The Provision of Bookkeeping Services to Small and Medium-sized Local Businesses by the Books Now, LLC Company

 

 Problem of background

Bookkeeping refers to the process of tracking the financial transactions made by a business organization within a stipulated period.  Contingent with the type of accounting system that the firm uses, each financial transaction is usually recorded based on the existing supporting documentation. Typically, these documentations might be a purchase order, an invoice, receipt, or other similar types of financial recording validating that the business transaction took place (Oosthuizen, Van Vuuren & Botha, 2020). According to modern financial accounting research, a large percentage of the small and medium-sized business organizations, in their early stages, are mainly concerned with compliance-recording transactions, paying bills, ensuring payroll accuracy, getting paid, as well as following federal and state regulations

 Nonetheless, small and medium-sized business enterprises' costs for bookkeeping will ultimately depend on different variables. The size of the company, number of workers, number of monthly transactions, how payrolls are processed, bills to settle, invoices sent out, and number of expense accounts and balance sheets to reconcile are examples of these variables (Ganesan et al., 2018). Furthermore, the company's costs will be impacted by how the accounting department of the business administers policies and procedures, accounting systems, and reporting.

Recommendations and steps to Achieve Goals

Recommendations

One of the primary decisions that should be taken into consideration by Books Now, LLC when setting up the SMSs bookkeeping systems entails determining whether to use an accrual or cash accounting system or not. In case the company is managing the financial records of SMSs from their premises, it will be vital to stick with the cash accounting (Garbowski et al., 2019). Likewise, if the company decides to use cash accounting to record the daily financial transactions of SMS businesses, it will be essential to consider recording transactions whenever cash changes hands.

On the other hand, in the process of using an accrual accounting method, the company should have the potential of recording sales or purchases instantly, even though cash may not exchange hands until later dates. At times, the underlying reason for that is that a business organization may decide to use the cash accounting method before switching to an accrual accounting system as it diversifies its business activities (Adeniji, 2021). Conversely, in case the company acknowledges that the business is offering credit to their potential customers or it is obtaining credit from its suppliers, then it will be logical to utilize the accrual accounting method.

Nonetheless, it will be vital for the management authority of Books Now, LLC to decide whether they will use a double-entry or single-entry bookkeeping system to record the business transactions that hired them. Using the single-entry bookkeeping method for small and medium-sized businesses means that this system will typically follow the same technique as keeping the check register of the organization (Lestari & Maimunah, 2019). The company will be recording financial transactions of the businesses as it settles its bills and makes deposits into their accounts. This method ultimately works for small and medium-sized businesses because of their low volume of transactions.

The company should also have the potential to set up their electronic accounting system in setting up the bookkeeping system of the business. The primary reason for that is that nowadays, financial accounting consulting companies use computerized software to keep track of the businesses’ accounting journals with their bookkeeping entries (Musah, 2017). Although firms, especially small and medium-sized businesses, use basic spreadsheets like Microsoft Excel, it will be imperative to consider setting up charts of accounts. These charts might change with time as the business organization changes and grows.

Steps to achieve the goals

1. Selecting the most suitable accounting method

Different accounting methods are used, including cash-basis, accrual, and modified cash-basis accounting methods. Since the primary goal of Books Now, LLC entails offering bookkeeping services to small and medium-sized businesses, it will be imperative to either use the cash-basis accounting method or the accrual accounting method. The reason why the cash-basis accounting system is preferred is that it does not require extensive accounting knowledge. Basically, this method uses cash accounts, for instance, income, expenses, and so on (Oosthuizen, Van Vuuren, & Botha, 2020). The Accrual accounting method requires extensive accounting knowledge, and it is also time-consuming. In utilizing this method, income and expenses, for instance, should be recorded as the transaction takes place even if money changes hands.

2. Determining how the business transaction should be recorded

The company can decide whether to use accounting software, hire an accountant, or record the business transactions by hand (for instance, using spreadsheets). For instance, manual recording of transactions by hand is considered to be time-consuming. However, it one of the cheapest options for small and medium-sized business owners. When using this method, it will be vital to consider accounting for each transaction before calculating totals. Alternatively, hiring consultants frees the management authority of a business from managing their accounting books or making unnecessary accounting mistakes (Kaili, 2019). Although this option is the least time-consuming and most expensive, it enables the company to ensure that its financial statements have been compiled and totals computed chronologically.

3. Setting up a chart of accounts

The chart of accounts is vital since it will assist in listing the accounts of a business in its financial statements before breaking down money into specific categories. Furthermore, these charts are vital since they will assist in showing the inflow and the outflow of cash. It mainly comprises expenses, revenues, equity, liabilities, and assets of the business. To further break down each account, the company can use sub-accounts, such as product sales, to systematically organize transactions. 

4. Opening business bank account

Since the primary goal of the Books Now, LLC entails offering bookkeeping services to small and medium-sized businesses, it will be imperative to ensure that it has encouraged the management authority of such businesses to open bank accounts if they are not operating them.  Mixing up business and personal funds are not preferred in a business. Thus, having separate bank accounts is vital since they assist in clearing accounting errors, overspreading, inaccurate tax filling, and so on (Kaili, 2019). In return, this strategy will ensure that the accounts of the small and medium-sized businesses are structured and create clear audit trails.

