You didn’t go into business to be a bookkeeper.
(Unless you own a bookkeeping business. If that’s the case, you may be excused.)
As for the rest of you, keeping the accounts isn’t something you want to do, but you’re doing it anyway. Small businesses have to keep those costs down, after all. But here’s a scary question: are you sure you’re doing it right?
You make the entries into the system, but without a background in accounting, you’re not positive they’re all going to the right place. On top of that, bookkeeping is one more thing on your neverending to-do list and frankly, you hate it.
But bookkeepers are expensive, right?
The Dangers of DIY Bookkeeping
When you’re building your budget, it’s important to consider costs that don’t show up on the balance sheet. They’re called opportunity costs – the cost of opportunities missed because you weren’t in a position to take advantage of them.
Let’s start with your time. There are certain parts of your business that only you can manage. Anything that takes you away from those parts has a potential cost.
Think of how many hours you spend doing the books each week. What could you do if you had that time back?
Make more sales calls?
Manage more clients?
Take your family to a ballgame?
Sing karaoke with your friends?
If you eat more dinners with Quickbooks than with your spouse, it’s time to re-evaluate your priorities.
Now let’s talk about the actual financial cost. An experienced bookkeeper who knows what they’re doing can get the accounts done much faster than you can.
Let’s say the business is paying you to spend four hours a week doing the books. A professional bookkeeper might be able to do the same work, to a higher standard, in less than half the time.
Finally, you have to calculate the risks. When it comes to finance, an honest mistake can have disastrous consequences. You could spend more than intended, miss important payments to vendors or even run afoul of the law. After they hire accounting help, many small business owners find they weren’t doing the job nearly as well as they thought they were.
Accurate bookkeeping is vital to your business’s growth. Without solid financial statements, you can’t know how the business is performing. You’re relying on your gut to tell you where your top revenue is coming from and where your budget has sprung a leak.
When Is It Time to Hire a Bookkeeper?
OK, fine, so you shouldn’t do your own books. Now you’re in the small business owner’s conundrum: there’s too much work to do yourself but not enough to warrant a full-time hire.
Congratulations, you’re in the same position as 99% of other small businesses. As a general rule of thumb, you don’t need a full-time bookkeeper until your business is doing at least $1 million in revenue.
There are exceptions; if you find yourself calling your part-time bookkeeper on a daily basis it may be time to bring someone in full time even if your revenue is still in the six-figure range. But for the vast majority of small businesses, a part-time bookkeeper can provide all the services they need.
Most small and medium businesses don’t even have a bookkeeper on staff. They outsource the work so they can get professional expertise without expanding their team. It may seem ironic, but the financial trends and cash flow statements your part-time bookkeeper prepares for you provide the very information you need to know when you’re ready to hire full time.
How to Find a Good Part-Time Bookkeeper
As an entrepreneur, you may have a bit of a controlling streak, so outsourcing anything makes you nervous. When you think about giving a non-employee access to the company accounts, you might need to lie down for a while.
After you’ve got your blood pressure under control, take a researched and methodical approach to finding a reliable partner to manage your books.
Here’s what to look for:
An established company with positive reviews and testimonials from clients
A reputation for timeliness and accuracy
An ability to help you document processes and come up with standard operating procedures
An ability to help you create a financial plan to meet your business goals
An understanding of the key performance indicators that track your business’s health
A commitment to client confidentiality
Familiarity with your bookkeeping software
Ability to take on all aspects of your account management, including reconciling accounts, managing queries and running reports
It can be scary to turn over accounting duties to someone new. But once you do, you open up possibilities for better growth, more efficient management and a more balanced personal life.
Zembr can help you figure out what level of bookkeeping help you need, from a few hours a week to hiring your first full timer. Get a no-obligation consultation.
