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Why should I hire a bookkeeper?

Consider a scenario where your startup is on its way from idea to formal business. There are many, many things to think about and consider.

And one of them may include that all-important decision of when to bring in outside experts to assist you with some of the operational functions that go into running a business.

Those functions almost certainly include the financial aspect of your business. While you may not need — or want — an accountant, you could at least consider a bookkeeper to help with the various financial aspects. Your only other alternative is to become a bookkeeper yourself so that you understand every aspect of your business! And that’s not realistic.

A make-or-buy decision is a common problem that businesses large and small have to solve. Small businesses have an even more difficult time deciding if it’s best to make or buy something, as they have limited resources in both time and money.

With your small business, you’re faced with the decision to prepare your books by yourself or to outsource your bookkeeping for someone else to perform. While there isn’t a single best answer that applies to all businesses, there are factors you should consider to come to a decision you’re most comfortable with.

When should you hire a bookkeeper?

Many small business owners start with the goal of producing the best product or service. Bookkeeping is often an afterthought or a nuisance. They may launch their businesses with little thought put towards who will keep their financial books or file their taxes. Often they sign on with a SaaS company like Xero, Freshbooks or Quickbooks Online with the intention of managing their daily transactions. While these programs appear easy to use, the small business owner can end up struggling or even failing because they may not have accounting experience to back up their good intentions.

It’s estimated that the average small business owner who does his or her books spends 10 hours a week on the task. This is time that is taken away from the actual business and may not generate new revenue for the company. It is essential that the small business owner ask themselves the following questions prior to performing their bookkeeping:

  • Do I have the skills necessary to establish a bookkeeping system on my own?
  • Do I have the time to maintain the bookkeeping system on my own?
  • Is my time best spent managing the bookkeeping system?
  • Am I able to keep up to date on new tax laws in order to avoid legal trouble?

If you find yourself answering ‘no’ or even ‘not sure’ to these questions, it might be wise to investigate using a professional bookkeeper from the outset of your new business.

How will your bookkeeper save you money?

Typically, in-house bookkeepers and outsourced accountants are much more expensive than an outsourced bookkeeper. When you hire in-house, it is important to remember that you are responsible for payroll taxes and benefit programs. A typical in-house full charge bookkeeper commands a salary of $40,000 per year. For a small business owner, this may be a difficult pill to swallow. Hiring an outsourced bookkeeper is usually 1/4 of this cost and does not come with the obligation to pay payroll taxes and benefit programs.

In addition to this, a qualified outsourced bookkeeper should be an expert in their field. This means that your finances are always managed by someone who knows how changes in tax laws and regulations will affect your company. As a small business owner, it is impossible to run every aspect of your business. Once you start your business, you should hand over the bookkeeping to a professional who has your best interests in mind. It is essential to form a partnership with an expert who will guide you in the right direction.

Time

Are you still managing your financials? Are you still doing your accounting reporting? How long does this task take out of your workweek?

On average, a business owner can spend up to 5 hours a week updating records and making computations. And this is only during the average week, not including end-of-year reports and tax season. Time can jump to 10 hours during these important finance events.

What could you do with an extra 5 hours a week? What should you be focusing an extra 10 hours on at year’s end or the close of your fiscal year?

Doing your books is taking away valuable time from growing your business. As the business owner, this is what you should be spending time on. You are the great thinker behind the operation, the mastermind who needs to be working on the next big move. Hire a bookkeeper to take care of this operational function to save your time for what you need to be doing.

Passion

You may be both the brains and the brawn behind your business, especially if you’re starting. It’s great to be behind the wheel 100% at this early and sensitive stage.

A business owner will never feel completely comfortable letting other people take over. It’s much like being a parent, never really wanting to hire that sitter, always wondering what’s happening at playdates and sleepovers. But Mom and Dad have to work, have to focus their attention on what ultimately secures their child’s future. Your business is your baby, and you need to make sure that you are taking care of it the best way you can.

Is crunching numbers and composing reports really what you want to be doing for your business?

Most business owners get burned out so fast because they are doing too many things. Many business owners also burn out way too soon because they are forcing themselves to do things that they are not interested in. This level of dedication and discipline is admirable. It is not, however, intelligent use of their talents.

Ask yourself what you love doing. This is what you should be focused on. Then, hire a bookkeeper to take over the financials so you can do it.

Expertise

As you review your talents, also ask yourself if you are a skilled accountant. Do you have a background in finance? Do you have a working knowledge of accounts receivable and payable? Are you an expert at doing taxes? If the answers are “No,” then are you the best one to be doing this? You could learn to be, of course, but again, you will find that this is not a good use of your time at all at this point. If the answers are “Yes,” then ask yourself this:

Is crunching numbers and composing reports really what your business needs you, in particular, to be doing for it?

Think about the many different roles that you have taken on in your business. They are all important roles, to be sure. But which ones should you be doing yourself? Ask yourself what you and no one else can do for your business. Ask yourself what your true talents are and how you should be applying them.

As expertise goes, an actual bookkeeper has the talents and skills to do professional work. Would you hire a bookkeeper to brainstorm a new business concept? Would you hire a bookkeeper to find your minimum viable product? Run your marketing? Plan your expansion? You get the point. Do what you are good at and hire a bookkeeper to do what they are good at.

Growth

Starting a business needs your full attention and focus on every single aspect. As you pass your first year and gain some stability, however, you will want to rethink your investment. If you are still doing everything, you won’t be able to grow. You need to pull yourself out of the tedious aspects of running your business so you can get into a position to push your business forward.

