Why Bookkeeping is Essential in Your Small Business

Author: Omar Helal

Hi there,

I’m Omar, bookkeeper and Certified QuickBooks ProAdvisor. Through my company Column & Post LLC, I provide remote bookkeeping services to businesses all around the state of Florida. I specialize in serving small businesses that can’t afford a full time bookkeeper, but still benefit from consistent bookkeeping.

Today we’re going to review some of the basics of bookkeeping. We’ll review what it means, why it matters, and what key questions you should be asking yourself as a small business owner. Let’s begin by reviewing the primary tool for bookkeeping: QuickBooks.

What is QuickBooks?

The most common software for bookkeeping and accounting at the small business level is QuickBooks, by far. As a certified QuickBooks ProAdvisor, I am a specialized expert in QuickBooks. I do not work for QuickBooks, but I do use their software with all my clients.

There is both a desktop version and an online version of QuickBooks. I recommend Quickbooks Online (in its various versions) over the Desktop version to improve collaboration with your accountant and bookkeeper as well as your clients. Desktop may save money in the short-term as you only purchase it once, but you don’t get the online updates to the software and everything runs on one computer (aka you have to do everything yourself).

Quickbooks Online can instead grow with you and your business. There are different versions with different features, so you can choose the level that works best for you. Plus, the cost will vary based on these features so you pay for what you need.

What is Bookkeeping?

So what is bookkeeping exactly? The best way to understand is to recognize that a bookkeeper is one part of your whole financial team. This team may include accountants, financial planners, stockbrokers, and more.

The bookkeeper is the most fundamental part of the team. Why? Because the other members of the financial team use the information provided by the bookkeeper to assist in their work.

The core job of a bookkeeper is to organize and manage financial data. That financial data is then used for all sorts of purposes. For example, an accountant may analyze and interpret that financial data, and use it to provide advice on taxes. A financial planner may use that financial data to understand your financial situation and help you make long term plans.

Basically, think of building a house. Your CPA, financial planner, and others may help build different parts of the house. But as a bookkeeper, I make the bricks that they build with. 

Incidentally, if you are looking to add other members to your financial team, you can find some great ones right here with Business Power Partners. Justine Sachetta is an excellent financial planner, and Darrion Woods is a banker specialized in dealing with small businesses. If you don’t already have these members of your team, or even if you do, I highly recommend contacting them. You can find their information by clicking here!

Because a bookkeeper is just one member of a financial team, I think it is important to meet other members so that everybody can coordinate and align with your goals. That is why if you have a financial planner, CPA, or other financial professional assisting you, I will talk to them directly if given permission. I will even offer to sit in on meetings so that we may collaborate and I can answer questions about your books on your behalf, hopefully making those meeting a little less stressful for you.

What Does a Bookkeeper Do?

Most bookkeeping work is done within QuickBooks. That means handling accounts receivable (money paid to you) and accounts payable (money you pay to others), managing the chart of accounts, classifying transactions, and more.

Other services that a bookkeeper may offer include payroll services, sales and use tax filing, inventory tracking, and more. Though these tasks are typically performed outside of QuickBooks, I do have experience with them and will offer these services to clients.

Another critical aspect of bookkeeping is financial reporting. As a bookkeeper I use the financial data input into QuickBooks to generate reports that give you a clearer picture of your business. These reports can tell you what your profit for a certain time period has been, how much money your customers owe you, which vendors are giving you the best price on certain products, and more. Education is also a part of what I do. That’s why I don’t just send you reports, but also offer regular meetings with my clients to clear up any questions they may have about the reports.

Below is a more detailed list of tasks that a bookkeeper may help with. Skim it over, but don’t worry, you don’t need to read the whole list unless you want to.

• Accounts Receivable: Money that you make from your customers

  • Invoices

  • Credit Memos

  • Refunds

  • Discounts

• Accounts Payable: Money that you pay to vendors

  • Bills

  • Vendor Credits

  • Deposits

• Chart of Accounts Management

  • Products and Services

  • Assets and LIabilities

  • Loans

  • Deposits

• Transaction Classification

  • Connecting Bank Accounts

  • Data Entry

  • Receipt/Invoice Management

• Payroll

  • ADP, Paychex, Quickbooks Payroll

  • Employee vs Contractor

  • Form 1099

• Inventory

  • Inventory Tracking Systems

  • Price Tracking

  • Reporting

• Sales Taxes

  • FL Sales & Use Tax

  • Discretionary (County) Sales & Use Tax

  • Reports to file taxes

• Insurance Audits

  • Workers’ Compensation

  • General Liability

Why Bookkeeping Matters?

There are many benefits to good bookkeeping, but the short of it can be explained as such: Would you drive a car blindfolded? No? Then don’t run a business without bookkeeping.

You can not make decisions effectively in your business unless you are informed. And you can’t be informed if you aren’t on top of your bookkeeping.

I get that sometimes it can be hard to see how the back-end logistics are helping provide growth to the front-facing part of your business. The flashing green signs of cost impede what your business truly needs to thrive. So take this note and understand that a good bookkeeper on your side can help you in numerous ways, adding value to your business overall.

Good bookkeeping practices means you have:

• Better financial decision making

• Reduced stress and more time

• Improved cash flow

• Minimal tax filing and compliance issues

• Maximized the value of your financial team

• Gained critical reports for funding

• Support for lease agreements

• Improved fraud/theft detection

• Trust among business partners

Finally, if you are a small business owner, I encourage you to ask yourself 4 simple questions:

1. Am I making a profit? How do I know?

2. Am I wasting my time with certain clients or projects that are taking away from my overall value?

3. If I’m making sales, then why do I keep running out of money in the bank?

4. Am I spending my time doing what I envisioned when I started?

Together we can find that answer to these questions, and many more.

To learn more about How Good Bookkeeping Powers Small Business Success, check out my full article on this topic.

And if you’re ready for a free 15-minute consultation to see how a bookkeeper can help you in your business, contact me today. We can discuss my comprehensive process, your individual needs and priorities, and any questions you may have.

Let’s decrease your stress and increase your business growth together!