If you don’t have the time or experience to properly do your bookkeeping, mistakes are bound to happen. The easiest way to avoid them is by hiring a bookkeeper.
Bookkeepers can take reconciling, invoicing, running payroll and more off your plate. That helps you focus on the more important aspects of your business — and makes running your business a lot less stressful.
You should also consider the cons of hiring a bookkeeper. They can cost more than doing your own bookkeeping, and they might not always be necessary.
See the pros and cons of hiring a bookkeeper below to see if it's right for you and your business. If your business is growing along and doing your own bookkeeping is overwhelming you, it's usually right.
A bookkeeper for a small business is responsible for many day-to-day financial operations. That includes recording and categorizing bank transactions, reconciling those transactions and preparing financial statements like balance sheets and profit and loss statements. They can also set you up with and teach you to use payroll software and accounting software.
In other words, the stuff you probably don’t have time to do.
Bookkeepers aren’t the same thing as accountants. Accountants will typically handle your small business’ higher-level financial tasks, like tax planning and business structuring. Bookkeepers track your numbers, while accountants often interpret those numbers to analyze your business’ performance.
Not every business has a dedicated bookkeeper, but every business should be doing bookkeeping. If you fall behind on your books, that could cause you a lot of stress — and even penalties — during tax season.
Hiring a bookkeeper can be one of the most relieving and rewarding investments your business can make. If your business is growing and you’re at the point where your finances are becoming too overwhelming to handle on your own, a bookkeeper can provide you with these benefits and more.
As a small business owner, you likely have a lot on your plate: working with your customers, marketing your services, growing your team — the list goes on. Those are the things most business owners get excited about, because they can grow and improve your business.
What small business owners are less excited to do is run payroll each week or create a bunch of reports during tax season. Having a bookkeeper to handle those tasks for you gives you back hours of your week — and in a year, those hours can add up quickly. You can focus on doing the tasks you love without having to slug through the tasks you dread.
If you don’t have experience in bookkeeping or accounting, it can be difficult to learn all the jargon associated with it. Learning how to create a profit and loss statement or reconcile your bank statements correctly can take a lot of reading and practice.
By hiring a bookkeeper, you can hand off your finances to someone who already knows all the jargon and processes. It’s important to accurately maintain your finances because they’ll help make tax time easier and give you a real insight into your business. Investors and lenders will also often ask to see certain reports before doing business with you. A bookkeeper can give you peace of mind knowing your reports are correct and improve your chances of securing funding.
A bookkeeper can be someone who does more than just keep track of numbers for you. They can walk you through certain processes and explain why those processes are important so you don’t feel left in the dark when it comes to your accounting.
When you’re first starting your business, a bookkeeper can be especially helpful in this regard. Many of our own clients just want to talk to our bookkeepers to go through all the basics. Once our bookkeepers show them the ropes of their payroll and accounting software, they’re ready to take it over on their own.
So even if you don’t hire a bookkeeper for the long-term, a short-term arrangement can equip you with the basic, yet essential tools you need.
While there are plenty of great reasons to hire a bookkeeper, there are some drawbacks you might want to consider.
Bookkeepers can be incredibly helpful resources — but they’re not free. Whether you want to hire an in-house bookkeeper, a third-party bookkeeper or an online service, you’re going to have to pay something.
The prices will vary depending on what option you want. If you’re hiring an in-house bookkeeper, your costs include their salary and benefits. You can save money by going with an online bookkeeper or a third-party bookkeeper. Online bookkeepers usually charge a monthly rate, while third-party bookkeepers usually charge an hourly rate. That means a third-party bookkeeper will likely charge you more than an online one, but that’s because they likely offer more services and resources.
As beneficial as hiring a bookkeeper may be, it’s not always the right time to hire one.
If your business is fresh and you only have a handful of transactions each month, you’re likely better off saving the money and doing your bookkeeping on your own. This is often the case for small businesses that are just one person.
Many tax and accounting firms, including us, allow you to hire a bookkeeper just to train you on certain softwares and processes if you’re not comfortable doing it by yourself right away.
A bookkeeper might introduce you to different software or new ways of doing things. They might help you in the long run, but there’s no denying that it can take a while to get the hang of something. It can be downright frustrating.
Switching accounting software can be especially tough. You may have to worry about transferring all your data on top of learning a new way of bookkeeping. It’s easier to transfer data to more modern platforms like Xero than it is others (looking at you, QuickBooks Desktop).
When the growing pains are over, it won’t take long to see how efficient a bookkeeper’s recommendations can be compared to your old methods.
Hiring a bookkeeper could be one of the best investments your small business could make — or one that you don’t need yet.
You should consider your business’ needs, transaction volume and budget before you hire a bookkeeper. A bookkeeper can make it easier to do your taxes and give you more time to run your business — but they can cost more and take time to get used to.
If you want to learn whether hiring a bookkeeper is right for you, schedule a free call with a DiMercurio Advisors team member.