Leveraging Outsourced Controller Services To Future-Fit Your Small Business

Your business is booming, money is constantly rolling in, you are making strides with acquiring new prospects and growing your client base. In the midst of all, you are troubled by the gnawing concerns regarding how you are going to proceed further, whether you are utilizing your cash flow efficiently, and if you are employing the right marketing tactics to increase your ROI.

If you are facing these troubling questions, you are not alone. Many small business owners go through this phase at some point in their business lifecycle. Fortunately, you do not need to burden yourself or get your entire management team to answer these questions for you. What you do need is to simply look for outsourced controller services providers and opt for one that can help you achieve your strategic objectives.

Who Is an Outsourced Controller? 

A controller usually is a person who is in charge of generating reports, reviewing data, and preparing payroll for a company. However, the most crucial aspect of their job is to assist the company through challenging yet necessary changes for continuous growth. They will utilize and examine the information provided by the bookkeepers and accountants to forecast future prospects for your company while also consolidating financial data to prepare budgets efficiently. Companies need the expertise of a full-time controller to assist them with managing financial records and providing accurate reports.

A controller can also provide complete oversight of day-to-day finances regularly. This includes detailed reporting about the company’s operations, infrastructure, and internal controls. All of these operations are critical for the success and growth of a business, so having a controller working for their organization is a must for every CEO. However, the dilemma that most small companies face is that they are not able to afford a professional, full-time controller for their business due to budget constraints.

For this dichotomy, controllership solutions provided by outsourced financial management services are perfect for such small companies.

Here are some of the most significant advantages you receive with outsourced controller services:

1. Ensures confidentiality 

The most common problem that small businesses face is how closely different departments are seated. If youraccounting department is seated in close proximity to other departments, then there is an increased possibility that classified information can fall into the hands of wrong individuals. It can either occur due to human error or done purposefully by an employee to sabotage the company’s finances and reputation. Said information can then either be exchanged, leaked, or used for ransom by the perpetrator, which leads the company further down the rabbit hole, and can result in employee turnovers or for the company to face bankruptcy.

When you have outsourced controller services managing your finances, you do not have to worry about these risks. This is because the information you wll be sharing with the outsourced consultant will be in a secure, protected server online. Your financial information is only shared and communicated between exclusive members of the team including you, the business owner, and the management service. The consultants will also provide you with a trusted business advisor in charge of analyzing and studying financial reports for your company. Your financial advisor will evaluate your business performance to assist you in making more proactive and strategic decisions regarding the growth of your company.

2. Helps you control turnover rate 

Employee turnover rate refers to the number of workers who leave an organization within a certain time span, and high turnover rates are common in both bookkeeping and controller positions. The reason why small companies usually face difficulty keeping an accountant for an extended period of time is because hiring, training, and keeping a full-time controller can be a very costly expenditure.

The national average income of a controller ranges between $94,000 and $146K. It could also go beyond this range depending on the scope of work and the size of business. In comparison, an outsourced controller costs up to $2,500 a month, or $30,000 per year, which is one-third of the expense of employing a full-time, in-house controller. But keep in mind that these costs are dependent on the size and complexity of your company.

3. Eliminates single-point-of-failure (SPF) 

Single-point-of-failure occurs when only one person is kept in charge of managing a single task or operation, and in their absence, everything is awaited. This also means that getting behind on your bookkeeping for one day would delay your accounting tasks and before you know it, you start noticing a negative impact on your cash flow.

By outsourcing your finances, you don’t have to put your business at risk, as instead of a single employee, you get an entire team of professionals tending to your company’s financial needs with the utmost precision and care. Even if one outsourced controller leaves their position, another one will quickly replace them before you know it.

4. Provides assistance to the CFO 

CFOs are constantly under pressure to look for new growth opportunities and development prospects for the company all the while monitoring its financial well-being and developing new investor relationships. When it comes to growth, CFOs are no different than any other member of your staff, and are greatly dependent on the assistance of a financial controller to take up the slack to keep your business on the path of success. With an outsourced controller, your CFO will be able to assign particular responsibilities to them to free up their agenda and focus more on their core responsibilities.

Outsourced controller services provide more than just bookkeeping and accounting. More importantly, they also provide managerial oversight and accounts monitoring to ensure that correct policies and processes are implemented and that accurate financials are always issued on time. They keep an eye out for ensuring uncompromising integrity of all accounting operations, provide tax details to your CPA, assist the accounting department with cash flow management, and even train new recruits to the company.

See Also: CFO vs. Controller: What’s the Difference?

