Bookkeeping For Small Business Owners 101 – How Virtual Assistants Can Help?

Bookkeeping is one of the most critical parts of running a small business. A company's ability to manage its finances effectively is the foundation of its success, and maintaining accurate books is essential to this process.

Initially, bookkeeping for small businesses seems like an easy task. But as your company grows, you could get too busy, or it might get too complex for you to handle on your own. It can get real hard, right?

If you don’t wanna end up like Scott, hiring a virtual business bookkeeping expert can be the real deal. These experts can offer top-notch and tailored services to manage your finances effectively.

Whether you want to handle the books yourself or delegate that task to virtual bookkeepers, this blog will help you grasp the basics of bookkeeping every small business owner should know about.

How to do Bookkeeping for Small Business?

Set up a general ledger to record transactions

Previously, firms would keep track of their financial activities in books known as the general ledger. That concept is now outdated, and general ledgers are now primarily virtual.

There are several methods for creating a general ledger virtually. Google Sheets are the most accessible and affordable. However, juggling various accounts can make general ledgers complex significantly as the size of your business and transactions increase. Thus, businesses can hire a skilled virtual assistant who can help them manage their accounts and books efficiently.

Manage your accounts payable and receivable

Small businesses must manage their accounts payable and receivable to guarantee prompt payment for goods and services that have already been purchased or provided. Sending estimates and invoices, keeping track of due dates, and classifying unpaid expenses as accounts payable are all part of the process. You can choose to use separate invoicing software or accounting software with invoicing features like automated payment reminders.

Create a payroll system

Some companies use their accounting software to handle payroll processing, while others use a different payroll software product. The software you select, the number of employees you have, and whether you provide additional benefits to them will all affect how you set up and manage payroll.

Segregate your expenses into business and personal

Open a corporate bank account and keep your company and personal finances separate. There are a few reasons for this.

One major factor is liability. For example, suppose you run a business or LLC from the same account and mix your finances. In that case, there's a chance that you might be held personally accountable for any debts or financial trouble your business gets into.

Taxes are also a significant factor in why you shouldn't combine your personal and business accounts. A company cost may end up in your personal account, causing you to miss out on a significant tax deduction.

Organize documents and financial statements

Keeping accurate records is a key bookkeeping component. This includes documenting transactions and saving bills, invoices, and receipts to have all the information you need to run reports. Accounting software simplifies storing and retrieving these documents in case of an accounting error or audit.

Work with a tax expert

Small businesses frequently work with tax advisors to help them prepare, file, and ensure they take advantage of small-business tax deductions. Even though you might not work with a tax professional on a regular basis throughout the year, you should get in touch with one as soon as possible to avoid being pressed for time when tax season rolls around.

Set up your accounting software

This process frequently entails entering data about your company, linking your business bank accounts, and utilizing the software to make the necessary corrections and look for errors. It is also a good idea to look over the chart of accounts to make sure it is set up for your company in a logical way.

Pick a bookkeeping entry method

There are two types of bookkeeping for business: single-entry and double-entry. It is important to select a technique before you start maintaining financial information. The method you select influences how you enter each financial transaction.

• Single-entry accounting is the most basic type of bookkeeping. Each financial transaction must be recorded just once in your total bookkeeping record. This approach suits freelancers or small business owners with only a handful of monthly business transactions.
• Double-entry accounting is more complicated but more durable and better suited for businesses that have progressed beyond the home office stage with a few monthly orders. All transactions are recorded in a journal under double-entry bookkeeping. Subsequently, each item gets registered in the general ledger twice, as a debit and a credit.

Among both these methods, double-entry bookkeeping is often recommended for most small-business owners. You can hire a bookkeeper from Wishup who is skilled in both these entry methods.

Choose an accounting method

You can select either cash-basis accounting or accrual-basis accounting. Your reports will look different depending on which you choose.

Cash basis accounting records transactions only when the payment is received, without considering any pending invoices or outstanding bills.

