One common task that bookkeeping services provide is the reconciliation of bank statements.  This is done by providing a document that highlights any differences between the amount of cash shown on the bank account statements, and the actual cash balance within the company.  This helps to check for mistakes in either the company’s records or the bank’s accounting.
Trial balance sheets are another service that bookkeeping professionals should provide.  This is a type of worksheet that verifies accounting balances were figured properly.

Financial statements must also be prepared by the bookkeeper.  These statements help with decision making, as the business owner can determine the financial health of the company, where the company is under performing, and areas that could be improved.  If the company has shareholders or stakeholders, creditors, suppliers, or even other involved agencies, these documents are essential.

A bookkeeper must also maintain the general ledger for the owner of the business.  This ledger will contain all raw data, which is then summarised and classified to later be used in financial statements and trial balances.
Accounts receivable and accounts payable should be maintained by a bookkeeper or bookkeeping services firm as well.  This data tracks all unpaid transactions, in addition to compiling a list of who the company owes money to.

Finally, a bookkeeper needs to process payroll.  Payroll services issue payments to employees, calculate bonuses, track deductions, make sure the proper taxes are withheld, and ensures all payments to outside sources are handled properly.
In addition to knowing what is expected of a bookkeeping firm, a business owner should also take some time to determine the exact needs of the company, find a bookkeeper close in proximity to the company, and compile a list of possible options.  From this point each potential candidate should be contacted, fees should be compared, and references should be acquired.  This will ensure you find a reputable firm that will provide you with exactly the services you need, at a price you can afford.

Single entry bookkeeping is much like a register on your statement, where only single transactions are recorded in the form of a cash debit or credit.  Keeping the books in this manner is less time consuming, and less expensive.  However, single entry bookkeeping only makes a record of cash, accounts receivable, accounts payable, and taxes.  More in depth transactions are not recorded, which could lead to only a partial accounting of your finances.

Double entry bookkeeping makes use of generally accepted accounting principles (GAAP), and is a bit more involved.  Rather than having just one transaction in a column, there are two entries.  A credit entry is made for all income, and a debit entry is made for each expense.  These two entries will offset each other so that both sides tally to zero.  Double entry bookkeeping therefore provides the following advantages over single entry bookkeeping:

It provides verification that errors have not been made, including a check that there has been no theft, when all transactions are properly recorded;

Financial statements can be prepared easily because of the accurate calculations that figure profits and losses;

When both entries are made, the company can easily pinpoint areas where money is owed, or who owes the company money;

The company can easily view their financial standing, and can more simply prepare for the future;

Because there are more required entries, double entry bookkeeping creates detailed records of all assets within the company, so that income is never overlooked;

Double entry bookkeeping also tracks internal transactions, which helps to provide more detailed information for reporting at the end of the fiscal period;

There is never the problem of omitting data that is important because every transaction is logged twice, in separate areas.

As you can see, there are a number of key benefits to utilising the double entry bookkeeping system.  Just about every type of business in every industry can make use of this method, and yield exceptional results.

First, the bookkeeper should have at least basic knowledge of your industry.  If your company falls within a specialised industry, such as franchises, restaurants, medicine, sports, etc., there are bookkeeping firms that work with just those industries.  If your company is not as specific, any type of professional bookkeeper should suffice, but should have a basic understanding of what you do.

Next, you should verify that the bookkeeper or bookkeeping services firm you will be using is utilizing the latest technology.  All bookkeeping tasks today should be done through using software such as Peachtree, Quickbooks, MYOB, or other similar systems.  The company or professional should be highly skilled at using these applications.

Then, you should verify that the professional has a firm understanding of the requirements you are seeking for your business.  A good bookkeeper will become a partner of sorts, that will help the business, and provide detailed financial information to assist with the decision making process.  Your books should always be maintained the right way, the first time.

Finally, the bookkeeper you hire should have a great deal of experience working with small businesses.  Errors made on the books of small businesses can be extremely costly, and can even cause a business to fail.  You need to ensure the professional you choose can provide you with evidence that he or she has a successful track record with small businesses, and that references are provided.

When you take the time to locate a firm or independent bookkeeper that meets all of the criteria mentioned above, you will gain great peace of mind.  This person will be there for you with every financial need you may have, and will become a valuable asset to your company.

Books Onsite provides bookkeeping services in Sydney, Melbourne and Brisbane.

Because of these reasons, many business owners opt to hire someone specifically to carry out the duties of the bookkeeper.  This can be done in one of two ways:  in house by adding a staff member, either full time or part time, to manage the books, or through outsourcing.  Due to the large number of advances in technology, outsourcing services has become a very attractive and affordable alternative for a wide range of businesses.  Business owners no longer have to worry about not having adequate skills to keep their books, or how to allocate their time to cover all of the necessary operations.  In fact, outsourcing bookkeeping services has now become very popular in the business world, leading to a high number of outsourcing companies ready and willing to take on your financial tasks.