Conclusion 

Accounting is both a highly complex and sensitive business process, and tracking financial transactions can quickly become a time-consuming and challenging process if you’re not careful with it. Many small businesses try to work around this quandary by hiring a mediocre controller to oversee their finances, or exhausting their entire budget on one single controller. Either way, the company only faces disappointment and major financial setbacks. That’s why it’s recommended to remain safe, smart, and cost-effective by handing over your finances to a professional outsourced controller service.

With Monily’s advanced controllership services, you can put your numbers to work and will never have to involve yourself in the process. Our financial specialists will assist in managing your company’s accounting activities, increase your cash flow, and lower operational costs. This is perhaps one of the best strategic investments that a small business owner can make to achieve results that matter to them.

How to Hire An Accountant for Your Business?

Managing finances for your business can get tricky sometimes, especially when you aren’t knee deep in the process of debits, credits and recording transactions. Yet it doesn’t mean you should be struggling with it all by yourself.

Accountants play an essential role in every business by helping with financial planning and ensuring all the company’s finances are in order. From managing audits to administering payrolls to filing tax returns, accountants have no shortage of responsibilities on their shoulders. This is a major reason why it’s critical to have an accountant working actively for your company.

Before deciding on hiring an accountant for your business, it is important to do proper due diligence since their work majorly dictates the success of your business. Through our guide, you can learn everything about when is the best time possible for you to hire an accountant and what factors should you look out for while doing so.

Do you actually need to hire an accountant? 

Before getting into details of how to hire an accountant, it is crucial to understand why your business needs one. In retrospect, accounting is an umbrella activity that encompasses different finance-related activities. It includes preparing records of financial transactions, preparing statements and then analyzing them to take proper action. While a bookkeeper can take care of preparing records and statements, you need the help of an accountant to analyze the information and use it to actually improve your finances.

An accountant is responsible for several activities including: 

  • Analyzing financial statements to identify any problems in the company’s finances. 
  • Internally auditing financial statements to ensure compliance with laws and norms. 
  • Preparing reports for investors, shareholders, and others. 
  • Ensuring payroll operations are done effectively. 
  • Ensuring taxes are calculated properly and returns are filed on time. 
  • Coordinating with external audit professionals. 
  • Reporting to the management on all issues related to the organization’s finances. 

As you can see, an accountant’s job role is highly important for they can help a company make the right business decisions. More so, it is vital to hire an accountant whom you can trust with your finances and who holds appropriate qualifications.

Should you hiran accountant or outsource? 

One of the most vital responsibilities of any company is to maintain healthy and stable condition of their finances. Every dollar of income must be tracked, bills and salaries must be paid on schedule, and tax obligations must be fulfilled on time. If you decide to hire an accountant, you need to consider whether it would be prudent for you to hire an accountant in-house or outsource to an external agency.

Let’s break down the differences between the two to understand which is a more convenient option for you. 

Hiring an in-house accountant requires you to establish a dedicated accounting department in your business. You need to hire people, provide resources, pay their salaries, monitor their work, and cover all miscellaneous expenses. All this requires a substantial amount of money, time, and effort and going through an extensive hiring process. While it may seem doable for large-scale businesses, for small companies, they usually do not have the wherewithal to do all this.

In that case, outsourcing your accounting function would be a better idea to save both, time and money. When you outsource work to a reliable service, you ensure that the work is done by professionals who bear years-worth of experience in this field. As a businessperson, this gives you levity to focus on core business work and leave the number-crunching to the experts. Above all, you will only need to pay for the services they provide, not the whole package. This is a more cost-effective solution. At Monily, this is how we work with our partners.

Starting small is always safe bet, and you can always choose to have a full-fledged accounting team once your business grows.   

How To Hire An Accountant? 

Once you have decided that you need to hire an accountant for your business, the first thing you must know is whether you’re in need of a full-time or a part-time accountant.  

Having an accountant who works only for a few hours each day or a couple of days each week seems like a suitable arrangement for small companies whose financial operations are not too complex. Your accountant can come in when there is a requirement for them, and you can pay them only for the hours of the work they do. 

If you have more work that needs to be done, then it would be more efficient to hire a full-time accountant.

The following pointers can help you understand how to hire an accountant and what to look for in the most suitable candidate:

  • The first thing you need to do is prepare a clear job description, which should outline all the responsibilities your business would require. 
  • The accountant you hire must have the necessary skills. They must be qualified and hold considerable experience in the field. 
  • Based on these requisites, you can prepare an advertisement outlining what you are looking for and publish it either in a newspaper, magazine, job portal, or circulate via social media.  
  • Once the applications start coming in, you need to do a rigorous screening. You can organize the profiles based on the candidates’ qualifications and experiences. This process will help you cut through the applications faster and allow you to select a few you believe to be the strongest candidates. 
  • Once you have shortlisted the candidates, you can move ahead and schedule interviews with them. 

