Published Date: June 30, 2019 . Last Updated April 26, 2021
Many small businesses only get professional bookkeeping done in order to comply with legal requirements associated with the filing of income tax returns. There is no doubt that bookkeeping is central to all types of tax preparation. However, bookkeeping services have a bigger scope than this.
There are many financial details presented by professional bookkeeping services that are of great significance for businesses.
In this post, we are going to discuss three financial reports that are furnished by a professional bookkeeping service for any small business. The importance of these financial reports will also highlight the wide-ranging benefits of getting a professional bookkeeping service on board. But first, we need to ask some basic questions.
4 Questions Every Bookkeeping Service Will Ask
It is important that a small business owner must be able to answer the most basic but important questions on the back of their hand. When in the process of hiring professional bookkeeping.
1. How Much Cash Do You Have?
Start from the simple question. The cash in your current bank balance is the storyteller. You need enough cash to stay afloat in the business game. The professional accountants will take a thorough look if the ledger is going in deficit or surplus. Now you get the idea that similar questions will arise with time.
2. What’s The Break-Even Number?
The bookkeeping service needs to determine the precise amount required to break even. This will help clarify the current operations whether they are running on a track or not to hit the break-even number. The goal is to cross over that expected number. That’s when you’ll know the profits are generating. To keep a close eye, using accounting software like My CPA Dashboard plays a vital role.
3. Which Product/Service Is Most Profitable?
Which product or service is making your business successful? As a small business, you must be selling the product or service (or even a combination of both) that makes high-pitched sales. It is imperative to find which are the trending sellers or not. The bookkeeper will then make careful delineations that offer profit. Accordingly, you will need to think of an overall business strategy.
4. How Much Cash Do You Have To Cover The Annual Expenses?
A scary question that every bookkeeper will ask the small business owner is about the available cash. Whether the business is small or large you need to be able to forecast the future. With clear figures and numbers available is only when the bookkeepers or accountants can prepare the important financial documents.
4 Important Financial Documents Handled by Bookkeeping Services
1. Income Statement
Income statements don’t just tell you how much money your business has made. An income statement furnished by any professional bookkeeper accounts for all the cash inflows and outflows of your commercial operation. An income statement can give you a glimpse of all your earnings and expenses. Expenses related to travel, monthly bills, and marketing along with the size and source of your fortune—all this will be summarized in an income statement compiled by any professional bookkeeping service.
With a detailed income report, you are able to identify the money sinkholes and as well as the avenues that are bringing you a fortune. In short, a better future business strategy can be made using a well-prepared income statement. Using the right CPA software is a bonus to help prepare the transactions.
2. Account Receivable Aging
Account receivable is a financial report furnished by professional bookkeeping services that tell you how your business is faring on the collection side. This report actually enlists all the unpaid client invoices and unused credit notes along with dates. This financial report is crucial for several reasons.
- It can provide you with a clear picture of how much money you actually have in the receiving column.
- You can better streamline and prioritize your collection process with this information.
- You can choose future clients.
3. Customer Sales Report
For small businesses, every customer is important. So, it becomes really important for them to know how much every one of their clients is contributing to their businesses. A customer sales report just provides you with that information. You can customize your CRM practices with the help of data furnished in customer sales reports. Professional bookkeeping services can furnish customized customer sales reports for small businesses.
4. Cash Flow Forecast
Also referred to as the Operating Cash Flow Forecast, you need this report, no matter the name. It is important for every business to have a proper update about the current financial state, the financial viability is what they need to keep in mind to expand their business in the future. The forecast will let the business owner decide how, when, and where they can invest their future cash and plan the operating cash flow accordingly.
My Count Solutions is an online professional bookkeeping service that particularly helps small businesses with managing their finances. Their bookkeeping records consist of all the important financial information a small business can need to streamline its operations and you can use the My CPA Dashboard platform for accounting automation.