When we started our businesses we had a very specific idea about what we would do, how we would do it and what our days would look like. Then reality sets in and we find that there are tasks that need to be done that aren’t fun, weren’t in the initial picture, and don’t seem to help bring in the business. Bookkeeping is one of those tasks for many business owners. But we also need to weigh costs vs. comfort. Is it worth the cost just because I don’t like it or are there other factors to consider? So here are the three main times in a business’ lifespan, when I think hiring a bookkeeper makes sense. I’ve also included a couple of honorable mentions at the end.
- Initial Set Up of the Books – Most bookkeeping/accounting software providers for small business would like you think that their programmers created a product that is 100% plug and play. They aren’t, especially if you have no background in accounting or bookkeeping. So, save yourself & your tax preparer a TON of work and hire a professional, experienced bookkeeper, who is certified in your software to set up your bookkeeping system and to TRAIN you how to use it. I know we all look for ways to save money when we are first starting out, but investing in having your books set up properly and learning how to use the software can save you money in the long run…on tax preparation, you CPA won’t need to spend hours and hours figuring out what’s what; on taxes themselves, you can be sure to take advantage of all appropriate deductions and not pay taxes on money that isn’t income; on expenses, you’ll know what you’ve paid, or when something is due; and you won’t be spending potential income producing time on trying to figure out how to record a transaction or reconcile your accounts.
- When it Gets Delayed and Delayed and Delayed – You’re paying your bills & making your deposits on a timely basis, but nothing else is getting done. Your transactions aren’t getting recorded in your books; you haven’t reconciled in months; you know there is money in the bank account, but it doesn’t seem like as much as there should be; or you are spending precious family/down time trying to get caught up. Or maybe your bills aren’t getting paid on time, and you’re not collecting on your outstanding invoices. Or, you just HATE doing the books, I mean really HATE doing them. These are all reasons to start looking at the possibility of outsourcing your books to a professional bookkeeper or bookkeeping firm. You should be spending your time on helping your clients and growing your business…not on your bookkeeping. That isn’t what you wanted to do with your life (or you’d have a business like mine), so why not let an expert handle this part, and you do what you enjoy doing.
- When You Are Getting Ready to Ask the Bank for Money – When you go to get a line of credit or a small business loan you will need to present financial statements to the banking institution. If you’ve been doing your books on your own, then hiring a bookkeeper to look over the books can be money well spent. A professional, experienced bookkeeper will be able to check your Profit & Loss statements and your Balance Sheet for errors or inconsistencies. They can suggest adjustments or corrections (or do them for you) based on accounting principles so that your financial statements are as clean and accurate as possible, giving you a better chance of not only getting the loan or financing, but of getting the best interest rate possible on that loan, saving you money in the long run.
Honorable Mentions: There are few other times when bringing in a bookkeeper can be helpful.
- Hiring One Part-Time Employee – If you plan on hiring a part-time employee (only a few hours a week) as office help, having your bookkeeper set up and do the payroll can save you time & money. Going with a payroll company for one employee can be costly, and so can not understanding the rules, regulations, reporting and laws surrounding payroll. Many professional bookkeepers offer add-on payroll services. Just make sure the one you are hiring has the experience & knowledge to assist you.
- When You Hire A New Full Time Bookkeeper – What?? Why would you hire an independent bookkeeper if you have one already on staff?? Well, bringing in an independent, professional, certified bookkeeper to train your new bookkeeper on your software can, again, save you some headaches. The independent bookkeeper will not bring bad habits or past baggage into the training, only the proper procedures and current knowledge of the software. Time will be spent on training, not on the history of who does what and why and to whom.
Hiring a bookkeeper or bookkeeping firm is a big step and one that can have an extremely positive or negative effect on your business. As with everything else in business, make sure you take this step carefully and with a lot of research. You want to vet your bookkeeper, what is their background, are they insured, do they have experience with your industry? Do they seem like your “kind of people”?
Where do you find this bookkeeper? Through your network, ideally. Ask your business associates, your clients, your vendors, who they use. Would they recommend someone to you? There are also places like http://proadvisor.intuit.com for QuickBooks ProAdvisors, or www.freshbooks.com/accountants/map for a FreshBooks Accountant.