During the interview, you need to understand the following about each of the candidates: 

  1. Their knowledge of accounting processes and actual experience. 
  1. What kind of value they can add to your business. 
  1. How efficient the candidate is in analyzing financial reports and offering inputs for managing finances in real-time. 
  1. Their ability to make forecasts and budgets. 
  1. Their ability to communicate well – both orally and in writing. 
  1. What kind of analytical skills they have.  
  1. Their knowledge of software programs used for accounting. 
  1. How trustworthy they are and how consistent they can be with their work. You can provide sample reports and ask the candidates to analyze them. This is a good way of testing while hiring an accountant. 

Finally, you need to conclude the selection process and make an offer based on their experience and ability. Once the offer is accepted and they become part of your company, ensure that they can start contributing to the organization right away.

See Also: Accounting 101 for Small Business Owners

Conclusion: 

An accountant can greatly assist you throughout the different stages of your company’s growth. It is a critical position and therefore, hiring the right person for the job may seem quite challenging. However, the above thought-out process will help and enable you to select the best candidate who can help maximize your financial growth. If you hire wisely, you will lay the groundwork for a finance team that will evolve with your company and add value to your business in the long run.

Double-Entry Vs. Single-Entry Bookkeeping

Bookkeeping is a finance essential, and all this number crunching is the lifeblood of a company. As a business owner, your utmost priority is to make sure that your finances are being accounted for properly, on a regular basis, and that not a single dollar you are earning is going to waste. Therefore, to keep your business afloat, it’s important that you’re aware of the two primary kinds of bookkeeping systems that exist. These are: single-entry bookkeeping and double-entry bookkeeping systems.

Even if you are not directly involved in the process and would rather have your bookkeepers manage this function, it’s always helpful to be aware of the unique features that set these two methods apart. This way, you’ll get to know whether your current bookkeeping approach is working for your business or not.

What is single-entry bookkeeping?

Single-entry bookkeeping is perhaps the simplest and most basic system of bookkeeping. It does not require any specific skills or knowledge to implement and is meant mainly for small businesses and startups. In this system, every financial transaction is recorded through a single entry (log) in the journal, including both incoming as well as outgoing cash.

How does single-entry bookkeeping work?

In the single-entry bookkeeping system, there is a dedicated cash book that records details of all incoming and outgoing money. The book usually consists of four columns.

The first column includes the date, the second the narration of the entry, the third the transaction value, and the fourth column consists purely of the balance. The transaction value is indicated as positive if money is received into the business and negative if money is moved out of the business. If you prefer to see your income and expenses separately, you can choose to have two individual columns to record your transactions, but even with two columns, it will still be considered as a single entry.

The single-entry bookkeeping method is indeed very simple to implement and is recommended for small businesses that have recently started their operations, have little to no inventory, and are looking for a quick and straightforward method for bookkeeping.

For a large-scale enterprise, single-entry bookkeeping approach will not be ideal. A single, small error will pave the way for multiple errors to pop up in the long run and those will be a bit hard to spot.. Preparing financial statements using single entry can also prove to be a challenging task, and there’s always a high possibility of fraud with this approach. That’s why this system is limited to small businesses who are in the process of growing and expanding their business.

What is double-entry bookkeeping system?

In the double-entry bookkeeping system, every transaction is reflected in two different accounts. One transaction shows the debit and the other the credit. In this system, the amount which is recorded as debit must be the same amount as the one recorded as credit. Double-entry bookkeeping is optimal for large-scale businesses who want completely error-free recording of their transactions.

How does double-entry bookkeeping work?

Let us take an example to fully understand how the double-entry bookkeeping system works.

Assume you have purchased some furniture for $1000. Afterwards, you record this transaction in two different accounts. The first account will be the furniture account, where it will show you $1,000 under debit. The second account will be the cash account, under which it will show the same amount of $1,000, but as credit. Now, let’s assume a client named ABC Ltd. has paid your bill for $2,000, which it will show under the column of debit for the cash account. In the ABC Ltd. account, it will show your $2,000 as credit. Put it all together, and all your transactions of credit and debit will be balanced. This is one of the significant features of the double-entry bookkeeping system, which is why it’s so popular with businesses.

