Bookkeeping is the recording on a day-to-day basis of any financial transactions you make, as well as any information that pertains to business. This practice is the best way to ensure that your financial information will always be accurate, up-to-date, and complete. As we all know, accuracy is important when it comes to finances.
What does a bookkeeping service do?
A bookkeeping service performs general accounting duties that you cannot or do not want to do. They will maintain your financial records, keep track of all your accounts, and verify the way you record your finances to be sure everything is accurate.
These services also do specific things for you, such as prepare, control, balance, and check various accounts using certain bookkeeping methods. Each day, they will input financial transactions into a physical journal or into a computer. Bookkeeping services also maintain general ledgers recording the status of your accounts, and balancing them to make sure they are accurate.
What are the methods used by bookkeeping services?
There are two methods that bookkeeping services may use to maintain your finances (most companies choose to use a combination of both). The first is a single entry system that requires inputting one entry for each financial transaction that takes place. This is a basic system that companies use to record daily receipts or generate reports on a daily or weekly basis.
The second type of method is called dual or double entry bookkeeping. This method requires a double entry for each transaction. This system provides checks and balances by requiring a corresponding credit check for each entry. While dual entry bookkeeping is not cash-based, single entry does allow cash entries.
What are the benefits of hiring a bookkeeping service?
You’ll never pay a bill late. A bookkeeping service will help you avoid the hassle of remembering to pay your bills on time. Another benefit is tracking multiple income sources. If you’re a small business owner, you may have income coming from several different contracts. A bookkeeping service will take care of invoices and enter all payments that are received daily.
Bookkeeping services will also handle payroll. If you have a business that’s large enough to have employees, processing payroll can be difficult, especially since it’s important to avoid any mistakes. Bookkeeping services will write and create checks for you to sign. They may even mail the checks out to employees for you once they’re ready to go.
Finally, they’ll give you financial reports of your transactions. Whether you want them monthly, bi-weekly, or weekly, you’ll have all of your financial details right at your fingertips. This will keep you from going into a deficit, which avoids overdraft fees and other consequences of going in the red.