Why Virtual Bookkeepers are Safer than an In House Bookkeeper

Many companies are starting to outsource their bookkeeping roles to virtual bookkeepers and for many good reasons. Outsourcing your bookkeeping can save a company allot of money over having an in-house employee, but did you also know that it introduces some very beneficial checks and balances to your accounting practices?

Accounting fraud can cost small businesses allot of money, and to lessen or avoid the potential for fraud a company would need to hire more than one person in order to separate duties which would drastically increase costs. Having an in-house bookkeeper also means that they have access to petty cash, checks, and may have friendships with other employees in the firm that they could collude with.

Hiring a virtual bookkeeper automatically introduces separation of duties as a check and balance since you are hiring a bookkeeper that has nothing to do with your business and doesn't have relationships with other people in the organization that they could collude with. Your virtual bookkeeper is setup with the appropriate access to your online bookkeeping software and is given the appropriate access to do their job and no more. They receive transactions from bank feeds, and they do not have access to these accounts. They also receive transactions via a receipt bank such as Hubdoc that have been scanned and submitted by people in the organization. Your virtual bookkeeper does not favor any employees and only categorizes the transactions as per the chart of accounts. The virtual bookkeeper provides the company with reporting that shows that all accounts have been reconciled correctly and denote any deviations in journal entries.

One of the easiest places in-house employees can steal money is out of the petty cash. A dishonest in-house bookkeeper may be able to take money from petty cash and create a transaction to cover up the theft. A virtual bookkeeper, however, does not have any access to petty cash and will get approval for all petty cash withdraw requests that they receive. This will alert in-house management much sooner to any petty cash withdraws that may have been made dishonestly.

Printing checks and approving checks can also be an area where your accounting system may be compromised by a dishonest employee. If one person is given access to print checks and approve them, they could easily print and approve their checks, or they could collude with someone internally? Your virtual bookkeeper will not have access to print checks either. If you do contract them to do accounts payable as an add-on service, they will use a third party provider and them internal manager will be the only one who can approve payments. 

Hiring a virtual bookkeeper will not only save you money, but it will also add some important checks and balances by automatically introducing separation of duties, removes contact with petty cash, and removes the ability to approve and print checks on your accounts. Hiring a virtual bookkeeper like Servant Bookkeeping Solutions can save you money and reduce the chance of fraud thereby helping your business to be successful!

5 Must Know Bookkeeping Tips for your Small Business

Proper bookkeeping is critical to the success any small business and it doesn't have to be something that the business owner ignores. Sometimes it is difficult to see the the importance of menial tasks such as saving receipts, documenting and classifying transactions when you don't see immediate return on investment, however these task when done properly allow you to see the true health of the business, allow you to make informed business decisions, reduce your tax liabilities, and ultimately help your business to be successful.

Tip 1 Keep Accurate Records

Yes, most of your day to day business records are located in your bank statements and credit card accounts. Some small business owners think that they don't need to save receipts because they can download their bank and credit card statements directly into Quickbooks or Xero, however there is more to it than that. If you are like the average business owner the end of the year comes very quickly and yes you believe that lunch at the local steak house was a business expense. However, remembering that you spent $200 on clients is not enough to meet the IRS requirements which state that you need the clients company name, attendee names, job titles, and the date of the event. Even if you had saved the receipts that information may be illegible by now. Servant Bookkeeping solutions can manage this for you and we utilize and recommend Hubdoc which allows you to take a picture of the receipt with your phone and put in a quick note with this information. Once entered in Hubdoc we will immediately have this information in which we can import into your accounting software so that your accounts can be reconciled correctly.

Creating a system to categorize and manage expenses throughout the year will save your hundreds of hours at the end of the year and expensive CPA hours preparing your taxes. By using a professional bookkeeper who charges a fraction of what your CPA charges you can save your company allot of money and still have accurate reporting to help you make informed decisions.