Typically, in the double-entry bookkeeping system, you need to maintain a journal where you record all transactions as and when they occur. Afterwards, you update the ledger where the entries are recorded under each account on a daily basis. At this stage, you need to balance both your debit and credit. Based on the ledger, you will need to prepare a summary of all transactions, which is known as the trial balance. This will be used to prepare other reports like Profit and Loss Statements, Balance Sheets and Cash Flow statements.

Thanks to the use of software, there is no need for you to maintain any physical books. You just need to make an entry and the software will take care of the rest.

Comparing single-entry and double-entry bookkeeping system

Now that we’ve analyzed both systems, let’s compare them to see which one works best for your business. 

  1. Single-entry system is best suited for small businesses and freelancers. Double-entry bookkeeping system can be utilized by both small and large companies. 
  1. Single-entry bookkeeping is easy to implement while double-entry system can become increasingly complexed as the number of transactions increase.  
  1. You can implement single-entry system using a single ledger or a spreadsheet. Double-entry, on the other hand, requires different ledgers. The use of software is necessary if you wish to keep your work simplified. 
  1. The single-entry system is the most basic way of bookkeeping, whereas double entry is a comprehensive and scientific approach towards bookkeeping. 
  1. It is very difficult to catch errors or frauds in the single-entry system. The double entry bookkeeping system makes it easier to discover errors and detect fraud. 
  1. Net income can be calculated by single-entry bookkeeping, but to develop a balance sheet, you need to use the double-entry bookkeeping system. 
  1. In the single-entry system, the accounts of the owner and the company can easily get mixed up. This is not the case in double-entry where all accounts are individually maintained. 
  1. Calculating profit and loss is much more accurate in the double-entry bookkeeping system. Also, you can prepare financial statements directly from your books.  
  1. Preparing reports is not so easy when you are using the single-entry system. The double entry system is versatile and makes preparing reports of all kinds much more efficient.  
  1. The records of a single-entry system are of no use for external parties like investors. The statements generated as a result of double-entry system are used by investors to assess the company and decide whether they want to invest in it or not. 

Conclusion 

Based on the holistic comparison above, you now have a better idea of how the double-entry bookkeeping system edges out single-entry bookkeeping in terms of convenience and proficiency.

See Also: Outsourced Bookkeeping Guide – Important Things To Know

Even if you are running a small business, it goes without saying that you aspire to scale up your activities. That’s why it is recommended that you utilize double-entry bookkeeping as it will streamline your financial management and open up more investment opportunities for your organization. Whatever you choose, it always helps to have a professional team of bookkeepers crunching your numbers for you. Try Monily free for the first two months and you will see your books accurately reflecting your business goals.

Outsourced Bookkeeping Guide: Things To Know

Bookkeeping is undoubtedly, one of the most critical business functions that help drive a business towards success. This is one of the reasons why hiring an in-house bookkeeper may prove to be a costly investment, especially for small businesses, as they are highly specialized professionals. Nowadays, most startups and small and medium sized enterprises, SMEs, prefer relying on outsourced bookkeeping services to make it work for them, financially and strategically.

See Also: What Does a Bookkeeper Do?

The idea of bookkeeping outsourcing is one that continuously wins you over the more you benefit from it. Since it involves you entrusting a virtual service provider to handle a highly essential activity of your accounting operations, it’s essential to know thedos and don’ts associated with it, so you only end up saving money and not losing it. This guide provides you a comprehensive understanding about how outsourced bookkeeping services operate.

What Are Outsourced Bookkeeping Services? 

Bookkeeping outsourcing refers to handing over all your financial transactional duties to a virtual service provider that will prepare and manage your books on your behalf. Outsourced bookkeeping services also allow you to have customized solutions for your business. You can choose to outsource only one part, several, or even the entire accounting activities of your organization and rest assured that none of your transactions will go unreported in your records.

Outsourcing bookkeeping activities will also eliminate the heavy investment and time needed in setting up an in-house bookkeeping department, hiring staff, and paying them every month. With outsourcing, the most convenient bit is to pay for the specific services that you are requesting them to perform. The outsourced bookkeeping service will have experienced, competent people well-versed in the financial industry. This will help you get a clear picture of the financial status of your business based on which you can plan strategic initiatives for your business.  

Sounds Great! How Does It Work? 

Outsourced bookkeeping services are very simple to implement for your business.

