Most business owners these days have a genuine DIY attitude toward their business operations – keep doing everything you can yourself and don’t pay for anything until you really have to.
And it is especially difficult justifying hiring some financial help – with simple and user-friendly software like QuickBooks out there, most entrepreneurs feel like they should keep their records on their own.
But as most young businessmen see after a while, as their business starts expanding and growing, they can only get away with doing everything by themselves for so long.
Spending More Time than You Can Afford
Although there’s no concrete rule when you should bring on hired financial help, there are a couple of problems most business owners experience just before they reach the tipping point. In most cases, at a certain point, bookkeeping starts taking up more time than you can afford.
You should never take your time for granted, after all, a recent Gallup poll showed that almost 40% of entrepreneurs in the US work for more than 60 hours each week.
So before anything, you need to start tracking your time and determine how much of it you spend on bookkeeping. After that, simply use an online calculator to see how much your time is worth. This will give you a rough idea how much money you’re spending on bookkeeping yearly.
True Costs of DIY Bookkeeping
If you’re spending nearly as much as other entrepreneurs out there, trust us, it costs you a lot. In fact, a lot more than hiring an actual bookkeeper would.
According to statistics gathered by PR Newswire, more than 40% of small business owners in the United States spend more than 80 business hours every year on tax preparation. If you take a closer look, you realize that this amounts to at least ten work days lost every year.
And what about the rest? Well, the situation isn’t much better for them – around 18% of business owners spend between 41 and 80 hours per year, while 15% spend between 21 and 40 hours.
Furthermore, according to Cost Helper, a professional bookkeeper will cost you anywhere between $20 and $50. But keep in mind that a professional will finish the job much faster, so if the costs of DIY bookkeeping are proving to be too much for you, definitely consider hiring a professional.
Should You Hire an Accountant to do the Job?
While some people spend way too much time on their books, others simply leave them untouched over the course of the entire year and then deliver their transactions, receipts and expenses to their accountants during tax season.
This sounds like a great solution to some – it’s a simple way to deal with this time-consuming and boring task. However, there are a number of reasons why this practice is ill-advised:
- Not having up-to-date books throughout the year will prevent you from having monthly or even quarterly financial statements that allow you to guide your business decisions
- Also, it’s a real waste of money, because Certified Public Accountants usually have larger hourly rates than bookkeepers, so you can end up paying more for this service than you need to
- Lastly, a CPA won’t provide you with retroactive, monthly financial records, and if you ever find yourself in a need of a business loan, you’ll need to provide a detailed business plan
What Can an Experienced Professional do for you?
If you decide that now is the right time to seek some professional help with your finances, what can a bookkeeper do for you? For starters, you need to take some time – in other words, browse for a couple of hours and pick up the phone to talk to a couple of people – and find the right person for the job.
So make sure to check the bookkeepers resume and ask for credentials. If the person you’re talking to doesn’t have at least a certificate IV in bookkeeping, you should cut all communications and look for another person. Here are a few more things you should pay special attention to:
· Clear Communication
A good bookkeeper is able to speak to other financial professionals and clearly communicate with people without a financial background. So you need to find a bookkeeper who’ll be able to explain your books in a clear and concise way, in a language you understand.
· Ready Financial Statements
As we mentioned earlier, one of the main advantages of working with a bookkeeper is having relevant, up-to-date financial statements you can use to plan your business moves and/or prepare your taxes at the end of the year. If the professional you’re working with doesn’t deliver – it’s time to look elsewhere.
You should be able to contact your bookkeeper quickly, any time you want and get a helpful response every time. If the person takes too much time responding to your emails or goes on a vacation without notifying you in advance, you should definitely start looking for another person for the job.
· Great Security Standards
Your business data needs to be secured at all times. And no matter how good your bookkeeper is, he’s basically useless if their PC is taken offline by a cyber criminal. So make sure that the pro you’ve hired has all the security essentials in place.
When it’s all said and done, you need to keep in mind that small companies can’t afford to make a ton of mistakes, especially during the first couple of months. Seeing how bookkeeping such an integral part of your business, there is not too much room for error.
So the fact that All Business puts “doing it yourself” as the second most common bookkeeping error small businesses make, is not surprising at all. And while hiring a bookkeeper may seem like a huge expense at first – it will save you a lot of valuable time and money down the line.