The services included for bookkeeping can vary from company to company, but the most common benefits include three key areas.
Accounts Payable
The accounts payable process can look something like the visual below.
- Invoices are entered into the accounting program
- Someone on the management team reviews them for accuracy and approval.
- A report is run to approve payment processing.
- Payments are sent to vendors.
Sometimes, you might have an automated process where invoices are emailed, uploaded, and entered. This cuts down on some manpower, but you’ll still want to make sure the AI reads and enters the data correctly.
The final step can also be automated using a bill pay service. You would review a report to see which invoices are due and mark off which ones you want to pay.
When your payables are automated in this manner, it creates a lot of efficiencies but also requires some oversight.
Accounts Receivable
Accounts receivable can also be automated to some degree. Sometimes you can send the same invoice every month until the dollar amount changes, but I’ve had several situations where adjustments need to be made before the invoice goes out.
However, with a lockbox, we can improve efficiencies in receiving money from customers…some of the time.
With a lockbox, deposits are made on behalf of the client, and the bookkeeper can log in and see who paid which invoice and apply those payments.
Then, once a month, someone will be tasked with reaching out to customers that have not paid old invoices.
Bank Reconciliation
With cloud-based accounting, the Bank Reconciliation is practically done for you.
As long as you’ve reviewed the transactions in the bank feed, they should show up in your reconciliation module, and USUALLY, all you have to do is click accept as long as it matches your bank statement.
But when your account is out of balance, it requires some research.
Recapping What Services are Included in Bookkeeping
- Accounts Payable – Data entry heavy with entering bills and reviewing them, approving them for payment, and processing the payments
- Accounts Receivable – Invoice customers, record payments, and follow up on past due invoices.
- Bank Reconciliation – Compare the statement to the transactions in your accounting software.
Additional Bookkeeping Services
Depending on the size of the company, other bookkeeping services may include
- Sales Tax Processing – With cloud-based programs, this can typically be automated if everything is set up correctly.
- Payroll Processing or Recording – Typically, it’s best to use a full-service payroll company. Still, some may offer payroll, and some may only offer it as a recording of what the payroll company has processed.
- Reconciliation of Other Accounts – This could include things like inventory, loans, credit cards, and depreciation, to name a few.
- Financial Report Preparation – Typically, this is as simple as printing and sending reports to you.
Accounting Clean-Up and Catch Up
Nearly every bookkeeping company includes clean-up and catch-up when bringing on a new client.
How Pricing is Structured
Most companies will consider the volume of transactions when they determine the pricing for the work and what part of the tasks the bookkeeper will be doing versus the client. The more the client is willing to do, will lower the cost of bookkeeping services.
Accounting Clean Up and Catch Up is typically priced at a 50% discount compared to the day-to-day bookkeeping because fewer tasks are required.
FAQs
- What does bookkeeping involve? Bookkeeping involves recording, organizing, and maintaining financial transactions and records for a business. It includes tasks such as tracking income and expenses, reconciling bank statements, managing accounts payable and accounts receivable, and generating financial reports.
- Are bookkeeping and accounting the same thing? No, bookkeeping and accounting are different but related functions. Bookkeeping focuses on accurately recording financial transactions, while accounting involves interpreting and analyzing financial data to provide insights and make strategic decisions. Bookkeeping is the foundation of the accounting process.
- Can bookkeepers help with tax preparation? While bookkeepers are not typically responsible for preparing tax returns, they play a vital role in ensuring accurate and organized financial records, which can significantly assist tax preparation. They can provide necessary financial reports, reconcile accounts, and work closely with accountants or tax professionals to facilitate the tax preparation process.
- Do bookkeeping services include payroll management? Yes, many bookkeeping services include payroll management. This involves calculating employee wages, deductions, and taxes, preparing and distributing paychecks, and ensuring compliance with payroll regulations. Accurate payroll management is essential for maintaining employee records and meeting legal obligations.
- How can bookkeeping services benefit my business? Bookkeeping services offer several benefits to businesses. They provide accurate and up-to-date financial information, which helps in making informed business decisions. Bookkeepers ensure compliance with financial regulations, reduce the risk of errors, and help track business performance. Outsourcing bookkeeping services can save time and resources, allowing business owners to focus on core operations.