This is how the process works for a majority of the services: 

  1. You need to first select an agency or an online service provider. There are many professional outsourced bookkeeping services available; a quick internet research will get you an exhaustive list of competent bookkeeping and accounting service providers. You will need to evaluate and compare them based on the services and their price plans they are offering. You can even look up public reviews and read about the experiences their existing or past customers have had with them.  Websites such as Trustpilot.com offers customer testimonials on outsourced bookkeeping services.  
  2. Once you finalize a service, a contract has to be signed. The service would sign a non-disclosure agreement ensuring that all your data will be kept private and secure. Also, the agreement will contain all the necessary terms and conditions, so it’s better that you take your time to go through it before jumping on board with the service. 
  3. The outsourcing service would then appoint an account manager to work with your company, who would become the single point of contact between you and the service. 
  4. The service will select bookkeeping staff to work on your account. The number of people will depend upon the scope and nature of your work and the size of your business. They will create back-office operations to handle your work, which includes creating data on their software. 
  5. A system would be put in place through which you will be able to upload your data to the service on a daily basis. They will then use this data to update all your records. From there on, the service would manage all your bookkeeping work and your role would be limited only to providing data and answering all queries that the service might have. 
  6. At the end of every month, an invoice based on pre-decided rates along with a monthly report will be sent to you. You will also be provided an annual report at the end of the year. Any queries you might have will be handled by the account manager. 

Why Choose to Outsource? 

As you may have observed, outsourced bookkeeping services aid greatly in simplifying your finances and provide you hassle-free organizing of your financial transactions.

If you’re still on the fence, here are a couple of more reasons why you should choose outsourced bookkeeping services for your company: 

  1. Outsourcing is good for the bottom line for your business and helps you save a lot of money. The costs involved in setting up a bookkeeping department, hiring people, paying their salaries, and providing them resources can all be avoided through outsourcing. 
  2. If you handle your bookkeeping in-house, then you will need to be involved at every single stage of the process. Your bookkeepers may want your input on various issues and it can easily inhibit you from focusing on more important tasks. Alternatively, you can appoint an experienced  bookkeeper and trust them to run the operation independently, but their services will be all the more expensive. 
  3. Outsourced bookkeeping services ensure proper updating and entry of your bookkeeping records. They will also detect any fraudulent activities and ensure there are no mistakes occurring that can affect your business’s credibility. They will ensure every single statement is prepared on time, your taxes are calculated correctly, and returns are filed as per their deadlines. You will remain in total compliance with the law and rest assured that you won’t run into any problems with the IRS. 
  4. When you allow experts to handle your data, you can be assured of both quality and confidentiality of your work. You can also expect professional advice from the bookkeepers that will add value to your operations. They will advise you thoroughly on controlling your expenses and managing your money more efficiently. 

Costs Involved 

The costs involved with hiring outsourced bookkeeping services depend greatly on the nature and complexity of your business and can vary from one company to another. In general, an outsourcing agency would charge anywhere from $6,000 to $24,000 per year. And if you set up a bookkeeping department in-house, you may need to spend somewhere between $52,000 to $83,200 annually. Bookkeeping outsourcing makes more financial sense and its reasonable pricing model is probably one of the major reasons why most companies prefer outsourced bookkeeping services.

At Monily, we have a team of expert bookkeepers who can efficiently manage all aspects of your bookkeeping. In addition to best-in-class bookkeeping services, we also offer tax preparation, payroll, CFO and controller services to help your small business grow. Try our services free for the first two months now and see the incredible results for yourself.

What Does a Bookkeeper Do?

Maintaining records of your financial transactions is always incredibly important in any business. It is thus imperative to have someone reliable and efficient to manage this function. This is where the skills and expertise of a bookkeeper come to good use. So, let’s dive deep and find out exactly what a bookkeeper does. 

Who is a Bookkeeper? 

A bookkeeper, in essence, is a person who takes care of all the work related to accounts and finances in a company. They track the transactions and ensure all the records are accurate, complete, and properly maintained. The records that the bookkeeper prepares enables the CEO to manage their finances effectively.    

What does a Bookkeeper do? 

Like many essential positions, the role of a bookkeeper is integral in ensuring that the company is performing to its highest capacity. 

Some of the key jobs that a bookkeeper performs are: 

1) Data Entry 

Data entry is one of the primary duties of a bookkeeper and is achieved mainlyusing a computer software. The bookkeeper records details of all financial transactions in the general ledger using double-entry bookkeeping and is expected to have enough legal knowledge to understand where to enter each number and transaction.. The computer programs also allow the bookkeeper to showcase their reports using spreadsheets and info charts. 

