Accounting and Bookkeeping 101: Everything you need to know

Accounting and Finance Services

Among all the games in the playground, the seesaw symbolizes accounting services best. Although there will be times when either costs or profit will be higher than the other, it is critical to balance both.

Outsourcing a third-party organization to manage your business’s affairs will benefit your company. Bookkeeping centers on documenting and organizing financial data, while Accounting is the interpretation of that information. Doing these accurately helps a business handle its cash flow, meet its financial obligations, and plan its investments, which are all essential to sustain a company.

Accounting & Bookkeeping Service

4 Main Types of Accounting

1. PUBLIC ACCOUNTING

Public accounting is the most comprehensive type of accounting. It specializes in management services, bookkeeping, and analyzing finances. Apart from that, it also handles tax preparation, creating accounting system designs, identification of financial errors, and compensating employees.

2. GOVERNMENT ACCOUNTING

This type of accounting focuses on government-related services. It guarantees that all expenditures and revenues follow the law, and it is responsible for creating a budget as well as managing government assets.

3. MANAGEMENT ACCOUNTING

Aside from recording and analyzing the business’s financial data to make the budget, management accounting is also in-charge of cost management, asset management, and performance evaluation.

4. INTERNAL AUDITING

Internal auditing examines financial waste, fraud, management practices, and mismanagement. It ensures that the business abides by the laws and regulations. There are various specializations that include different fields of auditing, namely environmental auditing, technology auditing, and compliance auditing.

IMPORTANCE OF ACCOUNTING

  • 1. RECORDS BUSINESS TRANSACTIONS

    Accounting keeps a systematic record of a business’s financial information. Having complete, up-to-date, and accurate data helps a business assess its performance and growth over a period of time.

  • 2. DECISION MAKING

    Since a business’ main goal is to acquire profit, all decisions depend on its financial status. By collecting, summarizing, and interpreting all financial information, a company can arrive at an intelligent and economically feasible decision.

  • 3. REPORTS RESULTS TO STAKEHOLDERS

    Stakeholders are one of the main reasons why a business exists. Updating them about the company’s financial status will increase the company’s sense of responsibility and credibility. Other than that, it will also keep them informed. For instance, sending a financial report to investors will make them aware of the business’ progress and might encourage them to invest more.

  • 4. QUICK ACQUISITION OF LOANS

    Banks and other financial institutions require businesses to submit a financial status report before they consider giving them a loan. In times like this, a reliable accounting system will present all necessary information, from the company’s current position to the profit it produced, its assets, and liabilities. Once the company meets all the requirements, it will finally be granted a loan.

  • 5. ACCURATE PROFIT AND LOSS STATEMENT

    Even a small amount of profit or loss will make a big difference as time goes by, which is why accountants make sure to record accurate financial statements. Whether small or large, businesses must maintain a proper accounting system to determine their financial position and track their productivity.

  • 6. HELPS CREATE THE BUDGET

    When accountants prepare organized financial records, it is easier to plan a company’s budget. The more detailed the allocation of finances, the more it helps the business save money, make strategies, and control expenditures.

WHO NEEDS ACCOUNTANTS AND BOOKKEEPERS?

1. SMALL BUSINESSES

Most small businesses assume that they do not need accounting in their company. However, it is during this early phase of the business that it is most vulnerable. In fact, the absence of an accountant is one of the main reasons why small businesses fail even before they get the opportunity to grow.

2. COMPANIES STRUGGLING TO HIRE

Hiring an experienced and affordable full-time accountant is difficult and may take time. Outsourcing will not only solve these problems, but might also exceed clients’ expectations.

3. GROWING COMPANIES

Business growth means more responsibilities, and outsourcing makes it easy to scale up and meet demands without spending more than necessary.

4. NOT-FOR-PROFIT ORGANIZATIONS

Accounting for charities or the not-for-profit sector is different from working for a private institution. This requires a more in-depth understanding and expertise about the industry and its purpose in order to further its cause, not to mention other charity-related tasks like managing donations, tax-deductible receipts, recording and approving of programs, managing grant funding, and reporting annually to regulatory bodies.

5. ANYONE WHO NEEDS TEMPORARY HELP

Contractual service is ideal for individuals or companies that need short-term assistance.

