To say this is the dawn of the new age of start-ups, would be the understatement of the century. Since the 1900s the idea of a start-up has grown so much that statistics are asserting the fact that almost 90% of businesses fail to stay alive. So, if the numbers show that every day about 130,000 businesses are established and 90% of them fail, then that’s at least 120,000 businesses that have just failed by the time you finish reading this sentence. Read more about this here.
Which brings me to the point of asking the obvious question of whether any of those failed businesses had anything to do with keeping records, or lack thereof; or perhaps if any of them knew how important it is to keep a record of their business’s numbers? We will never know.
But for those of you who are still floating above water, congratulations, you still have a chance! Read on.
What is Bookkeeping?
Did you know, that the idea of this dates back to the 1490s? According to written history, a gentleman by the name of Frater Luca Pacioli issued what is to-date documented as the first all-inclusive text about this profession, mentioning tools like ledgers and journals. The title of this book was ‘Everything About Arithmetic, Geometry and Proportion.’ This publication comprised of a detailed description of the familiar typical accounting system that we use worldwide today https://en.wikipedia.org/wiki/Bookkeeping
To anyone that owns a business or works in one, the chances of them hearing this phrase at least once is very high. So, what is it, one may ask? In a nutshell, this business process refers mainly to a record-keeping facet of financial accounting and involves the preparation of said documents for all dealings, procedures, and other proceedings of any business. In other words, as the name entails its ‘keeping book’ or is a book-keepers profession
How Many Types Are There?
There is more than one standard method of keeping a book, including the single-entry (also known as the cash book) and double-entry systems. These are typical to this process, however, any act that involves the recording of a financial transaction falls under this category of services.
Nowadays you not only get manual accounting data input systems but it is also very common to use an electronic or online bookkeeping system or software, especially in big companies and accounting firms.
The various other methods of recording transactions can be done through:
Petty Cash Books: These are often used to record small purchases of a limited value recorded by a junior cashier, and the petty cash is usually provided by a senior cashier to cater for small expenses like postage or a small amount of simple stationery for the office. The expenses are reimbursed every few days or weeks.
Journals: Come in two types, a Credit journal and a Debit Journal. As per their names, one is for sales and the other for purchases.
Day Books (also known as a book of original entry): Is both descriptive and chronological, similar to a diary. It is used to record any day-to-day financial dealings. The details are then transferred onto a Ledger.
Ledgers (or General Ledgers): A record of any accounts is known as a Ledger. This comprises of a permanent summary of all amounts entered from various sources such as journals etc collected into one. They are detailed transactions recorded separately by name, date, description, balance, expense, to name a few.
You can get two types of general ledgers: A Sales Ledger and a Purchase Ledger. The difference between both is in their names.
Where Do You Go If You Are Looking for a Bookkeepers Services?
One would say the obvious answer to this question is to go to an Accountancy firm – it is not as simple as that. You first need to know what type of service you require. There is no one-size-fits-all.
As your business grows and, so does your clientele, employees or even your vendors; keeping track of how much of your hard-earned money comes in and how much of it goes out, can get a bit messy, not to mention time-consuming.
Let’s look at an Abbotsford Bookkeeping Company for instance. These professionals, unlike accountants, handle the day-to-day task of recording financial transactions, including a detailed outline of all your purchases, all your receipts, payments made and also all your sales.
What to Look for In A Bookkeeping Company Like This?
Well-established companies like the one mentioned above would have a few significant characteristics that are worth looking out for if you want to hire professionals:
- They would usually offer free consultations
- Even though they are busy they will try and be flexible with their appointments
- They offer Tax Preparation Services and regular follow-ups thereafter
- They are family orientated
- They provide advice on things like how to improve your business or how to reduce your taxes
- Ideally, they should be able to help you predict where your business will fail, and where it has the potential for improvement
- They usually offer a fixed fee as opposed to unexplained high fees or small print that charges you extra
- The company would be using the latest online software
- The company would offer its clients a service guarantee https://en.wikipedia.org/wiki/Service_guarantee
- They offer more; for example, before and after-tax consultation and Payroll services
- As a bonus, their employees may speak more than one language, catering to a wider clientele
- They are detailed oriented
- The popular ones usually have client reviews left on their website
- A Bookkeepers overall purpose is to help you save money and increase profits
Instead of handling your business paperwork as a universal task, these companies offer a comprehensive and thorough look at your financials.
Not everyone is tech-savvy and sometimes we need help, and that is okay. So, if you are not inclined towards the DIY route of bookkeeping. Hiring the services of knowledgeable firms can mean the difference between joining the 90% of failed businesses or the 10% who are out there living a success! Learn more here.
However, if you need help with items like audits or preparing financial reports and balance or income sheets, then an accountant would be the best man for the job. This class of professionals also has its fair share of different categories. For instance, you get an accountant known as an ‘auditor’ or one that’s called a ‘cost accountant’. Perhaps you are looking for a management accountant?
Knowing who you want is a crucial step towards avoiding any unnecessary expenses and/or a personal waste of time.