There are a variety of myths that surround the bookkeeping industry and, while these stereotypes may have an element of truth, there is an enormous amount of misinformation regarding the tasks of bookkeepers.
If you run in a small-sized business hiring a bookkeeper could appear to be a costly expense only big companies could afford. In the end, you’d be paying a hefty sum to add data to an accounting system, wouldn’t you? In addition, given the widespreadness and ease of use that accounting applications provide, you will not have to deal with this expense , at least until you’ve reached the size of the size of a Fortune 500, no? Maybe, but not sure. Let’s examine some of the popular and persistent myths about bookkeeping services, and whether outsourcing is a good idea for any specific business.
Myth 1. It’s simply data entry
It is not a secret that bookkeeping involves significant amounts of straightforward data entry. But, as per the Bureau of Labor Statistics (BLS) that the bookkeeping industry is more than just that.
The duties of each individual may vary slightly, however in general bookkeepers must also reconcile accounts whenever discrepancies occur create financial reports to management, verify the accuracy of their entries and may even call clients or suppliers to request the payment, make refunds or report issues regarding the financials. Another crucial aspect that can fall under the bookkeeping category is alerting management of the possibility of future issues, specifically when making use of cash-based accounting.
While data entry may make up a significant portion of bookkeeping, there’s plenty of substantive work that bookkeepers do. In certain organizations bookkeepers could have large authority in dealing with reconciliation, suppliers and customers.
Myth 2 You can handle it by myself
Once we’ve dispelled myths like the “it’s just data entry” myth, the notion that bookkeeping is a DIY element of the business will be more difficult to discredit. The DIYers will not only need to handle a lot more tasks beyond data entry, but they will must also keep track of the status of their bookkeeping and may have to spend a lot of time reconciling the accounts when an entry isn’t correct.
There is a lot of an effective, user-friendly software available available to assist with maintaining the books. However, learning the software and then making sure that all data is entered in a timely manner and in a correct manner can be an overwhelming task for the owner of a business. Additionally, keeping track of every customer, account and other moving parts could become overwhelming quickly and lead to unanswered concerns such as “did I forget to enter that big purchase?” or “will we have enough after that weekly payment?”
Myth 3 The Bookkeeper is costly
One reason that most small-sized business owners go for the DIY method is the belief that bookkeepers cost a lot. The BLS page above reveals that a median hourly wage of around $19 and a yearly earnings of less than $40,000. For certain, hiring an all-time bookkeeper isprohibitively costly for small companies. However, one of the tenets in capitalism is markets can fill a gap if it is there, and bookskeeping companies can fill in the gap between bookkeepers who are full-time for big corporations and those who have no bookkeeper in the first place. Part-time hiring will ensure that the books are in good order, but won’t cause financial hardship.
Myth 4, owners give authority to third-party that could be untrustworthy
Security of data is a hot subject in the present and privacy for financial transactions is an integral part of a variety of legislation and rules. It is therefore normal that business owners are uncomfortable with the idea of giving all the key to their financial realm when they contract an outsourced bookkeeper. But letting anyone from the business examine and manage the financials exposes the company to attacks and fraud. This includes insiders with a motive to take down a company (see “the disgruntled employee” for a case study).
Professional bookkeepers, particularly those working for bookkeeping companies, build their reputations on confidence and security. If a bookkeeper divulged the financial details of their clients and customers, they would not only violate confidentiality clauses of contracts that could expose them to liability that arise from litigation, but they could endanger their livelihood completely. There are also legal implications that result from the obligations of fiduciary duty that employees have to fulfill towards their employer, which are codified in the law.
Myth 5. Bookkeepers only required during tax time
People often complain about the hassle of filing tax returns within America. United States, but many only have one source of income, and don’t make use of a variety of exemptions, work with credits or itemize. Imagine the strain bookkeepers face trying to manage a year’s worth data from a business that hasn’t followed proper record keeping throughout the year. If one transaction was not properly recorded during the course of the calendar year, that stress increases significantly, as does the time needed to reconcile and organize. So we are confronting the final misconception that bookkeepers only serve for tax-related purposes.
They may be most mostuseful when it comes to tax filing however, it is much simpler when they are employed throughout the year to maintain proper records. Invoicing for bookkeeping services outsourced only a few hours per week is more efficient, smoother and less stress-inducing for the tax-filer than having to pay for 100 hours of work in the space of two weeks prior to the tax filing deadline.
Bookkeeping services are essential to the growth of your business.
We hope that we’ve dispelled some myths regarding bookkeeping services. If you have an enterprise of a medium or small size bookkeeping is essential for your success. Mismanaging accounts leads to unhappy tax collectors, suppliers, and even customers–especially those who are awaiting refunds. This can quickly turn into a crisis for a company in the event that it is not addressed, and could be missed more than you realize. One mistake, if it’s off by three or two zeros could cause chaos until the transaction is reconciled however unorganized records and little time spent on the recording could cause the reconciliation process extremely painful for those who think of the bookkeeping process as a secondary concern.
In the end, any business that is growing will require the hiring of an accounting professional to manage the amount of transactions. If you are on the verge of having to hire the services, outsourced bookkeeping servicesare the ideal way to start your journey into the field. The need for just a few hours per each week, or an all-day employee is contingent on the number of the transactions involved, as well as the quantity of suppliers and customers and how complicated the transaction. Every business’s management has to decide this on their own, but this is the general rule: bookkeeping is essential to the overall health of the company, and bookkeepers can ease any pressure to handle the books by themselves. Don’t let the misconceptions regarding bookkeeping services keep you from exploring your options.
Conclusion: We hope that you’ve found this blog post to be enlightening and informative. If you want help creating a business plan for your company, or if you need the services of an experienced accounting firm, please contact us today! Let our team create something amazing for your business so that it can grow in both size and success.