Accrual basis accounting keeps track of invoices and statements even when the price has not been made yet. It is generally considered the preferred accounting approach and is more closely aligned with generally accepted accounting principles.

Manage your transactions

Managing transactions is an important aspect of daily bookkeeping. Once you have established your financial accounts and chosen a bookkeeping system, you must track your finances. In addition to getting the data in hand, you must select which accounts will be debited and which will be credited. Each transaction must be documented accurately and in the correct account to get an accurate financial picture of the company. It involves properly importing and categorizing transactions, resolving these transactions,

Know the basic bookkeeping and accounting jargon/lingo

The most important part of learning how to do bookkeeping for small business is to learn basic bookkeeping jargon. Here are some common ones you should know:

• Assets: These are the things or resources your business owns. It includes equipment, inventory, furniture, or cash.
• Liabilities: These are the debts or obligations your business owes to others. For example, loans or accounts payable.
• Income statement: A detailed financial statement indicates your business's expenses, revenue, and profit or loss over a specific period.
• Balance sheet: It is among the most important financial statements that shows a business's assets, liabilities, and equity at a particular point in time.
  

Keep accounting statements updated

When doing bookkeeping for business, make sure to keep your accounting statements updated at all times. This will help you track financial progress and make better decisions.

Ensure your books are ‘balanced’

Account debits and credits should match when totaled somewhere at the end of the month, quarter, and year. If they do, this indicates that your books are "balanced."

In brief, you should use this formula to ensure that your books are appropriately balanced -

Liabilities + Equity Equals Assets

As an entrepreneur, you can’t afford to make mistakes and lose time. Therefore, hiring a home business bookkeeping assistant is advisable to ensure your accounts are balanced correctly.

Make bookkeeping a habit

Like everything else in business, it would benefit you greatly if your books were maintained regularly on a proper schedule. This will create uniformity and give you a sense of stability and security with your finances. It will also help you prevent future issues.

Why is bookkeeping crucial for small businesses?

Whether you take care of the bookkeeping yourself or outsource it to a bookkeeper or small business assistant, it is imperative that your bookkeeping is done correctly. Here are some of the reasons why bookkeeping for small businesses is essential:

• Splitting your business and personal funds guarantees that you are not personally accountable for any debts or troubles arising from your company.
• Monitoring a company's financial health identifies opportunities to enhance practices or areas needing improvement or changes.
• Bookkeeping for small businesses helps find those silly errors early on by monitoring payments, and reconciliation helps prevent financial problems in the future.
• It is possible to save money and simplify accounting for small business by optimizing tax processes and partnering with tax experts.
• Accurately maintaining paperwork and data makes processes like qualifying for a loan easier.

Who can manage your small business bookkeeping tasks?

There are two primary ways to address bookkeeping for small business:

Outsourcing to a virtual bookkeeping service provider

Another option is to outsource your bookkeeping. With this service, you will be offered a virtual bookkeeper with whom you can communicate entirely via email or phone without having to make time to meet in person. The services will vary depending on the provider, so you must carefully consider your options and choose the best fit for your small business.

Hiring full-time bookkeepers

If you prefer, you have the option to hire a bookkeeper to work exclusively for your business on-site. In this case, it is important to prepare some interview questions that will assist you in selecting the most suitable candidate. By bringing a full-time or part-time professional into your business, you can benefit from their expertise and knowledge, and their familiarity with your company's finances, accounting software, and processes. However, hiring a full-time bookkeeper might cost you a hefty price and a lot of resources.

Who is a Virtual Bookkeeping Assistant?

A virtual bookkeeping for business assistant is a professional who provides bookkeeping services remotely, so you don't have to worry about hiring a full-time in-house bookkeeper. They can help you manage tasks like keeping accurate records, reconciling bank statements, and preparing financial statements while saving you time and money!

An online bookkeeping assistant is proficient in handling different accounting software and is fully trained in complex bookkeeping methods and processes. They will ensure all your business finances are up-to-date.

