Everyone knows the crucial role that bookkeeping plays in a business of any size. The financial health of a company needs to be maintained. Every transaction made should be tracked and monitored. With proper records, it will be a lot easier to make financial transactions — from receiving revenue to paying rent. Should there be a discrepancy, bookkeeping will make it easier to reconcile company records with the bank statement to spot the error. To put it simply, bookkeeping stabilises and regulates the financial flow of the company.
But how do you go about handling bookkeeping? Do you outsource the task to a freelance bookkeeper or accounting firm? Do you use online bookkeeping software? Or do you have an in-house bookkeeper? In this article, we will tackle the three types of bookkeeping that you can use to help your business keep up-to-date financial records.
Local bookkeeping involves hiring either a freelance bookkeeper or a firm to do the job. A person or team will record and monitor the financial transactions of your business on a day-to-day basis. This includes business transactions such as purchases, sales, receipts, and payments, among others. There are two types of local bookkeepers often outsourced. They are as follows:
● Freelancer: There are freelance bookkeepers out there who have the credentials and the experience in the field of bookkeeping. A freelance bookkeeper may work with you one-on-one to get your books done. They may be able to work online, in-person, or at your business. Most of these solo practitioners have a track record of experience and varying level of skills. They may not only work for your company alone, but serve other businesses as well.
● Firm or Agency: Bookkeeping firms or accounting agencies also serve companies other than yours. In terms of costs, firms will generally charge more than a freelance bookkeeper. However, they offer assurances that solo bookkeepers often cannot. They typically have a team to do the bookkeeping with some members being assigned to specific areas. In the case of one member taking a leave of absence or quitting entirely, another can take over. This is the advantage that a firm holds over a freelancer.
Cloud bookkeeping involves the use of web services or accounting software. You can either have someone handling the transaction recording and monitoring online through virtual assistance or use automated accounting software that can track and monitor your business finances with your assistance. Cloud bookkeeping, therefore, combines the best elements of bookkeeping software and traditional bookkeepers.
Please be advised that cloud bookkeeping will only work for you if you:
● Use online banking and are comfortable on the web
● Prefer a flat monthly rate over hourly billing
● Want online access to your financials via a mobile app
● Prefer chatting online or on the phone rather than in-person
Cloud bookkeeping either connects you with real bookkeepers via a secure, online account or allows you to access automated software that provides bookkeeping features. The first option enables you to manually input the data while your bookkeeper can record, sort out, manage, and calculate the data for transparent, effective, and efficient business transactions. The latter allows you to manually input the data in the system or software while its automated features will handle the rest of the bookkeeping job for you.
The first two types of bookkeeping may be suitable for your business, but if your business has outgrown the solutions we’ve covered, it’s time for you to hire an in-house bookkeeper. An in-house bookkeeper will work as a regular employee for you. Since you no longer need to outsource, all of the other manual tasks will be the in-house bookkeeper’s responsibility. With that being said, your bookkeeper should make sure they deliver accurate financial statements, tax-ready books, and a secure way to store and access your business’s financial records and data.
If you’re looking for a local Xero bookkeeper in Cornwall, get in touch with us today! We’re happy to help organise your business.