The first rule of business is to stay in business and your financial reports are there to tell you how healthy your company is, but those reports are only as good as the information you put into them.
When you are new you can probably do this yourself since you wont have many transactions (income and expenses) to manage, but as you grow you will want to hand this off to someone else, and it isn’t very expensive.
What’s the difference between a bookkeeper and an accountant? Bookkeepers maintain a history of financials by recording and categorizing all of a business’ transactions in one, organized place. Accountants on the other hand are responsible for summarizing, analyzing, and reporting that financial information. Plus bookkeepers tend to be much cheaper than a CPA.
Quick overview of accounting in gov con: You don’t need to be a CPA but I think you need to at least be an informed consumer so lets talk quickly about the rules here:
- The regs: Federal Acquisition Regulation (FAR-31) is the controlling regulation
- Accrual accounting: The government uses accrual accounting (Activity Based Accounting) and this is important because it means that you recognize costs and revenues when you do the work or obligate yourself to an expense, not when you get paid or make the payment (see FAR-31.2 for details.)
Managing your books on day 1: As soon as you start your new business you should have a plan to manage finances and the easiest way to do this is to use an online service–such as Quickbooks, Peachtree(now Sage 50) or Xero. Having a separate credit card that you ONLY use for business expenses helps a lot too
How much does it cost? Most providers charge an hourly rate ($10/hr-$60/hr) although some can be kept on retainer
Choosing a bookkeeper: Ensure that they have experience generating taxes, banking statements, and mandatory financial reports
Experience in Gov Con
- GL Solutions