The Hidden Risks of Using an Untrained Bookkeeping Service
Updated: Aug 10, 2022
A lot of start-ups decided that they need a bookkeeper as soon as they start making money. However, many don’t realize how important it is to have the right person, who is trained to do the job. This article will help you understand why using an untrained bookkeeping service can be risky.
What is a bookkeeper?
A bookkeeper is a professional who handles or oversees financial administrative tasks. They do not analyze accounts and data, but review transactions and prepare financial statements.
What Do Bookkeepers Do for Small Businesses?
Bookkeeping is a key part of any business. Your bookkeeper will ensure that your accounts are reconciled regularly and will follow up on past due payments and billing reminders to ensure that you're getting paid on time. Additionally, they ensure that all the accounting procedures are in place and followed according to the law and can even help with payroll and filing your business taxes.
Why Do You Need a Bookkeeping Professional?
It is easy to hire a secretary to oversee the financial transactions; however, it is a lot more difficult to find one who has the motivation and education to do so. You can’t expect your staff to perform well with nothing but an entry-level job description. They must be trained extensively to maintain the high productivity of your company’s financial department.
One of the most important financial tasks you can do for your business is to keep track of your financial reports every day. Not only will this help with assessing cash flow and profit/loss reports, but it will also pave the way for tax filing (you don't want to miss those deadlines!). Having correct information on your financial reports will have an impact on the taxes that you pay and the amount of money that you can save due to write-offs.
You might not think that one missed transaction or error could make a significant difference. But the truth is, your company's reporting depends on a professional bookkeeping service. They not only ensure that your reports are accurate, but they also help the long-term success of your business.
What are the hidden risks of hiring an untrained bookkeeper?
1. Missing Deadlines
Bookkeeping is a labour- and time-intensive task. Trying to handle it on your own or assigning it to an inexperienced bookkeeper can result in you missing deadlines that are crucial for filing taxes. Failing to meet these deadlines can land you in trouble with the government, which will charge penalties in the form of fines for late filings. If invoices are not paid on time, your suppliers may lose faith in you, and you may have difficulty negotiating credit in the future.
2. Insufficient Knowledge of Taxation & Accounting Principles
Hiring a professional accountant will save you time, money, and stress. Thorough knowledge of accounting and taxation principles is needed to minimize the possibility of inaccuracies in payroll and bookkeeping duties. While you may think you're saving money by taking bookkeeping duties into your own hands or hiring an untrained bookkeeper, a lack of knowledge in these fields will cost you. Penalties for tax authorities are higher than they would be if you had an expert doing it for you.
3. Take up your time and effort
Bookkeeping can be time-consuming and exhausting. When you don't have professional help, you're unable to spend your time on other important areas of your business, which end up costing you more in the long run. There are many things that a professional accountant can do that others cannot, which would otherwise take up your valuable time. Save yourself the work and call in a professional!
4. Not familiar with managing the latest accounting software
Accounting software can be complicated, and if you're not experienced, you're probably going to get overwhelmed by them. An experienced accountant will know their way around an accounting software's interface and be able to quickly check for unpaid invoices or pending creditor invoice dates. They'll also be able to set up payroll for new employees in a flash, with no problems to worry about.
5. Missed growth opportunities
It's important to hire a qualified accountant for your company. These individuals analyze all your company's financial transactions, and because they have experience with other businesses, they’re primed to spot problems first. An untrained bookkeeper is more concerned with getting the numbers right and may miss crucial growth opportunities. A more experienced professional can use insights and experience to fast-track your company's growth.
What should you consider when hiring an accountant?
You need to know what you need before you can go looking for an accountant. Consider the following:
What type of business do you run?
Different types of businesses have different bookkeeping challenges. For example, service businesses and retailers have their own set of challenges. Find an accountant with relevant experience.
What type of services are you looking for?
There are many things you can have someone else do for you. Maybe you’re just starting, so you want to handle everything internally. But if you’re too busy, you might want to hire people who specialize in something so you can focus on the rest.
What type of software are you using?
If you have a certain type of software, it’s important to find an accountant who also uses the same.
How can our bookkeeping service help your business?
Bookkeeping is a vital part of a business. It's not just a core part of the accounts of any business, but it's the very essence of the entire company. We not only help you to keep your bookkeeping records up to date but also helps you to save money in the long run. In addition, we implement and customize a user-friendly cloud accounting solution such as QuickBooks Online and Xero for your bookkeeping.
If you wish to know more about how our professional bookkeeping services could help your business, feel free to contact us now: +65 6352 0103.