Growth requires that you focus on your core business needs. Devote yourself to big-picture strategy and don’t get bogged down by the little tasks that will take you away from raising a strong business. Use your unique business talents to give your business the best care, and hire a bookkeeper to do the small stuff.

Expense

Are you trying to save money by doing your bookkeeping? This may seem like a smart move, especially in the early years or if you are bootstrapping. When it’s time to level up, however, the tables will turn, and you will end up losing more than you thought you could save. Let’s take a look at the factors involved:

  • How much is your time worth to your business at this point? As discussed above, your time is invaluable in certain areas.
  • How much time do you spend on financials and accounting?
    • How much time does this take away from core business needs? Any time spent doing the books is a huge waste when you consider what you are giving up to jot down receipts and expenses.
    • How much do you lose due to inexperience? If you are not an expert, you will surely spend more time on these tasks, and make more costly mistakes. Think about missed bills, late payments, tax computation errors.
  • If you could put a dollar figure on your time based on how it equates to your profits, what would your hourly rate be? How much would it cost you to hire a bookkeeper do take these tasks off your plate? The hourly rates are going to be vastly different, for sure.

When you put it all together, it is easy to see how much more affordable it is to hire a bookkeeper rather than use your own valuable time to do bookkeeping tasks. Individual Tax Return

Doing it yourself

While outsourcing your books might seem like the simplest and easiest option, it might not be the most efficient. Accounting and bookkeeping services can be costly, and depending on the complexity and volume of your business, it might not even be worth it!

In many cases, the situation of a business owner who’s just starting may be simple enough for them to perform their bookkeeping. On top of that, the volume of transactions each month might be minimal enough that bookkeeping might not even be a time-consuming task.

Aside from saving money, a small business owner can gain some value by preparing their books.

First, performing your bookkeeping can teach you new business skills in accounting and finance. This knowledge can inspire business leaders at any stage to make better and more informed decisions for future growth opportunities.

Further, performing your bookkeeping allows you to be more connected to your finances. Instead of looking at a single metric, such as your online bank balance, owning your books can give you a clearer picture of your finances on demand.

Business owners have resources available to help them learn how to perform their bookkeeping. A great place to start would be blogs from entrepreneurs or companies that you trust and are familiar with, as well as a community of like-minded business owners where you can share tips and advice.

Along with the informative resources, there are many powerful small business bookkeeping software applications in existence—some of which are free to use! Using the right accounting software can make your bookkeeping a quick and simple task rather than a more manual approach of using spreadsheets. In addition, you can find a mentor to help teach you how to perform your bookkeeping in the software of your choice.

On the other hand, if bookkeeping is not your thing, doing it yourself may cost you more than hiring someone else to do it. For instance, if you can’t wrap your head around accounting concepts, it may cause you a lot of stress and time wasted on trying to prepare your books. Since time is money, it might be beneficial to outsource your books in such cases.

Hiring a bookkeeper

Saving time is one of the top reasons why you would want to hire a bookkeeper, but growth is also another key factor. When business picks up, and you’ve got a lot on your plate, delegating the task of bookkeeping makes sense as you focus on the bigger picture. In addition, more complex issues usually arise the more you grow, and having a dedicated bookkeeper will not only keep your books accurate but give you immense peace of mind.

Putting your confidence in a competent and experienced bookkeeper can eliminate stress from complicated accounting concepts. Great bookkeepers will get to know your specific financial needs and can even provide you with expert insights into your business’s finances.

However, while hiring a bookkeeper does free up some time for yourself, it’s important to pay some attention to your books still. Your bookkeeper may be knowledgeable about accounting concepts, but they might not be an expert mind reader on what’s happening with your business. It’s essential to check in with them so that their treatment of your transactions is appropriate and relevant to exactly what happened in real life.

On a similar note, it’s important to check in with your bookkeeper so that you don’t completely lose ownership of your finances. If you outsource your books, you should still review your financial statements periodically to keep an ongoing picture of your financial situation.

Here’s how a good bookkeeper can help your business

When it’s time to pull the trigger (i.e. pick up the phone and find a bookkeeper to do your books for you), here’s what a professional, qualified bookkeeper or bookkeeping solution should offer you.

Availability

You need to be able to contact your bookkeeper quickly and get a helpful response. If your bookkeeper takes their sweet time responding to emails or goes on vacation without giving you notice in advance, it’s time to consider switching services.

Clear, easy communication

Bookkeepers need to be bilingual: able to speak with accountants and other bookkeepers, and able to speak with the rest of the world. Conversations should never be so loaded down with jargon that you can’t understand what’s going on. Make sure you work with a bookkeeper who is able—and willing—to explain your books to you in a language you understand.

Tax-ready financial statements

One of the greatest boons of working with a pro is receiving up-to-date financial statements you can use to plan business moves or prepare your taxes. If your bookkeeper can’t deliver, it’s a sign you need to find a different solution.

High-security standards

The best bookkeeper in the world is useless if their computer—and your business’s financial data—is taken offline by an attack. Your bookkeeper should be able to confirm they have security essentials in place.

So, Why Should You Hire a Bookkeeper?

You should hire a bookkeeper for your growing business simply because it makes good business sense to do so. They can do these tasks better, and you can do other tasks better. Think about it – what should you be doing with your time?

A bookkeeper’s time is best to spend doing what they do best, and so is yours. They love what they do, and you should be doing what you love, too. Be a business owner. Do what business owners do. Lead your company to bigger and better profits and hire a bookkeeper to record your success.

When all signs point to upgrading from DIY bookkeeping to professional help, it’s time to plan your next step. Start by checking out our guide to finding the right small business bookkeeping solution for your business.

 

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