There are a few things that every business needs to be official:
- proper licensing,
- adequate capital,
- and a bookkeeper.
Bookkeeping is one of the few business services that no business should be without. While many business owners try to do it themselves, most don’t do it well. If they do, they are losing a lot of time from their own business.
There’s an ever-increasing demand for bookkeepers. As business owners in every industry realize they should let the experts handle some of their work, they’ve turned over the bookkeeping to professionals.
Offering bookkeeping in your business is about more than recording transactions; it’s about helping your clients build profitable businesses and stay in compliance with their tax obligations.
Most beginner bookkeepers wonder how long does it take to learn bookkeeping. The amount of time it takes to learn bookkeeping varies depending on the individual’s level of commitment and prior knowledge.
Generally, it can take anywhere between a few weeks to several months to gain a good understanding of bookkeeping basics. The time frame may also depend on the type of course or training program being used.
Self-study courses may take longer as learners will need to be disciplined and motivated to complete the material on their own. However, if learning from a teacher or tutor, progress may be faster due to the ability to ask questions and receive immediate feedback.
Generally, with enough practice and experience, bookkeeping can become easier and more efficient. It is a skill that becomes refined over time, and further study and continuing education may be necessary to maintain current knowledge and practices.
With all the changes happening in the economy, it is very critical for a small business owner to have a grip on the finances in their business in order to create and maintain success.
This article will guide you through what a bookkeeper does, why they are important, and help you determine if you have what it takes to become one.
What is bookkeeping?
A bookkeeper records a business’s day-to-day transitions. They classify transactions, reconcile bank statements, and prepare financial statements of the company’s finances. Depending on the needs of the company, bookkeeping can be done daily, weekly, or monthly.
The job of a bookkeeper is to make sure everything is in order. This allows the owner to know how their business is really doing, have their taxes prepared properly, and ensure profitability by being able to see even the smallest nuances of the company’s financial position. With a bit of knowledge of bookkeeping fundamentals, and a lot of attention to details, you can easily build a strong and profitable bookkeeping business.
Why is bookkeeping important?
Bookkeeping is important because it helps you measure the degree of success or failure of your business. It helps you understand if the expenses that are occurring are worth the return on your investment. Owning a business is an investment just like owning any other asset such as real estate or stocks or bonds. If the ownership of that asset is not making any profit, you can easily and quickly determine if it’s time to dump it.
If you have the ability to help your clients create accurate and meticulous records in the company, not only can you help measure the true performance of the company as mentioned earlier, but you can also help your clients be relieved of any undue stress and tension in the event of an IRS audit.
Having easy access to financial records and receipts is a game changer and really the difference between night and day when running a business.
Without records or receipts, you don’t know how much income or losses your business is making, you won’t have the financial statements you need to file tax returns, and the IRS can audit you and take you down. In this case, an ounce of prevention is worth a pound of cure, and having organized bookkeeping systems in place just makes sense to be a successful business owner.
Bookkeepers vs Accountants
You may be thinking you have to have a degree in accounting to do bookkeeping. That is simply not true. The role of a bookkeeper vs accountant is sometimes used interchangeably, the specific task being carried out determines which one is which. Though, one person can perform both roles.
The Bookkeeper’s Role
In a nutshell, bookkeepers are responsible for classifying the financial transactions of a company on a daily, weekly, or monthly basis. They then reconcile this financial data along with the company bank statements to ensure the accuracy of the transactions recorded.
In this sense the bank statements are a source of truth. The reconciliations must match the bank statements. This helps to significantly reduce the chances of errors. Failure to reconcile bank accounts increases the chance of having inaccurate data and unreliable information on the financial statements. Again, for a business to be successful you MUST have accurate records.
The Accountant’s role
While bookkeepers perform more of the grunt work and chore of maintaining the day to day financial data, accountants are responsible for generating the financial statements, and analyzing and interpreting the results to help the business owner see the bigger picture.
Using the data generated by the bookkeepers, they analyze the results, make forecasts and projections, and identify important trends. Accountants can not only help you to determine if and how profitable your business is, but also what to do with the profits to create a bigger return on investment, similar to a financial advisor. If you have the expertise and knowledge of tax laws, this is a win-win for your clients.
Therefore, being able to instill sound financial management habits is the foundation of success for any organization.
The advantages of owning a bookkeeping business
- There’s constant demand, in both up and down economies.
- It can be a solo operation, but easily scales to include dozens or even hundreds of employees.
- The entire business can be remote with everyone working from home, but can also be brought to an office.
- The industry has been growing each year as more people start businesses and look for ways to make their own lives easier.
Assessing Your Skills
If you’re considering starting a bookkeeping business, it’s wise to take inventory of your skills.
- Do you have a knack for numbers, a keen eye for detail, and a passion for helping businesses thrive, then starting a bookkeeping business might be your path to success?
- Do you have a solid understanding of bookkeeping principles? If not, are you willing to invest time in learning to boost your knowledge and increase your skills?
- Are you comfortable talking to clients? It’s very important to consider if you can handle delivering bad news to a client. Sometimes, a bookkeeper is the front line of keeping a business open financially.
There are many soft skills that can help as well. Can you sell your services effectively? Are you excellent at being organized and keeping track of when things need to be done and keeping yourself, your team and your clients on task? Do you have systems and processes in place to maintain open channels of communication and feedback to address client concerns promptly?
In part two, we’ll discuss if bookkeeping is right for you and the steps you need to take to get started.
Having foundational skills like these are very important to have and play a pivotal role in increasing the odds of your success in offering bookkeeping services to your clients.
Starting a bookkeeping business as a beginner may seem daunting, but with the right steps and dedication, you can build a successful and rewarding career. By providing essential financial services to businesses, you’ll play a crucial role in their growth and success.
If you’re looking for success tips on building a bookkeeping business, start with downloading our FREE Checklist 5 Steps Towards A Profitable Path To Success Below.