How Hiring a Bookkeeper Can Strengthen Your Business
Hiring a bookkeeper depends on what stage of growth your business has reached and how comfortable you are doing your own bookkeeping. So, when should you hire a bookkeeper?
If your business is new and your bookkeeping is minimal, you may be able to do your own bookkeeping with a simple spreadsheet. But as your business expands and becomes more complex—and profitable—it’s time to consider professional assistance.
When you begin weighing the pros and cons of hiring a bookkeeper, consider the following questions:
How much time do you spend on bookkeeping each month? And how much time do you have to spare?
Does the thought alone of bookkeeping add extra stress to your day?
Are you behind on your bookkeeping, or unsure of your accuracy?
Do you ever feel unsure whether your financial records or tax filings are correct?
Your answers will give you an indication of how urgently you need to bring on a bookkeeper. Follow your intuition.
The benefits of working with a bookkeeper.
If you’re unsure whether you’re ready to hire a bookkeeper, consider these major benefits and how they can positively affect your work days and business success.
1. You get “mission critical” info.
Every month, your bookkeeper prepares a balance sheet and an income statement, and—depending on what style of accounting you use—a cash flow statement. These financial statements give you the essential info you need to run your business and file taxes.
When a qualified bookkeeper is on the job, financial statements are prepared properly and according to accounting standards—so your accountant can quickly and easily file your taxes.
2. You gain the potential to pay less in taxes.
When a bookkeeper is experienced with businesses in your industry, they understand common expenses—and can let you know which business expenses are tax deductible.
For instance, a bookkeeper who works with other yoga studios can tell you whether the cost of additional training for one of your instructors can be deducted on your taxes.
Plus, the cost of hiring and working with a bookkeeper is also tax-deductible.
3. You could pay less in accounting fees.
Suppose you went all year without preparing monthly financial statements and then handed off your business records to an accountant to file your taxes. They’d have to go back and prepare financial statements retroactively—effectively, doing a bookkeeper’s work.
Since accountants generally charge more for their time than bookkeepers do, it means you’ll end up paying more. If you have a bookkeeper do the job properly in the first place, you’ll save money in the long run.
Even if you prepare your own monthly financial statements and deliver them to your accountant come tax time, you risk being charged extra if they need to correct any errors. A qualified, professional bookkeeper should be able to deliver flawless books on your behalf.
4. You’ll save time.
When you spend less time on administrative tasks like bookkeeping, you’ll enjoy more time to focus on your clients and business success.
If you’re self-employed, it can be hard to put a price on your time. Use an online calculator to determine how much your time is worth. This can help you better determine whether bookkeeping is worth the hours it takes you to complete on your own.
5. You might even increase your profits.
One survey shows that, on average, companies’ profits increase 16% after they hire bookkeepers. One reason for this is that bookkeepers have the experience to efficiently manage your bookwork, giving you more time to focus on other areas of your business (like increasing profit).
The Pros of Bookkeeping Services
Question… Are bookkeeping services better than hiring in-house?
Not always. There’s pros and cons to both. If you’re sitting on the fence about outsourced bookkeeping services, there’s a lot to think about.
I want this post to act as a guide to help you discover what’s best for your company.
Unfortunately, bookkeeping services are advertised online as the one-stop-shop for all your accounting headaches. In some cases that’s definitely possible. In my experience though, there are still some things that you and your staff are going to be better off doing.
I’ll cover those in the blog post below so that you can be as prepared as possible before you make such an important decision.
The Pros to Bookkeeping Services
When most people start shopping for bookkeeping services, they usually do so out of a desire to save money on their accounting systems. It’s a valiant reason to shop around, but there are a few other benefits.
#1 – Experience Is Worth It’s Weight in Gold
The biggest benefit to bookkeeping services has to be the experience of the accountant you work with. This is all they do. Unlike hiring someone in-house who may spend half their day answering phones, gossiping by the water cooler and playing on Facebook, bookkeeping services spend all day every day providing bookkeeping. How much better do you think they’ll be at it?
Exactly.
Henry Ford popularized the idea of assembly line automation for a reason. Hiring a specialist to perform a specific function creates a lot of efficiency.
#2 – Tools, Tools and More Tools
The second biggest benefit to bookkeeping services has got to be the tools. These companies are chomping at the bit to earn your business. They’re constantly trying to come up with ways to create a better financial mouse trap. An in-house employee can get stuck in a rut due to the lack of competition.
Bookkeeping Services offer support#3 – How May I Help You Today?
The third benefit has got to be customer service. Bookkeeping services are vendors which means that customer service is assumed in the relationship. With an employee, entitlement often creeps in which can get ugly. As a vendor, the bookkeeping service knows it needs to earn your business or it will lose the account.
#4 – Look at How Flexible You Are!
The fourth benefit is that you have a lighter and more flexible business. When you hire an employee, they take up space, require training and a host of other things to keep them efficient. Bookkeeping services absorb all of that plus the cost of payroll taxes, HR and more.
#5 – Getting Hit by a Truck
The fifth benefit is consistency. If you have an in-house bookkeeper that gets hit by a truck, you’re up a creek. Good bookkeeping services will have a system in place to deal with emergencies. For example, at Ignite Spot, we create training manuals for each client so that if the accountant is sick, another member of our staff can fill in to keep your business running. Good stuff!
The Pros and Cons Of Hiring An Accountant For Your Business
Many business owners, especially smaller businesses, often choose to do their own bookkeeping. With new technology available, including accounting software, it has become easier for even a business owner with little bookkeeping knowledge to handle their own accounting. However, while there are benefits doing your own bookkeeping, there are also pitfalls to watch out for. Depending on the size and complexity of your business, you may need to consider whether hiring an accountant may be a better option than doing your books yourself.
The Pros and Cons of doing your own Accounting
The obvious pro of doing your own accounting is saving the money that it would cost to hire an accountant. In addition, you know exactly what is happening with your business and are involved in every aspect of your revenue and expenses. For those with a small business with few or no employees, this may be a viable option. However, consider a few cons of doing your own books.
- Time. Not everyone is efficient at bookkeeping. The time it takes you to do your books may be taking you away from what you do best; running and growing your business.
- Lost opportunities. You may not be aware of all the tax laws and codes that could benefit or hurt your business.
Pros And Cons Of Hiring An Accountant
Once again, the obvious con of hiring an accountant is the cost. It is an extra expense and you will need to trust someone else to have access to your confidential business information. However there are benefits or pros as well.
- Increased deductions. An accountant can advise you of deductions or tax credits that you can take advantage of to increase your profits.
- Liability. Your accountant can decrease the liability of mistakes in your tax filing. Ignorance is not an excuse that the IRS accepts, so having an expert on your side can save you money in penalties and interest.
It is each business owner’s personal choice whether they do their own accounting or hire an accountant. However, many will find that having a professional on their side may actually save them money in the long run and free up time for them to focus on their business.
The Pros of Starting a Bookkeeping Business
If you have those characteristics under your belt, here are some of the benefits of starting a bookkeeping business:
- Startup costs for a bookkeeping business are minimal.
- You can become a specialist in one accounting application for increased marketability.
- It’s consistent work that typically takes place on a regular schedule.
- You can work virtually and broaden your target market.
- There aren’t formal certifications or training necessary (although, it’s never a bad idea to become certified).
The Cons of Starting a Bookkeeping Business
Some of the potential challenges you may face if you start a bookkeeping business include:
- There could be significant liability issues.
- You need to take measures to ensure all client data is kept secure.
- It could be expensive to purchase and update various accounting software.
- You need to be comfortable with technology so you can access a client’s computer, if necessary.