Most business owners and entrepreneurs are do it yourselfers by nature, tackling your core business and all the tedious duties that go with it on your own. That’s why, when you’re considering outsourcing bookkeeping, you may be reluctant to take the leap.
That could be the case for a variety of reasons. You may be very disciplined and good at setting aside time each day to log your financial transactions and reconcile your accounts. Maybe you don’t need expert guidance to gain a clear picture of your business’s financial health. If this sounds like you, kudos — you are on top of it and ahead of the pack. If that doesn’t sound like you, it might be time to bring in some extra help. Here’s how to go about making the decision, along with a few guidelines for hiring the right person or company.
If your small business is just getting started or if you are a freelancer and view it as a side hustle, it may be premature to hire a bookkeeping and not the best use of your valuable income.
This may apply to you if:
-You’re in the first year of your business as a freelancer.
-You haven’t incorporated your business.
-You don’t have any sales.
-You have low volume financial activity.
-Because of low income form the business, you are operating your finances from you personal bank account.
-If you answered “yes” to any of the above, you are most likely fine handling your own booking for now.
If, however, you’re finding that what were once manageable financial admin tasks have now became overwhelming amounts of record keeping, tracking, and paperwork, you may want to get some help. Here are the signs that you should hire a bookkeeper:
You’re Scrambling at Tax Time
Are you pulling everything together last minute at tax time? 40% of business owners say that accounting and bookkeeping are what they dread most about running their business. The average person spends 13 hours on their taxes each year and that typically doubles to 24+ hours for business owners! If you are spending significant time on this, it is time to bring in help. This time can be better spent in other areas of your business.
You’re Running Your Financials Out of a Shoebox
Depending on your business, you may need to record your financial activity on a monthly, weekly, or even daily basis. Many business owners take the risky approach of letting their receipts, statements, and invoices pile up without recording them. This method is a disaster and you can easily lose track of important information that you will have to go looking for later. A bookkeeper can handle these tasks and tie transactions back to clients to ensure you aren’t missing any important information or don’t have any cash flow issues.
You Pay An Accountant To Do Bookwork
There’s a common misconception that if you have an accountant, you don’t need a bookkeeper. You need both. There is a difference between the two but when it comes to tax time a lot of small business owners have their accountant scrambling to do things that are really a bookkeeper’s responsibility. If you show up with a box of receipts and they need to spend hours reconciling your books before they even get to filing your taxes, you most likely need a bookkeeper.
You Aren’t Sure How Your Business Is Doing
Do you know what your revenue was last month and what your costs were? Do you know your bottom line? A bookkeeper can provide you all of these details so you can stay up on the trends of your business.
You Just Paid a Ton of Taxes
Many freelancers and small business owners who pay their estimated taxes quarterly are still surprised to find out that they still owe more at year’s end. Having a bookkeeper will help you stay on top of this and help mitigate your tax liability. Organized books can also help your accountant identify opportunities for tax breaks and write-offs.
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