WHEN TO OUTSOURCE ACCOUNTING SERVICES?

1. WHEN FORMING YOUR BUSINESS

Choosing your business’s structure needs a thorough understanding of legal matters because it will greatly influence the business’s ownership, assets, liabilities, and taxes. Whether it is an entity of a sole proprietorship, partnership, limited liability company, corporation, not-for-profit, or cooperative, it will need accounting to help settle all business licenses, employee paperwork, and bookkeeping, among others.

2. WHEN WRITING YOUR BUSINESS PLAN

Business plans are not prepared by accountants alone but by the whole management team. However, their expertise is needed because a good business plan includes necessary details about the company, its products and services, market analysis, strategic implementation, financial forecast, management structure, and an appendix.

An accountant’s insights will ensure that all business information and strategies, especially those regarding the company’s finances, are not only accurate, but also cohesive, feasible, and time-bound.

3. WHEN COMPLYING WITH TAXES

Handling taxes can be complicated. Entrusting this to accountants who are experts in this field can reduce the risk of breaking tax laws.

4. WHEN AUDITING

After accountants analyze the company’s daily financial transactions, auditors are needed to examine the financial statements. This is important to verify the accuracy of the accounts and avoid any potential discrepancies.

3 THINGS TO CONSIDER BEFORE OUTSOURCING

1. ENUMERATE YOUR GOALS AND THE SERVICES YOU NEED

Before reaching out to an outsourcing company, knowing your goals and listing all the support and services you need will enable you to choose the right accounting package for your business. This will prevent you from spending your finances on services that you do not currently need.

2. WORK WITH A COMPANY WITH ALIGNED VALUES

Business is business, but working with a firm that does not share the same vision and values as you can create future conflicts. Put your trust in a company that does not only produce results but is also guided by the same principles you practice.

3. CHOOSE SOMEONE WHO UNDERSTANDS YOUR BUSINESS

A “yes” person may make business discussions seem easy and fast, but an accountant who understands your business will not just agree to everything you want them to do but rather discuss what your business truly needs and make suggestions if necessary.

 

There are times when companies are confused about the service they need. Accountants who can identify what your business lacks will probably be the same experts who are capable of tailoring unique solutions to help it grow.

WHY OUTSOURCE WITH THE REMOTE GROUP

  • 1. COST SAVINGS

    Companies can reduce expenses by up to 50% through outsourcing highly skilled professionals who do not go through recruitment and training, do not use facility expenses, and do not receive payroll, benefits, and insurance. BPO companies also offer a lower service rate, depending on their location’s labor costs. Bookkeepers’ annual salary in America ranges from $37,050 to $58,500, while it is only  ₱360,000 to ₱660,000 in the Philippines.

  • 2. TIME EFFICIENT TO FOCUS ON COMPANY GROWTH

    Bookkeeping duties such as logging, analyzing, and reconciliation are not only time-consuming but also exhaust employees’ energy. Leaving these in the hands of outsourced professionals will save the company from physical work and give the employees more time to focus on growth-centric activities like networking, building customer relationships, and generating revenue.

  • 3. EMPLOYEES' AVAILABILITY

    Each employee is vital to a company’s everyday operations, especially for small businesses. Although it is the employees’ right to enjoy their sick leave and vacation leave, when one role is vacant, it will affect the company’s productivity. In outsourcing, problems as such do not exist. In situations where the expert assigned to you is not available, the service provider will temporarily fill the role with another employee.

  • 4. EXPERT ACCOUNTANTS AND BOOKKEEPERS

    Oftentimes, professionals from accounting and bookkeeping firms have more experience than the others because they continuously go through training to stay competitive in the industry. Being surrounded by other experts also keeps them updated about accounting trends, solutions, and tools.

  • 5. ACCURATE BUDGETING

    Since bookkeepers record and organize all transactions that happen in the workplace, including income and costs, it is easier to review the company’s financial resources and plan for future expenses.

  • 6. REDUCE ERRORS

    Bookkeeping errors are often caused by a lack of knowledge, experience, or training. Because outsourced bookkeepers are all trained and experts in their field, this kind of problem rarely or never happens. In fact, virtual bookkeepers use an automated system that tracks a company’s expenses and increases transparency. With the consistent supervision of experts, any miscalculations are immediately resolved.

