Small businesses tend to do as many tasks as possible themselves. Owners either perform these tasks themselves or delegate them to their employees. This is one of the ways they can cut costs, as they don’t have the resources to hire employees for every task that needs to be done. Bookkeeping is just one of those tasks. It is not a very difficult task, especially if you have online help and bookkeeping software. So, why hire a bookkeeper? Surely you don’t need to spend extra money to get outside help when it’s possible to do it yourself? The answer to these questions depends on the situation of your business.
In the beginning, when a business is just starting out, you may find the time to keep records of every single financial transaction. But at some point, there comes a time when bookkeeping may be doing more harm than good for your business itself, and you have to ask yourself, “Do I need a bookkeeper?” But how do you know if that time has come? There are some signs that let you know it’s time to hire a bookkeeper.
You’re focusing on non-core business activities.
If you own a business, your sole focus should be developing and growing it. Running a business is not easy, and there are far too many tasks that require your attention. Bookkeeping is not one of them. If you spend valuable time making sure your financial records are in order, your business could suffer. A business owner needs to be efficient. It is not advisable to spend time and effort on tasks that can be better done by experts in the field. It will cause you to overwork yourself and risk burnout. If you can’t justify the time you spend on bookkeeping each week, it’s time to hire a bookkeeper.
You’re making bookkeeping mistakes.
Although bookkeeping is a simple task, it has great financial and accounting importance. Your accountant can only properly account for the company’s finances if the bookkeeping has been done correctly. The accountant essentially relies on the data that the bookkeeper provides. Therefore, it is crucial that your company’s financial transactions are carefully recorded. Any errors in bookkeeping or payroll can be unpleasant for the business and result in fines or penalties. If you are not an expert in this field, you are prone to making mistakes. Keeping accurate records of all business expenses or income is essential, as it can affect tax deductions. Also, since bookkeeping is an added responsibility, you spend a limited amount of time on it each week and may overlook some information that leads to errors. These mistakes can cost your business dearly. It’s better to let a professional handle this task instead of spending time on a task you can’t do at a subpar level.
You are not able to keep up with the bookkeeping.
Every day that your business grows and you get more clients, your financial transactions and associated paperwork also increase. Proper records must be kept to avoid errors and ensure your business is profitable. This becomes a full-time job that requires undivided attention. As an owner, your efforts and time will be focused on growing your business, and you may not find the time to devote to bookkeeping. In such cases, it is better to hire a bookkeeper instead of delegating this task to another employee who may already be overwhelmed with work to keep up with the growth of the business. A bookkeeper will be able to manage the records competently.
Your accountant does the bookkeeping.
You may not have a bookkeeper, but chances are you have an accountant since every business usually has one. Sometimes small businesses ask their Accountant to do the bookkeeping for the business, as this is a part of finance and accounting. Although this may be done to save the cost of hiring another employee, a bookkeeper, it unintentionally ends up costing them more. An accountant, based on their services and qualifications, costs much more than a bookkeeper. When a company hires an accountant to do their bookkeeping, they pay the accountant much more than they would have to pay a bookkeeper for the same services.
They are in a hurry during tax season.
Your accountant is responsible for filing taxes for your business when the time comes. However, in order to do that, he or she needs complete financial information, which becomes your responsibility if you do the bookkeeping work yourself. If you are working overtime during tax season trying to compile a year’s worth of financial information, then you are not doing the bookkeeping properly. You will likely need to speak with your accountant frequently during this time to record all expenses and income. A bookkeeper will keep up with each of your transactions and file them accordingly to make it easier for the accountant to do their job.
Hiring a bookkeeper makes your life as a business owner a little easier and makes your business far more financially sound. Understandably, small businesses are hesitant to hire a bookkeeper due to budget constraints. But there is a cost-effective solution to hiring a bookkeeper in-house.