Tip 2 Keep your Accounts Reconciled

Account reconciliation is the process of validating the companies records against the bank or institution's transaction list to ensure that nothing was missed on either side, and that only authorized transactions were made. This can be a very tedious, but important process as it can have direct financial implications on the companies bottom line. I've known some business owners who don't reconcile and just go by whatever the bank says on the register, but this can be a huge mistake. First of all, not all checks that were written in the current month will clear the bank in that month. If this isn't taken into account on the registers it can skew the financial statements for that period, and if the owner is just looking at the register will think that he has more money in the bank than he actually has which can cause cash flow issues.

Banks make mistakes too, they have millions of transactions that go through sometimes daily and they may make a mistake in crediting or debiting your account. Regular transactions sometimes post twice, or do not post at all, sometimes refunds aren't credited back correctly causing the balance to be off. These mistakes sometimes take months to discover and correct and these mistakes can skew financial statements for the company making it difficult to understand where the company currently stands financially. It is important that the owner have a clear understanding of the companies overall financial picture as this helps him or her to make the right business decisions at the right time directly affecting the companies bottom line. 

At Servant Bookkeeping Solutions we can take this burden on your shoulders so you can rest easy that all of your accounts are reconciled on a regular basis. This service alone could save you more money than the cost of our standard fees and help you have the piece of mind that your accounts are protected, and accurate which rolls directly into the accuracy of your financial statements. 

Tip 3 Collect Applicable Taxes and Keep Separate

As a business owner you are responsible for collecting and paying sales and use tax as well as employment taxes. These taxes need to be taken out as soon as the sale is made or when payroll is completed. The longer amount of time that goes by before this occurs the more opportunities for errors to be made or for it to be forgotten. This is not your money and you are responsible for reporting and paying it either quarterly or in some cases monthly as defined by your state comptroller and the IRS. They are very serious about these being accurate and being filed on a timely basis otherwise you can face penalties or worse. 

Creating a system to accurate track and record these taxes and file them in a timely manner is important to keep your business compliant with the state comptroller and IRS and both have allot of power to collect these monies. Servant Bookkeeping Solutions can help you collect and file these taxes and keep your business compliant.

Tip 4 Make Sure Your Invoicing is Accurate

Invoicing is more than a request for payment from your customers. Invoicing should be tied to your invoicing and actual man hours that went into the product or service that you are selling and should be tied directly to these accounts in your bookkeeping software. Proper invoicing can save you time and money when ordering inventory, creating financial statements, and paying taxes and it will help you have a better understanding on the health of your business as well as having a good handle on your cash flow.

Invoicing is at the heart of your accounts receivable process and it directly affects the amount of money that is coming into the company. When done incorrectly you may have to create different invoices, delete invoices and recreate invoices and orders which is confusing to your CPA and can end up costing you allot of money at tax time. 

Additionally when your customers do have issues with your product, and they will, you will have an accurate record of the terms of the sale and will be able to take care of your customer more efficiently. 

Servant Bookkeeping Solutions can help you define a process that works for your invoicing process and help you put checks into place to ensure that invoicing is being done accurately and that your accounts receivable is appropriately aged.

Tip 5 Schedule your Financial Statements and Review

Many business owners look at the main financial statement, the income statement or otherwise referred to as the P&L (Profit and Loss) which is a very good report overall. The Income statement gives you a quick picture of your companies performance over a specified time period. Many business owners like to look at these quarterly, however at Servant Bookkeeping Solutions we like the opportunity to review this with you monthly so you have more time to make a course correction for your business if necessary. 

At Servant Bookkeeping solutions we also like for our clients to look at the Balance Sheet on a monthly basis. The Balance Sheet looks at a companies Assets, what they own, their liabilities, what they owe, and the Owners equity, what the owner has invested in the company. First of all this report allows you to see the mix that you have in each and you can easily see if you have started to take on too much debt, or if you could possibly leverage more debt to build the business. This allows you to make course corrections if necessary for your business. There are many ratio's that can be used on the balance sheet to determine the health of a company. Financial institutions will also require this statement when acquiring loans.

