If you are doing your own accounting, but getting busier and not spending your time as productively as you would like, ask yourself the following:
- Could someone else do the accounting better or more efficiently?
- What is it costing me in productive time to do the accounting myself?
- Do I know my current financial position?
- Are my sales tax and income tax filings up to date?
- Can my business support a bookkeeping fee?
After going through the above, you should have a good idea of whether it is time to consider hiring a bookkeeper. I work with several bookkeepers that keep my clients up to date and on track. The Yellow Pages and Internet are full of "qualified" bookkeepers, but I have seen some not so good ones. It is best if you have a referral from someone.
Good reliable bookkeepers are increasingly difficult to find. Fees are increasing too - some bookkeepers charge $50 per hour and up. You are doing well if you can hire a good bookkeeper for less than $150 per month.
This can be money well spent if it reduces the stress of sales tax and employer remittance filings and year-end accounting. A good bookkeeper can also handle supplier payments, monthly financial statements and tracking accounts receivable and accounts payable. If you give the bookkeeper clear directions on your requirements, then he or she should provide a list of what information is needed to do this job.
Pieces of the article where copied from David A. Townsend, CA www.datownsend.com
TOP 10 BOOKKEEPING MISTAKES MADE BY SMALL BUSINESS
- Not saving receipts - While some receipts may not be required by the IRS, they provide backup documentation for the many deductions you may claim. It is very simple to have a folder for such receipts, which can prove valuable at tax time. The paperless office does not exist in the real world, where audits do still exist. A paper trail, documentation or verification in the form of backup documents should be available.
- Doing it yourself - No matter how much they hate it, many small business owners insist upon handling the books themselves. Having a competent bookkeeper coming in to handle the books can be extremely beneficial, they have the skills to do the job quickly and efficiently and will provide a second pair of eyes to find errors and make suggestions.
- Forgetting to track reimbursable expenses - Small business owners often pay for expenses out of pocket or with their own personal credit cards then make the mistakes of failing to track these expenses or to get reimbursed.
- Not properly classifying employees - The proliferation of independent contractors, consultants and freelancers has made it difficult to determine who is on staff and who is not. This results in misfiling when it comes to filing taxes since there are different rules and regulations for employees and non-employees.
- Lack of communication - Having someone handling the bookkeeping is only effective if they are filled in and kept up to date on all financial transaction. Many mistakes can be avoided with open communication such as miss handling an employee bonus or advance, miss classifying a receipt to the wrong chart of account and many more.
- Not reconciling the books with bank statements and credit card statements each month - One of the fundamental aspects of bookkeeping is reconciling the books and bank/credit card statements each month. Nonetheless, there are businesses that do not do this and others where errors are made by not doing it properly. Again, this is good reason for hiring an experienced bookkeeper.
- No backups - No matter how good our security software is, you still need to make file backup for your bookkeeping software. Backups should be saved on an external hard drive or some other form of safe keeping. Do not save your backups to your desktop or anywhere on your computer.
- Sales Tax - A common mistake in retail businesses is not deducting the sales tax from total sales. This results in a higher total sales amount and overstating your gross profit margin. Contractors are another business that has several issues with sales tax, some are not collecting enough and others are not taking the installation charges into effect when calculating the proper amount to charge sales tax.
- Petty Cash - A system should be set up for petty cash and each time money is taken out for any purpose, a petty cash slip or journal should be kept for record keeping. This petty cash fund should be reconciled every month just as the bank statements are. Many offices are nonchalant about using the petty cash fund without keeping accurate records.
- Errors in categorizing chart of accounts - There are fairly standard categories for expenses. However, often expenses are entered into wrong categories or too many categories are created. Use general bookkeeping guidelines for standard categorization and create as few new categories as possible.
Pieces of the article were copied from All Business www.allbusiness.com