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Why You Need To Find & Hire a BOOKKEEPER (How To Do It)

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The 10 Minute MBA, is a no-fluff daily podcast that teaches you practical business lessons you can use to grow your business immediately.

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Welcome to the ten minute MBA. I'm your host, Gott declary. On the ten minute MBA, I unpack business tips, tricks, strategies insights that you can use the start, scale or grow your business. Today I'm going to be speaking to you about book keeping and, more importantly, why you shouldn't be working in the business, why you should be working on the business, the importance of bookkeeping, but also how to find somebody to help you actually do the bookkeeping. So let's first define some terms. So bookkeeping is a vital component of any business and getting it right from the very beginning will prevent problems in the future. You should organize your bookkeeping as soon as you can to maximize efficiency and give your business and organizational boost. Bookkeeping is different than accounting and the first thing to understand is that if you are going to do your own bookkeeping, which I'm going to make the argument that you shouldn't be doing your own bookkeeping, but if you are going to be doing your...

...own bookkeeping, you do have to understand that it is different than accounting and if you're unfamiliar as to what the differences are, don't think that you're alone. Many seasoned entrepreneurs would struggle to put the distinction between them into words. So before we actually talked about how bookkeeping works, is important to know what bookkeeping actually is. So bookkeeping is the process of recording daily transactions and organizing financial documents. Accounting uses the data that you take from bookkeeping and and meticulously kept book keeping records to make sense of a company's finances and progress. Simply put, a bookkeeper tracks finances and an accountant analyzes them. It sounds easy, but it really requires a lot of attention to detail and time. Book keeping is definitely less daunting when you know it doesn't require the same mathematic or scrutiny that you would have to apply if you're doing all of your own accounting,...

...but it's still requires you to think about it. And of course there's various levels of book keeping. Right if you're running a brick and mortar then there's going to be a lot more bookkeeping than if you are selling something on shopify, where a lot of your transactions are recorded automatically. But there are three main things that you need to do if you are doing your bookkeeping. So number one, you have to keep track of your finances. Number two, you have to organize your accounts and, number three, you have to regularly reconcile your books. So let's start with number one, keeping track of your finances. When you're bookkeeping for your business, you can break down your finances into four categories profits, expenses, inventory cycle and liabilities. Profits can be divided into cash or credit sales, depending on whether the customer pays you at the time of purchase or when you send them the invite for the bill. Expenses can be divided into recurring or non during expenses. Non Recurring expenses are usually one off unexpected payments, whereas recurring expenses could cover items such as bills. If Your Business sells a product, your inventory cycles should catalog product...

...purchases and sales, allowing you to see how much imatory you have at all times. Liabilities are outstanding Balances Your Company ows, as opposed to the expenses that are incurred by running of the the running of the business, such as buying inventory or paying employees. A liabilities are separate two expenses and should be organized and recorded and tracked accordingly. The second thing you have to make sure of is to organize your account so having properly organized accounts will make accounting easier and book keeping easier, and the lie a quickly and easily look over your finances at any time. If you're unsure how to organize your accounts, are you won't be handling the accounting yourself. Take take some time and speak to your accountant about what they need from you as the company's bookkeeper. That will help them do their job properly. As a general rule of follow when organizing your books, divide everything into the following categories assets, liabilities, income, expenses and equity. These categories will cover what the company owns and owes, as well as the money going in and out of the business. By dividing...

...your books like this, you and your accountant will be able to find the appropriate documents in record time, whenever you have to find them. And the third thing is to regularly reconcile your books. How often you close and re concile your books is a decision that you will make with your accountant, and accounting period can be a month, that can be a quarter or can be a year, depending on what works best for your organization. When each accounting period ends, you will need a complete series of bookie book keeping tasks before the next period begins. These tasks include reconciling, which means checking that the company's Bank and Credit Card statements match your books. A lot of these tasks are about making sure that you can account for every cent that has gone in and out of your company. By doing these tasks regularly, you will be able to claim and prepare what you need to prepare when it's time to file your taxes. Bookkeeping as simply the Organization of Your Company's finances. The key to great book keeping is regular, thorough analysis of your books. Bookkeeping shows...

...you what is happening in your company. So a good way to know that if you're doing things right is to ask yourself, can I track every cent of the company's money right now? When the answer is yes, your books will be a great asset to you, your accountant and the future of Your Business. Now I want to add on a little bit of insight for people that are looking to hire a bookkeeper, and I would always recommend that as soon as you can, you hire an accountant act as a bookkeeper. Usually, if you're just hiring an accountant to do your businesses taxes, it means you're hiring them quarterly or to reconcile your books, or could be once a year and they're not on staff and they're not regularly working. And if you don't need to reconcile your expenses because, for example, they're all automatically tracked, then maybe it makes more sense to just have an accountant for certain periods in your business. But it also depends on the complexity of your business. But regardless, I know that the sooner that entrepreneurs that I've worked with get rid of that accounting headache, the sooner they can focus on working on the business versus working in the business. So it makes sense why people obviously don't...

...hire a bookkeeper right away. When you're starting a new business, you are trying to keep cost down wherever you can, so hiring somebody to do something you could do yourself Macon counterintuitive, but a bookkeeper may actually save you time and money. You'll have more time to spend on building Your Business and following your passion and save money by having a professional organize your finances from day one. So when considering someone as your company's bookkeeper, this is what you should keep in mind. If you are willing to hire, which I really do believe you should what kind of business do I run and does my bookkeeper understand how books for this company will be different to businesses in other industries? What bookkeeping software does my bookkeeper recommend and why? Is My business large enough to require a full time bookkeeper or would a part time bookkeeper be better? Asking a candidate as well as yourself, these questions will allow you to see what this person would prioritize when working for you. If these priorities align with yours, then they could be a good fit for your business. When hiring a bookkeeper, don't limit yourself to a person in your office space. We spoke...

...about freelancing before and how to find good freelances. There are so many good bookkeeping options now, so don't be afraid to explore them. Bookkeeping firms remote workers are viable alternatives to a full time in office employee, and even if you aren't considering them, a little investigating might lead you to find some incredible talent. As long as a person you hire has the right qualifications, the way you hire them doesn't matter. Where you hire them from doesn't matter. Where they're doing the work from does not matter. What I would recommend you do is, if you want to do your own book he bookkeeping day one. Spend some time at least learning from a professional on how to do it so that you don't screw it up, because if you do screw it up from day one, it's just a headache. It's not going to be the end of the world, but it is just a headache to go back and fix your books. So higher a professional. Learn from that professional. Takeover when you feel confident, but I would highly recommend it. As you scale your business, you should start to think about getting rid of some of this at mid headache and some of this busy work so that you can really focus...

...on driving your company forward and championing the Vision for your company, which is entirely up to you as a founder or as an entrepreneur. Anyways, I hope that help remember any business questions you have. Don't worry, I got you. This has been another ten minute MBA. It's all for today. I'll see you tomorrow for.

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