Bookkeeping Questions

Common Questions

Do I need a separate business bank account?

Yes, while not every single person may be forced to, it’s the best practice to separate your personal finances from your business fiances. I would recommend completely separating your spending as to not accidentally break any laws, especially if your company is structured with limited liability like an S-corp or LLC.

What does a Bookkeeper do and how is a Bookkeeper different from other financial positions?

A Bookkeeper is responsible for the management of your financial data usually in the form of accounting software. A Bookkeeper works with billing specialists, AP or AR specialists, and other data entry specialists to document your companies fiances primarily for the benefit of the business. The Bookkeeper then seeks direction in the hierarchy of the finance department however large that may be.

What does a Financial Analyst do for my business?

A Financial Analyst looks at your data created and makes observations or creates budgets related to a company’s finances. For instance, a business owner will come to me and ask “why am I not making money?”, I will be able to tell the business owner which operations are struggling, if their business model is inherently flawed, or if they just need to be patient for more customer acquisition. Financial Analysts don’t give advice, just facts about your business and it’s up to the business owner to make those decisions.

What is a P&L statement, Balance sheet, Statement of Cash flows and Statement of Equity?

These financial documents are the lifeblood of any business. A P&L statement details profit and loss over a set period of time. A statement of cash flows shows cash flowing in and out of your business over a set period of time. A balance sheet shows your business’s total assets, liabilities and equity. A statement of equity is a greater breakdown of equity in a company.

What causes an IRS Audit?

An IRS Audit usually occurs when you get behind on your taxes, your company is of a criminally risky business, or when you make mistakes in your tax returns. A bookkeeper will help you in avoiding mistakes made when you file taxes, since after you file taxes you’re still usually required to keep the books associated with the filed taxes unless you amend.

How can I improve my AP and AR?

You can improve your AP and AR by having someone specifically look over those accounts. Having a funnel system in place that makes it easy for others to pay you as well as sending frequent emails and follow ups to those that owe you, and to have proper bookkeeping so you know what you owe to others.