Whether you are running a small startup or managing a large enterprise, keeping accurate financial records is vital for informed decision-making, tax compliance, and long-term success.
Who is a virtual bookkeeper, and why should you hire one?
A virtual bookkeeper is one who is capable of handling your books from anywhere. You can easily communicate your financial data with your virtual bookkeeper via the software you two are using, and he will organize them in the best of your interest.
One should hire a virtual bookkeeper because:
- They help the business save on annual operating costs.
- They are more flexible with work timing.
- They help in keeping track of your financial data, along with up-to-date payment and invoicing.
- They help maintain an accurate financial book for the business.
Another benefit of virtual bookkeeping is that it is quicker for virtual bookkeepers to administer digital transactions like debit cards, credit cards, PayPal, etc.
Types of businesses that are mostly likely to opt for virtual bookkeepers:
- E-commerce stores
- Application developers.
- Software designers and engineers (freelancers)
- Writers and illustrators (freelancers)
- Health professionals who prefer online bookings and payments.
Why is Bookkeeping important for your small business?
- Tracking Profitability
Measuring a company’s profitability allows it to monitor changes in its revenues and the possibilities of increasing it in the next periods. Some helpful profitability ratios that let you gauge your company’s efficiency include:
- Gross margin ratio
- Profit margin
- Return on assets ratio
- Return on equity
- Return on capital employed
- Maintaining Cash Flow & Improved Financial Management
As a responsible small business owner or bookkeeper, you should be aware of your company’s revenue streams. Proper financial records make it easier for you to analyze the financial state of your firm and determine areas that need improvement.
- Preparing for taxation
If you run a start-up, recording transactions as they happen can save you time and prevent last-minute scrambles for financial information. Good bookkeeping helps you identify tax types and calculate amounts due in advance.
- Easier Reporting
Bookkeeping programs with visual aids like graphs and charts improve data accuracy and communication with investors. Effective bookkeeping provides the necessary information to engage your team and foster a sense of inclusion.
- Evaluate Performance & Plan for the Future
Accurate bookkeeping is crucial for tracking your company’s financial records and assessing performance. It allows you to identify trends, compare past results, and understand where to cut costs. This insight can help you adjust your strategies and keep your business on track.
Steps on how to handle bookkeeping for your small business
Step 1: Collect your financial documents.
First, you need to collect all the required financial documents, such as invoices and receipts, and track all sales and purchase transactions, along with payroll records and tax returns.