Bookkeeping is a vital business process that involves recording, summarizing, and classifying financial transactions to provide business owners with accurate information they need to make critical business decisions. It is an important function for businesses of any size as it helps entrepreneurs track their income and expenses, prepare financial statements, and comply with tax laws.
Bookkeeping needs to be accurate because entrepreneurs must have an accurate measure of how their business performs. That said, the organization staff as well as external entities like investors, financial institutions, and the government also need access to important information.
If you’re an entrepreneur looking for bookkeeping services in Las Vegas to manage your business’s financial transactions, you’re in the right place. This article will discuss how bookkeepers can help you track important information and make informed decisions regarding your finances, investments, and daily operations.
What Bookkeepers Do
Here are some specific tasks that bookkeepers do to help entrepreneurs:
1. They keep track of your income and expenses. Accurate and up-to-date bookkeeping allows entrepreneurs to see how much money is coming in and going out of their business. Hiring a bookkeeper to prepare your financial statements such as balance sheets, loss statements, profit, and cash flow statements will help you keep track of your resources and plan where to allocate them to ensure that your business grows and gains bigger profits.
2. They help you comply with tax laws. As a business owner, you need to comply with the tax laws in your state, and accurate bookkeeping is essential for this. A bookkeeper will help you keep track of your cash flow, profits, and losses, so you can accurately report your financial status to your local government, allowing you to avoid hefty fines and penalties.
3. They help you make informed business decisions. Business owners can refer to the information their bookkeepers compile and collate to analyze their company’s financial data, track their sales performance, identify new business and market trends, and make necessary adjustments to improve their business operations and strategies.
Business operators need to understand the basic principles of bookkeeping as it will help them manage their finances effectively. Here are the five bookkeeping principles to help you get started.
1. Revenue. This principle of accounting states that revenue should be recognized when it is obtained, regardless of when payment is received. This principle is based on the accrual basis of accounting, which means that financial transactions are recorded when they occur rather than when payment is received or made.
2. Expense. Under this principle, expenses are recognized in the period they are incurred, typically when goods or services are received or used by the business. For example, if a company incurs expenses for advertising in January, but pays the bill in February, the expenses should still be recognized in January, when they were incurred.
3. Cost. This principle of accounting states that assets should be recorded at their historical cost, which is the amount of money originally paid to acquire the asset. This principle is based on the presumption that the cost of an asset is a more reliable measure of its value than other methods, such as market value.
4. Matching. According to this principle, expenses are matched with the revenues they helped generate in the same accounting period to provide a more accurate picture of a business’s financial performance. For example, suppose a company incurs advertising expenses in January to generate sales in January. In that case, the advertising expenses must be listed in the same accounting period as the sales rather than in a different period.
5. Objectivity. This principle states that financial statements should be based on objective evidence rather than personal judgment or opinion. This means that the financial statements should be based on facts and figures that can be independently verified rather than on subjective estimates or assumptions.
Different Types of Bookkeeping
Traditionally, bookkeepers and accountants use either single-entry or double-entry bookkeeping. However, thanks to the advancement of technology, computers have made bookkeeping much easier. Nowadays, entrepreneurs can either do their own bookkeeping or outsource it to offsite bookkeeping services.
Single-entry bookkeeping is a simple method of recording financial transactions in which each transaction is recorded in only one place. This method is typically used by small businesses and individuals with few financial transactions who do not need to produce complex financial statements.
Double-entry bookkeeping is a method of recording financial transactions in which each transaction is recorded in at least two accounts. This approach is based on the principle that every financial transaction affects at least two accounts.
Bookkeeping software is a computer program used to record and track financial transactions. It automates many of the tasks involved in bookkeeping, such as recording transactions, generating reports, and reconciling accounts. Many bookkeeping software types are available, ranging from simple programs for small businesses to more advanced systems for larger enterprises.
Virtual or off-site bookkeeping refers to the act of outsourcing a business’s bookkeeping function to a remote service provider. The business owner or manager provides the bookkeeping service provider with the necessary financial information in this arrangement, then the service provider remotely handles the bookkeeping tasks using a bookkeeping software and other tools.
The Bottom Line
As a business owner, you will want to capitalize on the benefits of hiring bookkeeping services. A reliable bookkeeper will manage your financial records and reports, ensuring their accuracy and timeliness in order to help in your decision making and compliance with tax laws. They will be a big help in freeing up your time so you can focus on other important aspects of your business, such as marketing, sales, and product development.
Don’t let bookkeeping stress you out any longer. With our reliable and accurate bookkeeping services in Las Vegas, you can focus on running your business and leave the financial record-keeping to us. Schedule a meeting with us today.