In today's fast-paced business environment, small business owners are continually looking for ways to optimize operations and reduce costs. One efficient solution is hiring a virtual bookkeeper. Virtual bookkeeping services offer numerous advantages, particularly for small business consulting firms seeking to streamline their financial processes.
Managing "The Books"
The irony is that, as important as finance and accounting is to businesses of all sizes, this is the first obligation ignored by small business owners and solo-prenuers. There's a variety of reasons for this, but they all can be boiled down to two major reasons:
Lack of Knowledge on HOW to do it
Many small business owners tend to ignore their accounting tasks simply because they don’t know how to do them. The thought of tracking expenses, balancing accounts, and managing invoices can seem overwhelming, especially when these tasks aren’t part of their skill set. Many small business owners believe that you need an accounting degree and all this technical knowledge to 'manage the books.' While this is true in part, it is not completely true. So, without proper training or support, accounting gets pushed aside in favor of other areas where they feel more confident, leaving their financials unorganized and potentially problematic.
Lack of Understanding of WHY to do it
Another reason small business owners neglect their accounting is that they don’t fully understand why it’s important. They may not see the direct connection between their bookkeeping and the success of their business, believing it to be just a mundane administrative task. I have heard business owners tell me several times,
"Why bother? I'm making money!"
I always respond the same way: "Prove it."
Without accurate financial records, it’s nearly impossible to make any informed decisions, understand cash flow, or plan for future growth (or sale!). This unavoidably leads to financial stress, strain and missed opportunities.
The Solution: Bookkeepers
A virtual bookkeeper is a professional who provides bookkeeping services remotely, typically via online communication tools and cloud-based accounting software. BreathEasy Consulting utilizes the industry standard Quickbooks Online for all our virtual bookkeeping clients. We find it to be very user friendly and very easy for clients to understand, even if they don't have a financial background.
Virtual bookkeepers, just like any other bookkeeper, manage a company’s financial records, track income and expenses, prepare financial reports, and reconcile accounts. The difference, of course, is that the 21st century and cloud computing allow for this service to be provided by experts from a remote location. Doing it this way allows for a greater pool of expert bookkeepers to be available to small business owners beyond what their local market might be able to provide. You are no longer reliant on your cousin, Agatha, who's pretty good at Excel.
Typical Responsibilities of a Virtual Bookkeeper
BreathEasy Business Coaching & Consulting organizes our virtual bookkeeping services into two major buckets: Standard and Advanced.
Standard Bookkeeping Services:
Standard Bookkeeping encompasses those tasks that ensure that a business's books are complete and accurate. This level of service is for company's that are relatively simple and don't employ many employees. Regardless, this level of service is still able to provide financial statements on demand (Income Statement, Cash Flow Statement, Balance Sheet). Services include:
Recording Transactions: Tracking income, expenses, and all other financial transactions.
Financial Reporting: Preparing financial statements like profit & loss statements, balance sheets, and cash flow reports.
Bank Reconciliation: Ensuring that the company’s records match bank statements.
Asset Depreciation: Ensures that capital assets of the company are properly depreciated so that the Income Statement is completely accurate.
Advanced Bookkeeping
This level of service includes all the services at the Basic level, but also incorporates more robust services and begins to look more like a permanent employee due to the ongoing level of attention required (AP/AR). Services can include, but are not limited to:
Accounts Payable and Receivable: Managing invoices, payments, and collections.
Payroll Management: Processing employee payroll and related tax filings.
Why Bother? I'm Making Money!
Returning to the example above for a moment, you'll remember that my typical response to this statement by well-meaning business owners is:
"Prove It."
I say this because these business owners never realized that they had to prove it. Tax season is always a long way off and the business owner never realizes that he has, as Karlton Dennis likes to say, a 'silent partner' in their business: the IRS.
The single most important reason to ensure your books are organized and accurate is to satiate the tax monster every year. You must convince it that you are telling it the truth about how much you made and how much you owe it. If it questions your assertions, be ready for a very uncomfortable conversation.
This means all T's must be crossed and all I's dotted. And it does nobody any good if you leave this work to the final weeks of the year. If you've ever been a 12 year old cramming for a math test on the bus-ride to school, you know what real panic feels like.
But there's another reason to make sure your books are clean, accurate and organized every month: Decision - making. How can you possibly know where to trim the fat on your operation if you don't have it specifically called out in a Profit and Loss statement? You might think that your operation is small enough now that you don't need a bookkeeper or to maintain your books up to standard. Perhaps this is true. For the small-fry soloprenuers out there, this might be correct.
However! It is when you are smallest that you have the greatest opportunity to build a solid financial foundation for your plans of world domination. You will learn the skills you need to keep your books straight as you go, when they are simple, instead of all at once and you're being 'invited' for an interview downtown. It turns out eating elephants and building good accounting processes are done the same way: one bite at a time.
Other People Will Be Judging Your Business Too
And oh, by the way: while we're talking about the importance of keeping organized books for decision - making, you might stop and consider that the decisions won't always be yours to make.
That's right; people completely separate from your company or business will ALSO be assessing your business. Entities like banks when you go for a loan or investors and partners who are assessing your business on whether they want to buy into the hot mess you've created.
Or what if you want out? You've poured your heart and soul (and 401k) into building your business but it didn't work and now you want to sell it. What person in their right mind would buy a business without looking under the hood and inspecting the financial statements? Are you in the habit of buying houses without doing an inspection first?
The Importance of Bookkeeping and Bookkeepers
The importance of keeping clean, accurate and organized books is a paramount importance. It's important to you to help you make spending decisions. It's important to the bank to help make lending decisions. It's important to partners to help make investing decisions. And all this begins at the lowest level possible: the bookkeeper.
You don't have to hire a full-time or part-time bookkeeper when you're first starting out; you absolutely CAN do it yourself. But beware! As busy as you will be with the daily demands of your business's operations in making revenue, keeping the books updated will be the first task to be ignored, I've seen it a million times. So instead, get yourself a virtual bookkeeper who will keep you and your silent partner satisfied. The very minor costs incurred is well-spent and helps you avoid the panic and fines you'll inevitably experience if you decide to ignore this most important task.
Sincerely,
R. Altomare
Founder, BreathEasy Business Coaching and Consulting
The Shameless Plug
BreathEasy Business Coaching and Consulting offers virtual bookkeeping services at very competitive rates based on the size of your organization.
When you sign up for Virtual Bookkeeping services by BreathEasy Business Coaching and Consulting, you get:
QuickBooks Online subscription - INCLUDED
Monthly Financial Statements - INCLUDED
Quarterly Financial Trend Analysis - INCLUDED
Quarterly Financial Forecasts - INCLUDED
Monthly Graphical Financial Reports - INCLUDED
So if you are considering starting or changing bookkeeping services, please consider BreathEasy as your partner in your success.
You may schedule a free discovery call over zoom to discuss your needs below:
Alternatively, you may email at: rob@breathez.org or call directly at 904-274-3510.
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