There are plenty of benefits to having accurate books. Through them, you can generate factual and real-time reports for decision-making. When you have the correct data, you won’t dread tax season because you’ll be ready. You won’t fear submitting inaccurate declarations that can get you into trouble later on.
When you organize your books properly, all the collected data becomes historical records you can look back on for comparative analysis. This data collection can also help you in tax preparation and business forecasting.
There are so many more advantages you can enjoy when you manage your books responsibly, and you can achieve this easier with the help of experts. So why not partner with a virtual bookkeeping service company? Two heads are better than one, as they say. The team you’ll partner with can help keep the data in your books accurate.
But despite the assistance, you still have some work to do. Check out these seven tips to ensure you get flawless data from professional accounting services.
- Learn bookkeeping jargon
It’s helpful to know basic bookkeeping jargon so that you understand what you see when you look at your books. Here are some terms you can begin with:
- Accounts payable: Bills you have yet to pay to suppliers
- Accounts receivable: Money buyers owe you
- Assets: Money, equipment, and accounts receivable the company has
- Balance sheet: A report containing business assets, liabilities, and equity
- Accruals: Any income and expenses that haven’t reached or left your account yet
- Cash flow: Money that goes in and comes out of your account
- Cost of goods sold: Investment to manufacture products
- Credit: Accounting entry that either brings down assets or increases liabilities and equity
- Debit: The entry that increases assets or decreases liabilities
- Income statement/Profit and loss statement: A report that shows the income you make and the expenses you spend
- Net income/Net profit: The result of subtracting expenses from revenue
Knowing these terms means you can check the accuracy of your books more thoroughly. You and the bookkeeper you are working with will be on the same page, using terms you both understand when you communicate.
- Learn about available bookkeeping assistance
You must decide whether to hire an in-house accountant or outsource the work to freelancers or bookkeeping companies. Each has its advantages and disadvantages.
In-house bookkeepers
When you have an in-house bookkeeper, you do not have to worry about explaining your business and operations. Your bookkeeper will be familiar with the company’s ins and outs because they work in the same place as you.
Freelance bookkeepers
Meanwhile, you’ll save some costs when hiring freelancers because you can hire them only when you need updated books. However, your records won’t be updated in real-time. And if they have to cram backtracking all transactions from January to the current month, errors are more likely to occur.
Virtual bookkeeping services
Bookkeepers from a virtual service company may not be physically in your office, but you can schedule regular meetings with them for updates and for them to get to know your business. Because of the direct communication and real-time updates, you can better ensure your books are updated and free from errors.
- Utilize live bookkeeping
Live bookkeeping should be one of the top features you look for in a virtual bookkeeping company. This service means your books will always be kept up-to-date, with transactions from the previous months recorded and organized, and current and incoming undertakings placed promptly in the books.
When everything is updated, you can regularly review and reconcile your accounts to check for any inaccuracies. And if you ever need to generate reports, you’ll know that what you get will all be factual and up-to-date.
Depending on the offer of the agency you are partnered with, you can ask for these checks and reports regularly.
- Check their apps and software
You must also be well-versed in the latest bookkeeping software to check on what your partner agency uses. Quickbooks bookkeeping, Xero, Sage, Hubdoc, A2X, Taxomate, and more reliable software are green flags. These are the software features that ensure data accuracy:
- Automatically records and categorizes bank transactions through bank connections and reconciliation
- Has integrated time and project tracking features that record time and project progress, calculate compensation, and process payroll
- Streamlines reception and creation of payments to keep accounts payable and accounts receivable updated
- Gets snapshots of receipts and documents for automatic translation to usable, text-form data
- Allows integration of inventory data from eCommerce sites into the accounting system
- Enables expense tracking feature for processing and recording expense claims
- Stores a contact list for accurate information about suppliers and buyers
- Equipped with tax calculating features that update automatically according to the latest tax laws and regulations
With these features, you never have to rely on manual input, which decreases the risk of errors and inaccuracies significantly.
- Get services ahead of tax season
Another cause of inaccuracies in data, especially during tax season, is only doing bookkeeping during tax time. Recovering data backlogs in a short period of time can cause bookkeepers to make mistakes. So, to ensure you get the correct numbers for taxes, do not cram. Make bookkeeping a part of your daily operations. Not only will you be thankful when tax season comes, but you’ll also reap many benefits.
For instance, you’ll have an idea about the after-tax income you can spend to scale your business, pay loans, or save. Knowing how much taxes you will pay or have paid will also help you proactively work on lowering it in the next tax year. You can go from simply calculating and paying taxes to using the data to manage your business better.
- Enable desktop and mobile phone access
Checking the books frequently and regularly will help ensure all the details jotted down are accurate. Make this task easier through a software that allows both desktop and mobile phone access. After you have downloaded the software application on your mobile phone, you can log into your accounting software and stay updated wherever you are.
And if you have to fulfill any other tasks, like invoice creation and sending or making payments, you can do that on your phone too. If you are eager to learn about your business’s financial health and cannot wait for the bookkeeper’s report, the financial dashboard on your phone can give you a quick idea about it.
- Limit access to financial records
Many software are equipped with a feature that allows limited access to data and financial records. The owner can allow only the bookkeeper, accountant, and other key people in the business to see and edit details in the books. This way, redundant entries, errors, and the possibility of fraud are minimized or zeroed out. Only trusted people in the company can access financial records.
You can also protect your business from fraud by adding another layer of approval from authorized people for large financial transactions. By placing this process, you can review any major transactions being made before they happen. And if transactions are done by mistake, you can hold them immediately before money comes out of your account.
What Virtual Bookkeeping Services Offer
Even if you delegate the task of bookkeeping to your partner agency, remember these tips so you’ll know what to do to ensure your financial records are always accurate. Aside from bookkeeping, you can also get these assistances from a virtual bookkeeping company:
- Accounting for the creation of reports
- Forecasting of business finances based on collected historical data
- Payroll management, if you have employees
- Tax computation assistance from sales taxes to income tax returns and more
- Ecommerce business assistance like inventory management for various platforms (Amazon, eBay, Shopify, Walmart, WooCommerce, etc.)
- Consultations with professional bookkeepers and accountants
Agencies have trained bookkeepers and accountants in their team, so you can skip the hassle of looking for a competent freelancer in case you are planning to outsource. When you partner with them, you know that you are working with professionals you can trust, especially when it comes to money matters.
Aside from this, outsourcing to bookkeeping and accounting companies is also less costly with affordable monthly plans. No need to add another person to the payroll, which will cost you more in office resources, salary, incentives, and benefits. Plus, outsourced bookkeeping and accounting companies operate remotely, and you won’t have to deal with human resource management.
In Closing
Whether you outsource your bookkeeping or not, it’s important to get accurate data. Inaccurate data can lead to problems for your business—from incorrect tax filings to messy financial reports. Fortunately, you can use the seven tips mentioned above to ensure the data you’re getting from your virtual bookkeeping service is as accurate as possible.
Remember that no matter how reputable a service is, you still need to do your part as a small business owner to make sure your finances are in order. By following these tips and fostering the teamwork between you and your partner bookkeeper, you can hope for flawless financial data for your business.
AUTHOR’S BIO:
Mike Pignatelli, CPA, is the CEO of Unloop Accounting, an agency built to meet the accounting needs of modern ecommerce businesses. As an experienced financial controller, Mike has worked with various seven-figure inventory businesses. Mike and his team are your go-to accountants if you need reliable data to make sound financial decisions.