2) Preparing Reports 

Reports and statements need to be prepared daily by the bookkeeper. These reports are required by the management to understand the financial position of the company as well as its performance among the competition. This helps them in making more profitable financial decisions that lead to more opportunities and ensure steady growth of the business. The key financial statements that a bookkeeper prepares include the profit and loss statement, balance sheet, and cash flow statement. 

See Also: The Four Basic Financial Statements And Their Purposes

3) Payroll 

Payroll refers to the payment of salaries for employees, which is an incredibly important task and requires a lot of attention. The bookkeeper computes the salaries keeping in mind the allowances that need to be paid, the deductions that need to be made, etc. Depending upon the company’s policies, the bookkeeper may also need to prepare paychecks to be handed out to each employee individually. 

4) Liaison Activities 

The bookkeeper needs to liaise with other employees managing the accounts of the company. Companies usually have an accountant or a CPA in charge of handling its finances. The bookkeeper would need to have a good relationship with those employees and provide them the data needed on a regular basis.  

Bookkeepers may also need to liaise with the tax authorities in case of any last-minute tax issues. Liaising with clients may also be necessary to handle queries, or discuss any issues related to bills or pending payments. 

5) Budgeting 

Budgeting is also one of the important duties of a bookkeeper that needs to be fulfilled, especially if they’re working in a small company that doesn’t have a CFO or a financial controller to prepare the budget for them.  

A bookkeeper’s holistic knowledge and expertise allow them to perform this task efficiently. The budget will include the company’s estimated revenue, fixed and variable costs, cash flow, and the profit that it is earning. Apart from the budget, bookkeepers can also prepare business forecasts to further increase their knowledge of the market and advise the company on strategic expansions and growth. 

6) Ensure Accuracy 

Bookkeepers are given an important responsibility of ensuring all the financial data is always accurate and up to date. In case they find any problems or discrepancies in the records, they need to highlight and report them to the authorities, whether it’s their supervisor or the CEO of the company. Doing this will ensure any and all problems are rectified, and the data presented is precise and dependable. 

7) Managing Software 

There was a time when companies would fulfill their bookkeeping responsibilities manually, which used to be very cumbersome. Thanks to the numerous software programs available online, bookkeeping work has now turned to be much easier, quicker, and accurate. The bookkeeper will identify the correct software to be used by the company, procure and use it to increase efficiency and productivity. 

8) Ensure Compliance with Norms 

Ensuring compliance with norms is one of the many responsibilities of a bookkeeper. . Norms that are defined by statutory and regulatory bodies need to be followed rigorously, as non-compliance can incite necessary legal action against the company. Therefore, what a bookkeeper does is be always vigilant of important reports and file returns on time as required by the law. They also need to ensure that taxes are calculated and remitted to the proper authorities before their deadlines.  

9) Manage Accounts Payable 

One of the most essential duties of a bookkeeper is to manage the accounts payable, which represents payments to be made by the company. Verifying invoices sent by suppliers, making payments, updating records, handling petty cash are some of the responsibilities that a bookkeeper needs to pay attention to. 

10) Manage Accounts Receivable 

Accounts receivable involves the money expected to be received by the company. The bookkeeper needs to prepare invoices for the customers and send them on time. They also need to maintain records by updating the accounts ledger with the receipts of the payments received by the customers. 

11) Stocktaking 

In small companies, a bookkeeper’s duties also include taking stock of the inventory. This will ensure that accurate inventory reports are prepared, and any and all discrepancies are as quickly resolved as they are identified. 

12) Bank Reconciliation 

One of the major duties of a bookkeeper is to reconcile the accounts of the business with statements received from the bank. This ensures accuracy in the records and is also helpful in finding out mistakes or uncovering potential instances of fraud. Using relevant software programs, bank reconciliation is made sufficiently easier for the bookkeeper. 

Using A Bookkeeper’s Services 

Now that you have a proper understanding of what does a bookkeeper do and how vital this job is for the company’s growth, you wouldn’t wait any longer to have a competent professional take up this job.  

While you are considering hiring the services of a bookkeeper, you have two options available: Hire a full-time accounts and bookkeeping employee or outsource the work to a professional bookkeeping and accounting services firm. The latter is more cost-effective and offers better results. Nevertheless, whichever option you opt for, you need to ensure you’re hiring a reliable professional who can help not only manage your accounts properly, but who will constantly offer financial advice and insights, and enable you to make future business decisions. 

See Also: How Much Do Bookkeepers Charge?

At Monily, we have a team of expert bookkeepers who are ready to help you maintain your books. Talk to one of our experts and find out how our bookkeeping services can help fulfill the unique needs of your business. 

