Business Bookkeeping vs. Personal Bookkeeping: What’s the Difference?
A core part of all business finances is bookkeeping, which can impact the success and growth of any small business. Bookkeeping encompasses a variety of important tasks that range from basic data entry in software to working with certified public accountants. It is the backbone of the accounting and financial systems in a business. Bookkeeping tasks have become more automated with the development of accounting technology and cloud-based software.
Anytime that a business spends or earns money, those financial transactions need to be organized and classified. This whole process is called bookkeeping. It involves tracking the revenue, expenses, assets, and debts in your businesses on a daily, weekly, or monthly basis. This information gets turned into financial statements that allow you to make smart business decisions, secure loans, process and file your taxes. Bookkeeping encompasses everything that is needed to record the financial activity of your business.
Advantages of Hiring a Business Bookkeeper
A business bookkeeper is primarily responsible for keeping track of all the income and expenses and making sure that these transitions are accurately reflected in the business’s books. Some of the tasks a business bookkeeper can help with are:
- Tracking down of receipts from the employees
- Entering of data
- Categorization of transactions
- Reconciling bank statements
- Sending and following up on invoices
- Managing the accounts payable.
The time spent on doing the tasks listed above depends on the type of business and how it operates. It could either take a few hours, a week, or even months depending on the business. If you run a service-based company like a consultation firm, the business bookkeeper might have to send out 2-3 invoices per month and make a handful of purchases apart from the recurring spending of rents and payroll. For such purposes, a remote or part-time bookkeeper could also easily manage the tasks.
However, if you own a construction company, you will have to oversee a dozen transactions every day and you will have to make transactions with the contractors and suppliers on a daily basis. You might also need complex reports in order to track each individual project’s spending. Depending on how many projects you take on, the transactions can get a lot more complex and difficult to classify. As compared to a service-based company, such a firm requires an in-house business bookkeeper that is aware of the business inside out and can stay updated with the tasks.
The role of a business bookkeeper does not change dramatically with the changing complexity of a business. The main responsibilities still remain the same i.e. to make sure that the financial transactions are accounted for and classified properly in the books.
Business finances can get out of hand very easily and quickly. Bookkeeping software can help you keep track of your money in a very efficient manner. Some benefits that a bookkeeping software can provide that excel bookkeeping cannot, are:
Track Bills for On-Time Payments
When you are busy moving the business forward, looking after the employees, traveling, and putting out the daily fires that pop up, there is a good chance that you might miss out on any bills or other financial transactions on the way. Using bookkeeping software can provide you with the confidence that you will not miss out on any payments.
Correct Filing of Taxes
Business taxes are a strenuous job. Different industries have different tax rules. Depending on your business operations, you have to file various taxes that have to meet certain requirements, state-by-state tax rules, corporate tax payments, 1099s for contractors or freelancers and it can be very time-consuming to sort through all the official documents and keep track of all the dates. Business software can help you stay sorted and file your taxes in an efficient manner, keeping the whole process stress-free.
Build Accurate Financial Statements
Financial statements provide your potential investors a glimpse into how your business is doing. If you need to ask for a loan from a bank, they will require a set of prepared documents and financial statements that span back to the early days of business. This provides them with some kind of proof that they are investing in the right place. So a bookkeeping software can help you stay updated from the very start.
Focus On Growing the Business
Small business owners have a lot on their plates. Between product and strategy meetings, marketing campaigns, and launches, there is very little time for them to worry about mundane operational tasks. A bookkeeping service can help you focus on the important stuff rather than nitty-gritty numbers.
On the other hand, personal bookkeeping is staying on top of your personal spending and making sure that your budget is being spent in accordance with your current lifestyle. It helps keep your personal expenses in check. A personal bookkeeper can help you maintain a check on the monthly mortgage payments as well as other expenses, making sure that you have a clear picture of whether you can afford the Gucci bag you have your eyes on or not, and whether you will be able to afford the trip to Paris this year or the next. A personal bookkeeper can keep track of your debts, investments and help you get back on top of all your personal expenses. Some of the tasks a personal bookkeeper can help with are:
- Budget analysis based on spending habits and long-term goals
- Financial statements consolidated monthly to determine net worth
- Bank and credit card reconciliations
- Cash flow reports tracking income and expenses
- Payroll administration for the household employees
- Bookkeeping for partnerships, sole proprietorships, and corporations if essential
- Bill payment services include capital calls, wire transfers, and vendor management.
A personal bookkeeper can help you know how much you have earned and spent from it in a particular time period. You can know when to invest money and also track the areas where you might have overspending issues. You may be able to identify the areas where you thought you were not spending much, but actually, a lot of money is going into it. You can also figure out if you are saving as much as you would like every year in order to reach financial freedom by your desired age. Tracking your expenses can help you assemble the next year’s budget.
Advantages of Hiring a Personal Bookkeeper
Some of the benefits of hiring a personal bookkeeper are:
- Reduction of stress and anxiety from the management of multiple financial issues like bills and due dates
- A clear picture of net worth so making financial decisions in the future is easier
- View an organized report of all your incomes, expenditures, and due dates from all devices
- Have more time to spend with family and friends and greater time for leisure
- Have a complete team of trusted advisors.
Is Personal Bookkeeping Essential?
Unless you earn so much that you are unable to keep track of your income and your expenses, having a personal bookkeeper is not necessary. Business tycoons and philanthropists often require the expertise of personal bookkeepers. However, if you can keep a personal budget and occasionally check your expenses and your income, you are good to go. There are also some free online apps that you can consult from time to time that can help you stay updated with your finances.
How Can My Count Solutions Help?
Bookkeeping experts at My Count Solutions optimize the process for you and manage finances, prepare financial statements and file your taxes for you. Bookkeeping services are provided to you at a fraction of the cost in an easy and efficient manner. At My Count Solutions, the services offered are:
Bookkeepers at My Count Solutions gather all your financial data and reports. They get to know you, your business operations, products, and services and then appoint the best team of bookkeeping experts according to your needs that can provide you with the best results. They provide financial consultation to all types of small businesses.
Run Business Smoothly
If you feel like you are drowning in records or are on the verge of bankruptcy, you do not need to worry anymore. The best team of bookkeepers can help you keep your books up-to-date. You will be provided a monthly report of all your business transactions so you can stay updated with the progress of your business. Financial statements can also be readily available before the due dates of tax filing processes.
You can hire remote bookkeepers that can help you maintain the business transactions even while being away. It helps promote work efficiency and keeps your business up-to-date as well. The team of remote bookkeepers can divide the workload by rotation of tasks increasing work productivity.
Zero Tax Filing Stress
The team of experts can file your taxes on your behalf making the tax-filing season stress-free. The year-round support extends to preparing for the tax season. Bookkeepers at My Count Solutions prioritize getting the books ready for you before the tax season is due.