Some of the other key advantages to outsourcing your bookkeeping services include:

• Allowing the business owner to concentrate on other areas of the business;
• Focusing the owner’s attention on the priorities and goals of the business;
• Reducing the risk of making accounting errors;
• Saving the business money;
• Getting the very most out of a skilled and experienced bookkeeper;
• Having the books managed quickly and efficiently;
• Ensuring complete security and confidentiality of all financial information.

Taking the time to explore the advantages of outsourcing your bookkeeping needs can give your business a distinct competitive advantage.  This simple change can truly propel your business to a much higher level, and can be one of the best things you will ever do for your organisation.

Budgeting Reports: A budgeting report is basically a form of a profit and loss statement.  This can show how the business is doing on the whole, as well as how the projections for the quarter stack up when compared to the actual detail.

Company and Financial Reports: There are a number of reports that can be created from basic financial data that has been recorded on the books.  Here you can examine in depth balance sheet details, cash flow, statement of cash flow, vendor expenses, detailed vendor reports, income sorted by customer, income sorted by service or product, profit and loss by job, profit and loss year to date, profit and loss by class, and other profit and loss details that are broken down by specific criteria.

Customer and Receivables Reports: Basic customer and accounts receivable data can also yield a variety of customised reports.  These reports can include account receivable ageing detail, collections reports, customer balance details, outstanding invoices, unbilled costs by job, and customer transaction lists.
Inventory Reports:  Inventory reports can help business owners to track inventory status by item number or by vendor, and also perform inventory valuation.

Custom Reports: In addition to the above mentioned reports, there are also a wide variety of custom bookkeeping reports that can be created as well.  These documents can be extremely beneficial to businesses and can include reports such as payroll details, employee earnings summaries, tax details, worker’s compensation summaries, accounts payable ageing detail, sales by representative details, sales by item number, and vendor balance detail and summaries.

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Excel comes equipped with many unique features, including one that allows you to download bank statements right into the program.  This should be the first step to using Excel for bookkeeping, and can save you a great amount of time.  Once you have done this, break down the spreadsheet a bit more into categories and start to move your transactions into the appropriate places.  The more often you do this, the easier it will get, which will make basic record keeping a cinch.

When you have done the basics, you can then start to format the Excel spreadsheet to make it a bit more efficient.  Excel has many preset tools that can be utilized to allow for a certain number of decimal points, sizes of numbers, outlines and borders, headings, column sizes, colors, and even to incorporate graphics.  These touches may be somewhat “cosmetic”, but they can help keep the information neat and tidy, making it easier to track.

Perhaps the best feature of Excel is its ability to automatically insert and calculate formulas.  These handy tools can be programmed into cells to automatically update, total entire columns, and figure “if this than that” scenarios.  Preset formulas such as “AutoSum” quickly tally a selected number of cells, while simple mathematical symbols can be added in order to calculate basic information.

All of these unique features and formulas can be further utilized in order to examine selections of data, in order to create reports such as profit and loss statements, accounts receivable, and accounts payable.  Excel also eliminates the common frustrating issue of having to redo the books when a mistake is made.  If you find you have made an error in entering a number somewhere along the line, you simply correct the mistake where it occurred and Excel carries the change forward throughout the entire workbook.

Anyone looking for a relatively simple and inexpensive way to begin tracking their business transactions should strongly consider looking into Excel.  The straightforward design and layout of information makes examination and entry a snap, while the step by step guides available help you at every phase along the way, even when your business needs to expand.

Let’s first begin by looking at assets accounts. This account is generally recorded first on the balance sheet, and should include any type of business asset. An asset is simply a type of economic resource. An economic resource is any item that is considered to be tangible or intangible, and has a value to the economy that is positive. Another way to classify an asset is any item that has a particular value which can be turned into cash. The two main classes of assets are tangible and intangible. Tangible assets can include fixed assets and current assets as well. Fixed assets are items such as buildings, property, and equipment. Current assets are items such as inventory. Intangible assets are not physical items or resources, but rather items that have value to the firm due to their role in the market. Examples of intangible assets include: stocks, bonds, accounts receivable, patents, copyrights, trademarks, and even goodwill.

Now let’s look into income accounts. Income accounts show what the business has received as revenue for the accounting period in question and will show if the company experienced a profit or a loss. If your business sells many different products or services, each should have a designated income account. This will help you to clearly see where all the sources of income are coming from, as well as which areas need improvement. The sum of all of these accounts will equal total revenue. An income account could be set up in the following manner:

• Product or Service A’s Sales Revenue
• Product or Service B’s Sales Revenue
• Product or Service C’s Sales Revenue (and so forth until you have accounted for all products or services)
• Income from Interest
• Income from Asset Sales
• Income from Consulting, or Miscellaneous

It is not uncommon for companies to only have a couple of income accounts, as this makes bookkeeping a much easier process. Having a large number of accounts can lead to accounting issues that may cause management to have a difficult time deciphering the information.