Startup Tax Prep – How to Find the Right Tax Provider In 2021

Many startup founders who take the DIY approach find themselves at a crossroads as tax season rolls in. The amount of time that goes into keeping track of ongoing records of their income, expenses, sale or purchase of assets, and the deductions that they plan to claim starts taking a toll. This further worsens when there are constant changes in business and tax legislation and processes.

There is no denying that it all becomes even more stressful when the startup tax filing deadline is just around the corner.

If you are one of those startup owners tiptoeing around, it is high time you considered hiring a professional tax preparer for your startup tax filing and relieve yourself from the intricacies involved in the tax prep process. 

Having said that, you also need to ensure that your outsourced tax consultant doesn’t mislead you in the tax prep process causing another significant financial blow. With quite a few certified public accountants, enrolled agents, and tax consultants around, the most crucial question to ask is “how to find the right one?”

Here are some tips you should keep in mind when choosing a startup tax preparer:

Check out the Preparer Tax Identification Number

While choosing a startup tax preparer, the first and the foremost thing to do is to check for their IRS Preparer Tax Identification Number or PTIN. This is an identification number that the paid tax return preparers must use on U.S. federal tax returns or claims for tax refunds submitted to the IRS. A valid 2015 PTIN gives the tax preparer the authority to prepare federal tax returns. Your tax return must have the PTIN and the preparer’s signature on it.

Confirm Professional Credentials

Although your startup tax preparer doesn’t need to have a professional credential, it’s always safe to look for certified public accountants, attorneys, or enrolled agents, preferably a part of a professional organization. However, don’t be fooled by credentials. He may have passed certain tests or undergone specific tax training. So do sort out the credentials before hiring the tax preparer and make sure he is knowledgeable and competent.

Moreover, due to the evolving tax laws and frequently occurring tax reforms, your startup tax preparer must be well abreast of the changes in federal, state, and local tax laws. He should be taking continuing education credits to stay informed and have up-to-date knowledge.

Ask For Relevant Experience and Expertise

Your startup tax preparer should have at least 12 years of experience working as a CPA or attorney for a small business in the same industry as you. They should also have worked with startups that are similar to yours in terms of company structure, business entity type, size, growth stage, and location. All these elements have an important bearing on the tax return and startup tax filing requirements.

Know the State-Specific Filing Requirements

As mentioned above, there can be some complicated state-specific and locality-specific filing requirements. For instance, if your startup is based in Alaska and has offices in multiple states, you may have to fulfill additional state-filing requirements according to the states your startup has a presence in. 

It can get even more intricate if you own a business in a state outside of the one where your home is. Make sure that your tax preparer knows all those startup tax filing requirements and walks you through the process.

Seek a Tax Expert Well-Versed with Tax Deductions and Tax Credits

You may be entitled to small business and self-employed tax deductions, which many small business owners may be leery of due to lack of enough knowledge, or they are simply apprehensive of the complexities involved in the claim process. Home office deductions, car expenses, travel expenses, advertising costs, professional fees are some of the tax deductions that can result in a significant refund of your withholding.

Similarly, companies such as biotech and medtech startups engaged in research and development can slow their burn rate with a payroll tax credit based on qualified R&D expenses. Your startup tax preparer should already be familiar with such tax deductions and credits and help you identify those and provide the right guidance and advice to increase your savings.

Clear and Transparent Fee Structure

You should set clear pricing terms with your tax preparer early in the process. It would help if you understood that prices might vary based on how complex your return is and the extra services you may need in terms of different schedules, forms, etc. Be careful! The preparers should give you a clear and transparent fee structure.

Sound Guidance

Your startup tax preparer should be able to guide you well step by step. Any communication gap can thwart the whole process of the startup tax preparation. He should explain what information you need to provide, suggest ways for you to save on taxes, inform you if there are any new changes in tax laws that could affect your startup tax filing. Be wary if he is keeping you in the dark and not doing due diligence.

Year-Round Availability

Taxing authorities may ask for additional information even after the tax season is over. Make sure that your startup tax preparer is available after your return has been filed for additional guidance and support.

Takeaway

Tax filing for startups can be extremely daunting, especially if you are doing it for the first time. However, there are tax experts and experienced professionals readily available that can help. Remember, a competent tax preparer does more than just filling out forms. They need to understand your business and the industry dynamics well and be available for year-round guidance and consultation. 

See Also: Startup Tax Filing – Things You Need to Know In 2021

With Monily around, you can rest assured that you will receive end-to-end tax preparation services. Monily’s tax experts have worked as partners with thousands of businesses and startups over the years and are positioned to set you up for a smooth startup tax preparation.