5. Determining how the business will be paid

A business cannot grow if its potential customers do not settle their debts. Therefore, Books Now, LLC should ensure that it has encouraged the businesses that hire it to establish clear client payment policies. In return, it will be easier for such organizations to have the potential of determining the type of payments to be accepted by their customers. It includes things like credit cards, checks, cash, and other associated forms of payments. For example, if the business decides to sell to clients on credit, it will be vital to ensure that they have sent out invoices at later dates after providing products or services (Musah, 2017). Furthermore, it will be vital to take into account determining invoice payment terms, for example, when payments will be due, forms of acceptable payment, where to dispatch the payments, and so on.

6. Keeping record of expenses

Keeping track of expenses is one of the crucial parts of accounting. It assists in ensuring that the accounting books are kept in order as expenses are tracked. It includes bills, invoices, receipts, previous tax returns, and proof of payments, credit cards, and bank statements. The more documentation kept in the records, the better off the business organization and accounting books will be.

7. Making a schedule and setting reminders

Letting financial transactions pile up results in disorganized records, errors, and unnecessary stress. Creating and sticking to the accounting cycle will assist in simplifying bookkeeping responsibilities. The schedule should begin with the opening accounting balances and end with the closing account balances (Musah, 2017). Using reminders can also assist in updating the business’s accounting books.

Types of market research/what it will accomplish

Small and medium-sized businesses always require systematic bookkeeping methods as they grow. These businesses are ultimately concerned with losing financial control. Therefore, the company’s primary goal will entail convincing such businesses to outsource bookkeeping and accounting consultants like them for cost or expense analysis.  With the stakes relatively higher, it implies that the company should have the potential of enabling such business organizations to make extensive utilization of management accounting services. Ideally, this is because a large percentage of these businesses cannot have the potential of affording the use of a dedicated chief financial officer (CFO) (Lestari & Maimunah, 2019). Furthermore, although such businesses do not require full-time bookkeeper/s, they can depend on part-time accounting help to limit their hiring options.

Nonetheless, some of these business organizations can rely on in-house financial accounting and bookkeeping assistance. Despite that, the goal of Books Now, LLC will enable small and medium-sized businesses to save money by outsourcing their accounting services. This is because bookkeeping will not be the only key business activities to be financed (Adeniji, 2021). In return, the businesses will have to be comfortable with their accounting situation as the cash producer for their owner or committed to growing.

Small and medium-sized businesses usually purchase bookkeeping and other accounting services for the purpose of tracking their transactions. Therefore, another goal Books Now, LLC entails ensuring that they will be contacting their business partners or meet in person so as to discuss the prospects of working together. Considering the bookkeeping services to be offered, the company will be ensuring that it has competed indirectly against the prospects of being hired as part-time or full-time bookkeepers. As a result, this will enable such businesses to have greater control of their financial accounts and for the sake of future development. Another advantage of moving the bookkeeping of a business to outsource is that it will assist in changing the role of the existing workers (Garbowski et al., 2019). Therefore, the company will be tackled with the task of ensuring that part-time bookkeepers of the businesses have been efficiently trained to handle their accounting records as required.

Recommended Implementation /Process Design

The accounting books of a business enable its management authority to review their organization's expenses and income and see where they stand financially. By ensuring that the accounting books are organized systematically and up-to-date, the management authority of any business can have complete control of their finances and make SMART (systematic, measurable, achievable, realistic, and timely) business decisions (Ganesan et al., 2018). Different steps can be utilized by Books Now, LLC to achieve the bookkeeping goals of small and medium-sized businesses.

Despite that, the organization will cross a threshold at some point, and it will be imperative to place more emphasis on the need for accurate and timely financial reporting and intelligence. Because of that, the business will be forced to have managerial or management accounting, or accrued-based accounting, or advanced bookkeeping to assist in making data-driven financial decisions (Oosthuizen, Van Vuuren & Botha, 2020). Ideally, these are the main guidelines that will assist the business to improve cash flow, increase profits, and enjoy economies of scale. On the other hand, in case bookkeepers can be hired by the businesses based on these guidelines, it means that the company's aim will entail ensuring that bookkeeping training is systematically done.

 

 

 

 

 

 

 

 

 

 

 

References

Adeniji, Y. A. (2021). Internal Audit Outsourcing Practices among Micro, Small and Medium Sized Enterprises (MSMEs) in Lagos State. European Journal of Business and Innovation Research, 9(1), 53-67.

Ganesan, Y., Haron, H., Amran, A., & Pitchay, A. A. (2018). It is the External Accountant Matter in Business Performance of Small and Medium Enterprises? The Role of Non-Audit Services. International Academic Journal of Accounting and Financial Management, 5(4), 36-48.

Garbowski, M., Drobyazko, S., Matveeva, V., Kyiashko, O., & Dmytrovska, V. (2019). Financial accounting of E-business enterprises. Academy of Accounting and Financial Studies Journal, 23, 1-5.

In Kaili, E. (2019). New models of financing and financial reporting for European SMEs: A practitioner's view. Cham, Switzerland: Palgrave Macmillan

Lestari, R. M. E., & Maimunah, S. (2019). ANALYSIS OF SIMPLE FINANCIAL BOOKKEEPERS FOR THE VEGETABLE VENDORS IN EAST BOGOR REGION. JHSS (JOURNAL OF HUMANITIES AND SOCIAL STUDIES), 3(1), 05-10.

Musah, A. (2017). Benefits and challenges of bookkeeping and accounting practices of SMEs and its effect on Growth and Performance in Ghana. Journal of Accounting, Business and Management (JABM), 24(2), 16-36.

Oosthuizen, A., Van Vuuren, J., & Botha, M. (2020). Compliance or management: The benefits that small business owners gain from frequently sourcing accounting services. The Southern African Journal of Entrepreneurship and Small Business Management, 12(1).

 

 

 

 

 

 

 

 

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