As you can see, both assets and income accounts play a very different, but very important role in business  bookkeeping and accounting. The more precise your records are kept, the easier it will be to track your company’s progress, expand, and curtail problems before they become major issues.

Mistake #1: Trying to keep the books yourself.
This is an especially big problem for small business owners. It is not uncommon to try to manage every aspect of a business by oneself. Many times people do this in an effort to save money; however in the long run it can lead to errors in the accounting, and a good bit of time being wasted that could otherwise be spent on the products or services being offered.  If your not an experienced bookkeeper than hire a bookkeeping service.

Mistake #2: Not reconciling your business bank accounts with your books.
It is essential that the books always match the bank statements. When all the numbers are properly tallied, you can clearly track where money goes, what money is owed, and what bills are outstanding. This keeps monetary errors from being overlooked.

Mistake #3: Not updating the books regularly.
It is very common to simply forget to update the books. Anytime you make a purchase for any type of business expense, and every time there is any type income or outgo of cash, you need to document it in entry form.

Mistake #4: Not using, or not using the right type of, bookkeeping software.
Bookkeeping software can be extremely beneficial to accurate record keeping. Try to find a program that will work well for your type of business, and train anyone who completes transactions for your business to use it properly.

Mistake #5: Not backing up data.
You should always keep a backup log of all of the data that is entered into any type of bookkeeping program. This takes no time at all, but will mean a world of difference should your computer crash.

Mistake #6: Not categorizing entries.
Make sure you design your books to have plenty of categories in order to properly explain all entries. This will ensure your records are easy to follow, clear, and consistent.

Mistake #7: Not establishing a separate business bank account.
Even if you run a sole proprietorship, you should always have a separate bank account to track all of the transactions that have to do with the business. Doing this will make the process of keeping books much simpler, and will provide easy to track documentation of all income and expenses.

Once the business has received its bank statement, the person in charge of the bookkeeping should examine the information and compare it to the records kept in the Cash account of the general ledger.  This will help to confirm all of the information is correct, and to detect any potential problems.  This process is known as “reconciling the bank statement”.  Taking the time to reconcile a bank statement is necessary in order to make sure the information the bank has is consistent with the company records.

Since many businesses have a large number of transactions each month, the process of reconciling the bank statement can take a bit of time.  This can also be a somewhat complicated issue, because there may be items that appear in the company’s ledger that have not yet appeared on the bank statement.  For example, if a check was written off of the business checking account at the end of the month, it may not clear the bank until the following month.  Another example could be if the bank decreases the balance of the business’s account without first notifying the business.  This could be related to a service fee, for a bounced check, or any other type of miscellaneous fee.  Even a small difference such as this could cause a discrepancy between the business ledger and the bank statement.  Another possible explanation for a discrepancy could be because neither the ledger nor the balance reflected on the bank statement is correct.  Both records may need to be adjusted in order to reflect true balances.

Once you have looked over all of the numbers and found where the differences occur, you should find that you are able to adjust the balance or balances, and that all of the numbers now match; your bank statement will then be properly reconciled.

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The technical definition of a profit and loss statement is as follows:  a document that is created by a company that illustrates all income, expenses, and net profit.  This statement is then used to calculate net income by subtracting the total expenses from the total income.  A profit and loss statement depicts all transactions that take place over a particular period of time, such as a quarter or a year.

In order to get the most out of a profit and lost statement it is always a good idea to compare your current data to data that was collected for previous years.  This helps to give you an idea as to how your decisions are affecting the business as a whole.  You will be able to quickly see if you are making less money or more money, and if further changes need to be made.

A profit and loss statement can also be handy to present to other people who may have an interest in your business.  For example, you may need to present certain reports, such as this, to the bank in an effort to obtain funding.  The bank can then quickly look to see how well the business is doing, and make an assessment as to if the investment would be wise.  This document essentially informs the bank as to whether or not the business is profitable, as well as if the business has potential.

An ideal profit and loss statement should show a consistent amount of growth and a steady stream of income.  If the statement does not show this, or if the numbers do not appear to be headed in the right direction, a business owner many be faced with difficult choices.  The owner may decide to put off a planned expansion for the time being in order to better increase the bottom line.  The business owner may also look for areas to increase profits, such as reducing a product line that is not selling well, or cutting back on positions that may be costing too much to fund.

The profit and loss statement is an essential tool that can be used in a wide variety of ways.  From keeping tabs on the overall monetary health of a company, and predicting growth potential, to finding areas to cut overspending and reduce costs, this statement should be considered a lifeline for any type of business.