  • 7. DETAILED AND TIMELY FINANCIAL REPORTS

    Outsourced bookkeepers and accountants go beyond tracking and interpreting financial data. Due to the clear and organized method they use in recording profit and loss, balance sheet, and cash flow, their reports are detailed and easy to understand. Accurate data, when supported by experts’ knowledge, can produce insights that are vital in conceptualizing new strategies. After all, the bookkeepers’ and accountants’ job is not only limited to documenting where the company’s finances go, but also identifying unnecessary expenses and devising a plan on how to smartly allocate that budget in the future.

  • 8. ACCESS TO TOP BOOKKEEPING SOFTWARE

    Aside from payroll expenses, businesses also pay for software licensing costs. Outsourcing bookkeeping services automatically gives you access to this, as well as other products that are not often purchased by companies because of how rarely they are used.

    Nowadays, bookkeeping companies operate completely online. This paved the way for BPO companies and clients to cross-collaborate on cloud-based systems, which means both can input new information and review the shared data anytime and anywhere.

  • 9. MEETS LEGAL REQUIREMENTS AND IS TAX SEASON-PREPARED

    A stress-free tax season is a result of responsible and regular bookkeeping. Instead of scrambling for all tax-related information before the due date, outsourced bookkeepers prepare it as the time goes by and ensure that all processes follow with full compliance, at the same time taking note of potential tax deductions.

  • 10. SCALABILITY

    A company’s profit may depend on various things. It may skyrocket because of current trends, but it can also slump because of unforeseeable circumstances such as calamities or pandemics. Not being able to scale up or down to match these changes will result in financial loss.

    Scalability refers to the company’s ability to sustain or exceed its profitability as operational demand or sales volume increases. Service providers give companies the option to easily outsource more bookkeeping and accounting experts or reduce their hired professionals depending on their financial situation, which ensures that companies do not spend more than they gain.

ACCOUNTING AND BOOKKEEPING ROLES

1. BOOKKEEPING

  • Keeping records of the business’ financial accounts
  • Updates financial systems by documenting a hard copy of the financial data or by using the network’s financial accounting software
  • Monitors the accounts’ payment and receiving process

2. TAX ACCOUNTING

  • Deals with the business’ tax
  • Gives the best tax claims advice and protects the company’s finances from unnecessary taxation
  • Helps in fixing return issues

3. CHARTERED ACCOUNTING

  • Specializations cover various areas from auditing to management
  • Usually a member of the professional financial body

4. FORENSIC ACCOUNTING

  • Tracks missing funds recorded in the financial report
  • Works together with law enforcement agents

5. FINANCIAL CONTROLLER SERVICES

  • Serves as the commercial department’s head
  • Allocates the work to employees and oversees the staff
  • Deals with new clients
  • May perform both external and internal auditing tasks
  • Checks the accuracy of accounting work

6. ACCOUNTING AUDIT

  • Provides detailed financial information about the business
  • Validates the accuracy of the financial statements and reports

7. BANK RECONCILIATION

  • Improves the business’ payment system by supervising financial transactions
  • Creates strategies on how to resolve expenditure issues and exclude duplicates
  • Manages financial documents

8. ACCOUNTS PAYABLE

  • Ensures accurate bookkeeping and finds any discrepancy
  • Provides expenses cut down and protects the business from fraud

9. ACCOUNTS RECEIVABLE

  • Maintains the accuracy of tax rates and regulatory information
  • Keeps employees’ financial records, including income, deductions, and bonuses

10. PAYROLL PROCESSING

  • Boosts the company’s collection rate, reduces the payment periods, and guarantees fast processing of invoices

OUTSOURCE WITH THE REMOTE GROUP

Outsource Accounting and Finance Services
Ready to take your business to new heights? Contact us today and let us know how we can help! Let’s work together!

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About The Remote Group

About The Remote Group

The Remote Group is a leading provider of customized offshore staffing solutions to businesses worldwide. Their services focus on solving talent and skills shortages, scalability, cost savings, and streamlining processes that help increase business productivity while diminishing inefficiencies.

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