and procedures through on-the-job training. Conversely, tax professionals have accounting degrees and must pass professional testing to acquire a license in order to begin working in the field. In addition, they must work alongside a veteran CPA for one to two years before they are cleared to work independently.
A small business owner should never refrain from seeking help from both parties. However, in most cases, small businesses only need a bookkeeper, at least in the beginning. Then, as they grow and expand, professional assistance can be implemented as needed.
A bookkeeper can be a key resource to help small business leaders manage their day-to-day operations. CFO Shield in the business of helping small businesses to solve problems and share in the same economies of scale that larger companies enjoy by providing expert bookkeeping services a fraction of the costs of hiring a full time employee. We have the experience needed to create custom solutions to help small business owners better manage their back office and help them formulate strategies to adequately manage working capital, thereby ensuring stability and prosperity.