Startup Tax Filing – Things You Need to Know In 2021

With the tax season just around the corner, many startups and small business owners are concerned about not being able to timely track all the receipts and invoices, making an error in filing or simply not keeping up with the deadline. Some businesses, especially startups and entrepreneurs, are stressing over their startup tax filing primarily because of the unprecedented challenges and business implications of COVID-19 in the past year.

However, there is always a silver lining.

The current tax code suggests that companies can use their past losses to offset future taxes under certain circumstances. This means that businesses will have the opportunity to make up for their 2020 losses in future profitable years.

Unsure about where to begin? Below are some critical steps that you need to follow to prepare your business for the tax season 2021.

Complete Your Paperwork

Every documentary evidence matters when it comes to filing taxes. It will help if you keep a record of all the paperwork. This includes all the receipts, invoices, bank statements, payroll records, and any other documented proof that supports an item of income, expense, or credit that will be used to complete entries in your Company Tax Return.  This will not only keep your business affairs up to date and on the right track but will also help you stay fully prepared for your startup tax filing during the tax season. ‍

There are certain documents that you require to get your startup’s taxes done. These include:

  • . IRS Employer Identification Number letter
  • . Basic Business Information
  • . Prior Year Tax Returns (Federal and State/s)
  • . Local Tax Returns (if any)
  • . Full-year Financial Statements

You might be required to submit other records as well for your startup tax filing, but this should give you a solid start for a much smoother and stress-free tax season.

Get Your Hands On The Right Tax Forms

Heard of Form 1040 or Form W-4P? What is Schedule C for? What’s the difference between Form 1120 and Form 1120S?

Take a deep breath!

You don’t need to get bogged down with a long list of these tax forms out there. You only need to know the forms specific to your business structure that you can use for your startup tax filing. You may end up submitting the wrong IRS Form if you don’t have the right know-how. Avoid such costly mistakes and align yourself with the correct forms to save your time.

Take a look at the different types of tax forms below and find which one is the right form for your startup tax:

  • . Schedule C – for sole proprietors.
  • . 1099-MISC – sole proprietors may also be able to use this form.
  • . Form 1120 – for C-Corporations.
  • . Form 1120S -for S-Corporations.
  • . Form 1065 – for standard partnerships and multi-member LLCs.
  • . Form 990 or Form 990-PF – for non-profit entities such as public charities or private foundations, respectively.
  • . Form 8832 – This is a tax election form used to elect or change how certain businesses are classified for federal tax purposes as a corporation, a partnership, or an entity disregarded as separate from its owner.

Mark the Right Deadlines on Your Calendar

Deadlines approach before you know it, and for your startup tax filing, you cannot afford to miss any. Better mark the dates on your calendar to avoid being the last-day filer or save yourself from penalties for late returns.

The 2021 tax deadlines for different types of businesses can be found on IRS website. Don’t let the dates slip for your startup tax to alleviate concerns around potential fines and interests.

Hurrah! You Have Some Tax Breaks

For startup tax, you are eligible for deductions of up to $5,000 each of your startup costs and your organizational costs in the year you kick off your business. Treated as capital costs and considered as long-term assets by IRS, these allowable business expenses include those incurred on market research, marketing, advertising, employee training, travel, legal fees, and other professional fees you paid for establishing your business.

If you are a tech company, you may even be eligible for the Research & Development (R&D) Tax Credit, most commonly known as the R&D Tax Credit. However, your business must meet the following ‍ two critical criteria to qualify for R&D Credits for your startup tax:

  1. Gross receipts should be less than $5 million in the taxable credit year
  2. Have no gross receipts or interest income of more than five previous taxable years ‍

There indeed is a lot of legwork involved in tax preparation. Though it doesn’t have to be stressful if you have a tax preparation and filing expert by your side that can manage your annual startup tax efficiently. Having an expert bookkeeper and tax preparation specialist is one of the best business investments you can make. Nevertheless, it needs to be done sooner, rather than later.

Tax experts at Monily have partnered with thousands of startups and small businesses. They are well-positioned to understand the dynamics and help you maintain accurate and up-to-date records for your business year-round, and timely manage your annual startup tax filing. The trained and experienced finance team at Monily makes every aspect of your startup’s finances including your startup tax prep as easy as never before.

See Also: Top 4 Benefits of Hiring A Tax Professional for Your Business

Interested in learning more? You may sign up for a free trial and see  how Monily’s tax experts enable you to ace your startup tax season.