Should You Hire a Bookkeeper and Accountant?

 

Small business owners tend to favor bookkeeping software such as Quickbooks when managing their finances. It allows you to have control of your fund even if you lack knowledge in financial planning. Unfortunately, automated software is not designed to grow with your business. There will come a time when you can no longer manage the finances of your growing business. If you want to prevent compliance and legal issues, an accountant can be a valuable asset. Here are some instances when you need to hire a bookkeeper.

 

Lack of Knowledge in Accounting

 

Suppose creating a financial statement comes as a daunting task to you, or you have difficulty creating financial reports and understanding jargons and terms. In that case, you will need to hire a bookkeeper during the initial phase. Your accountant will serve as your bookkeeper and as your coach in accounting. Furthermore, hiring an account during the early stage of your business eliminates the possibility of creating an error that can cause the downfall of your business.

 

Lack of Understanding about Taxes

 

The tax code is too complex; failing to pay the right taxes can expose you to fines and penalties. In the end, you will be spending a higher amount of money. Having the accountant's advice regarding the taxes can inform you about the possible deductions and credits. They can also compute the estimated amount of tax that you need to pay in the future so you will be able to prepare for it.

 

Losing Focus on the Core of Your Business

 

Accounting is a major task that you need to accomplish. It will take a significant amount of your time, even if you say that it is only a monthly task. Focusing your full strength and mind on creating a financial statement will prevent you from doing your original role in the business. For every small company, especially the start-up, it is essential for you to be hands-on in your business to ensure that it is functioning the way you expect it to behave. When you  hire a bookkeeper, you have someone who manages your financial statement, and your work is to build and advance your business.

 

You Are Noticing an Increase in Revenue But not in Profit

 

If you see a higher sale in your revenue but it is not reflected in the profit, you obviously need the help of an accountant. They will analyze your overhead cost or look at the department that requires an adjustment to increase your profit.

 

Roles and Importance of Professional Accountants

With the innovation in bookkeeping nowadays, you should not reject the idea of hiring an accountant, especially during the start of your business. If you are worried about the cost of an accountant, you can opt for a freelancer that you can hire on a project basis.

 

Accounting

 

Accounting is the recording, analysis, and management of money-related documents. It is a basic element of each division. Based on the statistics, in 2021, the US economy employed the service of at least 669,130 accountants. That is no longer surprising since they can be found over different commercial enterprises, helping everybody with their accounting needs.

 

Advantages of Accounting

 

As someone who has expertise in the field of accounting, you can apply your specialization in different areas including but not limited to accounting clerks, loan officers, investment accountants, government accountants, auditors, forensic accountants, management accountants, CPA, and public accountants.

 

The salary of an accountant is also not to be undermined. Bookkeepers brought a median pay of $62,000, based on the report of BLS. The main 10% of accountants netted near $107,000, while the low 10% earned around $39,000, greater than the average payment. Like in different professions, expertise and authorization are directly linked to the possible salary of the accountants. The more experience they acquire, the greater their pay should be.

 

Importance of Accounting in Business

 

The importance of accounting in the business is helping business owners decide on any financial-related procedures. The process includes measuring and editing business exercises, deciphering economic data, and conveying the outcomes to the company's administration and other key personnel.

 

Financial bookkeeping produces a portion of the key organization reports, including the loss and profit. Loss and Profits demonstrate the financial data of a business in a particular period. Likewise, accounting delivers a statement, which gives a preview of a business's resources, obligations, and value at a specific minute in time. It also helps the administrators conduct effective management by giving them perspectives of budgetary data, which might incorporate monthly administration reports, exhibiting expenses, and benefits against spending plans, deals, or other key measurements. The manner of reporting can be tweaked for the business's particular requirements. Without these records, it would be extremely hard to help the business settle on a more intelligent choice.

 

Roles and Importance of Professional Accountants

 

A professional and competent accountant is an important resource for the organization. These people utilize their knowledge to gain insight into the organization's financial state. Using their aptitudes and comprehension of the organization and the nature in which it works, proficient accountants are always up to a challenging task. Their training and education in accounting empower them to have a reasonable way to deal with money-related issues. It is a significant resource for administration, especially in SMEs where accountants are regularly the main qualified individuals on the staff. Accountants help with corporate methodology, give counsel and offer organizations an approach to diminish expenses, enhance the top line and moderate the potential risks.

Accounting Solutions: Man vs. Machine

 

Accounting is a vital function for small and large businesses. There are at least two existing types of accounting; automated and manual accounting. The accounting was normally conducted manually by the professionally trained accountant. Manual accounting became more efficient with the use of Excel. However, today, there are many automated software that you can use for bookkeeping. Your choice for your accounting system highly depends upon your business's needs. Let us examine your options closely.

 

Pros of Automated Accounting Software

 

Automated accounting such as Xero, Bill.com, and QuickBook provides many benefits to small businesses. It allows you to run accounting reports much quicker than manual accounting. It will be fairly easy for you to settle your account. After you input your transaction, the software will instantly pull the information to the associated journal and ledger. If you want to know where every cent goes, you will be able to view this record with only a single click. Every step in the accounting system is also streamlined.

 

Cons of Automated Accounting

 

However, despite the numerous advantages it offers, it also exposed our business to some risk. There is a risk that your data can be lost if a virus penetrates your system or if you accidentally delete it. Power Failure also serves as an enemy of automated accounting. There is also a possibility that your data can be hacked, and your customer's information can be leaked. You need to incur additional expenses when protecting your data; you need software that will limit their access to your system. During a data breach and the customer's information has been leaked, your company will be liable for the leak. The accuracy of automated accounting also highly relies on the correct entry of data. If the person commits a mistake in entering the data, the entire set of information can turn out to be useless.

 

Cons of Manual Accounting

 

With manual accounting, it is highly possible to commit a human error. They can make a simple mistake that can significantly impact the business's financial standing. The mistake in automated accounting is pretty minimal due to the minimum human interference. Furthermore, the computation that can be instantly done with Xero or Bill.com can take hours if done manually.

 

Pros of Human Accounting

 

Despite these disadvantages, the company can still benefit through the high dedication of the human to the task. With automated accounting, they may often wait for the end of the billing cycle to realize their loss and profit; this can allow them to neglect some vital signs that could've saved the business a significant amount of money.

 

 

Most of the grueling task that was done by hand can now be completed easier with the help of automated accounting. But no matter how efficient it is, it may only function properly if it is integrated with the system properly. Furthermore, a computerized system still needs the high attention to detail of a human to work efficiently. All in all, man and machine need to work hand in hand to guarantee the accounting system's precision, accuracy, convenience, and efficiency.