Many small businesses and charity groups lack the financial resources to hire a dedicated person or team to handle all of their bookkeeping needs. Fortunately, there are a handful of online cloud-based bookkeeping software companies that offer remote services at highly competitive prices.
Why Go Digital
Bookkeeping generally refers to the process of recording and maintaining an orderly list of financial transactions as part of a business’s normal course of operation. This includes simple inputs like purchasing supplies, recording sales to clients, payments to workers, etc.
More complex transactions that are part of the bookkeeping process include reconciling accounts and year-end closings.
Many small business owners with little time to spare are known to loathe the bookkeeping process. The simple reason is that business owners would rather use their valuable time to generate income rather than crunching numbers.
Nevertheless, it is vital that the task needs to be done properly to avoid tax problems and to better manage the business day-to-day.
The internet is full of digital accounting and bookkeeping service providers that cater to businesses of all sizes. The best part of paying for an online service is the ability to access one or more dedicated financial experts to handle basic and advanced bookkeeping needs ranging from payroll, bill paying, invoicing, and much more.
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Bookkeeping For Nonprofits
One of the biggest misconceptions is that profit companies and nonprofit organizations require the same level of bookkeeping. This couldn’t be further from the truth as everything from the financial statements to tax treatment are vastly different.
Bookkeeping platform can help with the four main financial statements all nonprofits require. These include:
1. Statement of Financial Position: The value of the organization at a given time as calculated by: assets such as cash, contributions receivable, investments minus liabilities like accounts payable, and accrued expenses.
2.Statement of Activities: The Statement of Activities is used to determine if an organization is spending more money than it receives. What’s important to note is unlike a for-profit business, this section must divide financial activity by revenue class and divide expenses by category.
3. Statement of Cash Flows: The Statement of Cash Flows can be used to evaluate the actual flow of money through an organization. It is particularly useful to determine how much cash is available at a given time to pay expenses.
4. Statement of Functional Expenses: The Statement of Functional Expenses is perhaps the most complex part of bookkeeping for nonprofit organizations. The section offers a visual representation of where the money is spent on program costs, fundraising costs, etc. This is particularly useful in helping organizations ensure money is best allocated between different expense categories.
The Dreaded W-4 Paperwork
The IRS Form W-4 Form, also known as the Employee’s Withholding Allowance Certificate, must be filled out by every new employee. The form is used to notify the job creator of how much income tax the new worker wants to be withheld from their regular paycheck.
The W-4 Form changed in 2020 and business owners can stay up to date with everything they need to know through the digital bookkeeping service provider of their choice.
The amount that is withheld will count towards the annual income tax bill that is calculated annually in April. If a worker doesn’t withhold enough taxes, they could end up paying a large amount to the IRS in April and possible penalties.
Over paying to the government is something few if any people want to do. After all, the government doesn’t pay any interest and only refunds the taxes once a year. In other words, extra taxes paid in May won’t be recovered for 11 months.
Conclusion: Peace Of Mind
No business owner likes to spend more money than they have to. But in certain cases, an investment in digital bookkeeping platforms offers more than just standard bookkeeping services. Instead, these service providers offer peace of mind that all the financial aspects of the business are up to date.
Access to professionally managed and easy to understand financial reports translates to better decisions and a business that is better positioned to pursue growth initiatives.
