04/01/2021
"So, what exactly does a bookkeeper do?" I hear this question frequently. A bookkeeper's primary function is to track, enter, classify, and report business/personal financial transactions.
*But many bookkeepers also serve as personal assistants, tax preparers, advisors, account watchdogs, bill payers, personal shoppers, and more.
The next question I usually hear is: "Why is that so important?"
So, here are some of the reasons bookkeeping, accurate financial record keeping, reporting, and regular, frequent account monitoring is not just important, but crucial, to business owners.
- Income tax is paid on the company's net income. Net income is the sum of income minus cost of goods sold minus qualifying expenses. If a business hasn't properly categorized or tracked expenses, it could potentially result in a largely bloated, unnecessary tax payment or, worse, a shortage that could accumulate interest and penalties.
- We are able - and do - supply reports, calculations and figures that show a detailed representation of a business' financial health. The result of our work is the first indicator of whether a business model is performing successfully or needs some adjustments - and which precise areas are thriving or sinking.
- We translate the data given to us into numbers that go onto federal tax forms, which in turn, go to the IRS. If a business has claimed (categorized) expenses that don't belong, that could spell trouble in the event of an audit. Knowing what belongs where, and what doesn't, really is a big deal.
- Most bookkeepers have the ability, knowledge, and experience to create, monitor, and update working budgets for businesses, creating less stress and more certainty for business owners.
- Accruals and deferrals. Credits and debits. Liabilities and equity. Chart of accounts. Revenue, gains, losses, depreciation, on and on.... these are some of the lyrics to the song of our industry. We know them well and have memorized the verses, so that our clients don't have to sing along. Instead, they can focus on other things, like making money. :)
There are so many more reasons, and I'm ready to sign off for the night, but if you have any questions about how a bookkeeper can benefit you personally or your business, feel free to comment, shoot us a message, text, call, email or post.
Also, please keep in mind, the finished product we present to our clients is only as accurate and detailed as the information we are given or the have the ability to access.
That is all. Hug your bookkeeper. ❤️
