Have you ever considered hiring a bookkeeper? As your business grows, it can become increasingly difficult to properly manage finances and maintain records. If this sounds like an issue for you or your business, then keep reading! In this blog post, we will discuss when a business should hire a bookkeeper.
Does Your Business Need a Bookkeeper or an Accountant?
The answer is: You Need Both
An accountant can use their expertise to analyze the big picture of your financial situation and offer strategic advice. They produce key documents such as a profit-and-loss statement if needed, or file taxes for companies. When tax season is over they also act as an outsourced Chief Financial Officer by advising entrepreneurs on important decisions like securing credit against receivables in order to introduce new products without risk.
In contrast, a bookkeeper does the day-to-day hands-on tasks: making sure new employees file all the right paperwork for the company’s payroll, submitting invoices (promptly) and following up on them, and paying the bills. The bookkeeper also tracks company expenses and can assure that every cost has been entered — and recorded correctly — into software like QuickBooks Desktop so that the business is ready for tax time along with filing any other reporting to, say, creditors or investors.
Accountants are important to have for guidance, but they’re not always accessible. A good bookkeeper is there to assist you throughout the year.
Your Accountant Should Not Do Your Bookkeeping
Some businesses will leave their books untouched over the course of the entire year, then deliver their expenses and bank transcripts to their accountant during tax season, so they can be done retroactively for the sake of filing a return.
This may seem like a simple way to deal with an unappealing task, but it’s not advisable, Here’s why:
- When you don’t have up-to-date books during the course of the year, you can’t use monthly or quarterly financial statements to guide your business decisions.
- It’s not cost-effective. Certified Public Accountants (CPAs) generally charge more per hour than bookkeepers. You could end up paying more for bookkeeping services than you need to.
- An accountant won’t necessarily provide you with retroactive month-to-month financial records. Having detailed business records is essential for securing loans, bringing on investors or partners, or selling your business.
When to Bring in a Bookkeeper
A business should hire a bookkeeper when managing finances becomes too difficult for the owner or a staff member. It can be easy to miss an important detail or obscure financial rule if someone unfamiliar with bookkeeping is juggling multiple tasks and responsibilities all at once. A bookkeeper will help ensure your records are accurate, procedures are followed correctly, and that taxes get filed on time!
DIY Bookkeeping Can Be Time-Consuming
39% of small business owners work more than 60 hours a week, according to a Gallup poll. Most of this time needs to be spent on executing tasks rather than managing finances. If you’re spending more time on your books than necessary, it might be a sign to hire a bookkeeper. It will allow you to focus on other aspects of operating your business while they ensure accuracy in financials and reporting. A bookkeeper is valuable because not only do they free your time, they can help spot business trends, freeing you to think strategically about where your money is going and where you can save.
Your Books Are Not Up To Date
When you fall behind on bookkeeping, your books stop reflecting the actual state of your finances. That makes it harder (sometimes impossible) to understand cash flow and accurately gauge the health of your business. Poor record-keeping may cause a number of issues for businesses such as missed deadlines, missed tax payments, fines, and lost revenue.
Bookkeepers Can Help Spot Tax Deductions
Bookkeepers are more than just the number crunchers that categorize expenses. They can also be an asset in helping a business get a better grip on finances and spotting tax deductions that would have gone unnoticed by someone less experienced.
Get A Handle On Cash Flow
If your business has inconsistent cash flow, then it might be a good time to hire a bookkeeper. Bookkeepers can work with you in advance to create financial projections that help your business plan better for the future. With proper bookkeeping in place, you can get updates on your cash flow every month in the form of cash flow statements, which tell you how much money other people owe you, and how much money you owe other people.
Your Business Struggles To Pay The Right Estimated Tax
A bookkeeper can help you with your quarterly taxes. You can do them yourself, but it is better to let a bookkeeper do them because they are more careful and know what they are doing. A bookkeeper can help you with your taxes. They make sure that the numbers are correct. You can do them yourself, but it is better to let a bookkeeper do them because they are more careful and know what they are doing.
Profits Are Not Increasing, When They Should Be
If your business is missing gains and revenue growth, it’s tempting to just focus on working harder and selling more. But perhaps the numbers are telling a different story? Bookkeepers can help you keep your finger on the pulse of your business by helping you decrease operating expenses and optimize cash flow, as well as identifying trends and problems.
Your Books Are Not Secure
Professional bookkeepers take security and confidentiality as seriously they do financial recordings and accuracy. A bookkeeper will ensure your financials are stored securely and are backed up for easy recovery in case something does go wrong. Bookkeepers will use professional software like QuickBooks Desktop to make sure your financials are always available, accurate, and at the ready. Having your financials compromised, or accidentally get deleted can be a critical issue.
Better Bookkeeping = A Better Business
Investing in a bookkeeper for your business means you’re taking the next step to focus on what matters and potentially letting go of tasks that are bogging down productivity. Every choice made towards sharpening finances is a move forward, but hiring an expert like a bookkeeper can mean significant growth in revenue streams without all the time spent crunching numbers or worrying about financial accountability.