We also like to review the statement of cash flows with our clients at Servant Bookkeeping Solutions. The statement of cash flows breaks the balance sheet into Cash from Operations which shows your accounts receivable and payable, Cash used for investing purposes such as for equipment purchases, buildings, etc. Cash used for Financing such as paying loans and other liabilities. From the statement of cash flows you can tell how profitable the company is in its operations, is the company investing money so that it can continue to run as equipment breaks and grow as the market demands, and how is the company doing at paying down debt.

Many bookkeeping companies just provide the income statement or P&L to the business owner on a quarterly basis and leave it up to the business owner to figure it out. At Servant Bookkeeping Solutions we offer all three financial statements to our customers and we provide them 1 hour of consultation a month to go over the financial statements and discuss trends and provide information on what we see in the reports, and discuss any bookkeeping issues for that month.

Conclusion

If you are running a business you need to understand how important bookkeeping is to the health of your company. It can help provide you the information that you need to make informed decisions on your business to ensure that you stay in business. It is important that you keep accurate records and that you record that information for the transactions as soon as possible to maintain the integrity of your bookkeeping system. It is important that you keep your accounts reconciled to ensure that you balances are accurate, fraudulent or inaccurate charges haven't been made and that mistakes haven't been made. These transactions are ultimately the numbers in your financial statements so you need to ensure that they are accurate and categorized correctly.It is also very important to collect your taxes from sales and use and from payroll taxes immediately and keep the money separate so that it can be filed in a timely manner. Remember, that is not your money that you collected, it belongs to the government and they will collect it. As a business owner you want to ensure your invoicing is accurate as this is reflected all over your bookkeeping software and affects your financial statements and importantly affects when you get paid. Lastly you should be reviewing all three of your financial statements with someone who can help you understand what they mean and help you to make informed decisions that can improve the health of your company. If you need help with any of these tips for your small business be sure to reach out to us on our website at http://www.servantbookkeeping.com/ Thank you for reading!

The Importance of Account Reconciliation

As a small business owner you have to wear many hats and have varying responsibilities. Their are so many important things that need to be done and in the midst of fighting all of the fires that happen on a daily basis some things have to slip through the cracks. Many times the business owner has to focus on the front line activities, sales, customer service, and resolving issues that the back end of the business is unintentionally neglected. One of the important back end tasks is account reconciliation. Most businesses have multiple bank accounts, credit card accounts, loans, etc and the number of transactions on each of these are significant. 

Account reconciliation is the process of validating the companies records against the bank or institution's transaction list to ensure that nothing was missed on either side, and that only authorized transactions were made. This can be a very tedious, but important process as it can have direct financial implications on the companies bottom line. I've known some business owners who don't reconcile and just go by whatever the bank says on the register, but this can be a huge mistake. First of all, not all checks that were written in the current month will clear the bank in that month. If this isn't taken into account on the registers it can skew the financial statements for that period, and if the owner is just looking at the register will think that he has more money in the bank than he actually has which can cause cash flow issues.

Banks make mistakes too, they have millions of transactions that go through sometimes daily and they may make a mistake in crediting or debiting your account. Regular transactions sometimes post twice, or do not post at all, sometimes refunds aren't credited back correctly causing the balance to be off. These mistakes sometimes take months to discover and correct and these mistakes can skew financial statements for the company making it difficult to understand where the company currently stands financially. It is important that the owner have a clear understanding of the companies overall financial picture as this helps him or her to make the right business decisions at the right time directly affecting the companies bottom line. 

Cyber crime and identity theft are also a very valid reason for you to be diligent in ensuring that all of your accounts are reconciled on a regular basis. Going through the account transactions line by line is a quick way to identify fraudulent charges. Many times criminals will make small purchases to make sure that the account number is correct before making much larger purchases. If these are found quickly through the reconciliation process it can save the company much money and headaches. 

At Servant Bookkeeping Solutions we can take this burden on your shoulders so you can rest easy that all of your accounts are reconciled on a regular basis. This service alone could save you more money than the cost of our standard fees and help you have the piece of mind that your accounts are protected, and accurate which rolls directly into the accuracy of your financial statements. When you have accurate financial statements you are able to make better business decisions directly affecting the profitability of your company.

Be sure and check out our website at http://www.servantbookkeeping.com/