Is hiring a Virtual Bookkeeping Assistant for small businesses a good idea?

Bookkeeping is an incredibly important part of a business's financial management. However, it is a complicated and time-consuming process. Thus, hiring a virtual bookkeeping assistant can help small business owners to streamline their bookkeeping processes and focus on growing their businesses.

Here are the top three benefits of hiring a VA bookkeeper:

1. They help you save time

Small business owners already have a long to-do list. Thus, they may not find enough time to do their bookkeeping. Hiring a basic bookkeeping small business expert can help you save time and energy for other critical business tasks.

2. They enhance scalability

A virtual bookkeeping assistant's services are flexible, so you can scale up or down depending on your business's needs. This scalability makes it an excellent option for budget-conscious entrepreneurs.

3. Enhanced expertise and accuracy

Bookkeeping assistants know the ins and outs of accounting software. They stay on top of the latest tax laws and regulations. They can provide you with reliable and accurate bookkeeping services online to keep your small business on the right track and avoid costly mistakes and penalties.

Why choose Wishup for all your bookkeeping requirements?

1. You get cost-effective online accounting and bookkeeping services

For your business to grow, cutting costs wherever possible is essential. This is why employing a Virtual Assistant is an excellent alternative to a full-time accountant. Virtual bookkeeping services are paid by the hour and don’t require additional benefits, bonuses, paid leaves, insurance, or retirement pension plans.

2. Virtual Assistants are accountable

Unlike regular employees, you can track precisely how much work they do in an hour. In addition, at Wishup, our Virtual Assistants will send you a detailed daily report with the tasks they achieved during that working day.

3. Work with the Top 1% of talent

Recruiting a quality employee is a tiresome process and can take weeks. At Wishup, we handle the screening and hiring process and hire only the top 1% of candidates.

4. Your finances are in safe hands

At Wishup, we understand that financial security is essential for businesses. Your finances are in good hands with us, and we will keep your sensitive financial info secure and confidential.

5. Onboard your virtual assistant in less than a day

At Wishup, we enable you to onboard your VA in less than 24 hours! Thus, you won't have to halt your operations or compromise your productivity.

6. You don’t have to spend a penny on training

At Wishup, we train all our bookkeeping assistants in 70+ accounting and bookkeeping tools to ensure they are prepared for the job. Thus, you won't have to spend any money on training them.

7. Wishup offers an incredible no-questions-asked refund policy

At Wishup, we strive to give our clients the best experience. Thus, we offer a no-questions-asked refund policy if you're not content with our services. Making sure our clients are satisfied is important to us, so we'll do whatever it takes to make it happen.

8. Instantly replace your VA (if unhappy)

Sometimes things don't work out as planned, we understand this. Thus, we offer the option to instantly replace your virtual bookkeeping assistant if you are unsatisfied with their work.

9. Try out your VA with a 7-Day Free Trial

Try us out for a week and see if we're the perfect bookkeeping assistant for your business! Our services are available for a 7-day free trial. You can test us out and ensure we're the right fit before signing any long-term contracts.

Conclusion

That was all about how to start keeping books for a small business or hire a virtual assistant to do that for you. As a small business owner, you can catch a break by hiring a virtual bookkeeping assistant to take care of this task. This way, you can be sure that the job is being done by someone who knows what they're doing and has the qualifications to prove it.

If you are looking for a competent online bookkeeping assistant, we at Wishup have you covered! Visit our website and book a free consultation or contact us at [email protected]

FAQs related to Bookkeeping for Small Business

What kind of bookkeeping is used by small businesses?

Cash-based and accrual accounting are the two main accounting techniques used by small businesses. Even though the cash-based method is the simplest to use, not all small businesses should use it.

Can you do bookkeeping by yourself?

As you start out, doing your books might seem like something you can do by yourself. However, it might get complicated as you start to expand your business. In such a scenario, it is a good idea to hire online bookkeeping services.