If you are just starting your business, and your monthly transactions seem minimal, it is possible to manage the books without hiring a bookkeeper. You’ll need to hire additional bookkeeping help as your business grows.
There are many factors that will determine the right time to hire a bookkeeper to help your business: how big your business is, the volume of monthly transactions, your personal finances, and how confident you are in managing the books. Depending on your budget, which option is best for you will determine how much.
What is a Bookkeeper?
A bookkeeper is an accounting professional primarily responsible for maintaining a detailed record of purchases, sales, and other financial transactions. The sort of exchanges represented and how they are recorded can fluctuate essentially contingent upon the inclinations and practices of various establishments or people.
Let’s look at the pros and cons of each option to help you decide when you should hire a bookkeeper.
Doing the books yourself can be a smart and cost-effective option if your business is just beginning. When it comes to bookkeeping, DIY is usually the best option.
- Your company uses cash basis instead of accrual accounting. The cash basis is simpler.
- Either you have previous experience in bookkeeping or you are willing to learn quickly.
- You have the resources and time to protect your financial information from threats.
You can keep overhead costs low by tracking your expenses and managing your books with basic accounting software, or even a spreadsheet.
Self-managing your books in the early stages of your company’s growth has the greatest advantage. You’ll develop an instinctive understanding of how your business spends money and learn how seasonality, as well as other trends, affect your business’s financial performance.
You can make costly mistakes if you don’t know what to do. For example, you might not correctly report revenue, track the correct expenses or categorize properly. DIY bookkeeping could end up costing your business. If you don’t have the necessary bookkeeping skills, costly mistakes such as not tracking tax-deductible expenses or incorrectly categorizing expenses can be made. You may also lose time if you don’t make the right financial mistakes. It can be very hectic to run your own business.
You decide whether or not the time you invest in managing the books of your company, which will increase as the business grows, is a wise use of your time.
As your business grows, it will become more difficult or impossible to keep up with the bookkeeping.
Outsourcing the task to an online or virtual bookkeeper is a great option. Companies often see their costs drop when they hire bookkeepers. The cost-benefit is that it is more economical to pay a bookkeeper/bookkeeping service than to spend your time on bookkeeping tasks.
- You don’t have time to manage your books yourself
- It’s not possible to afford an in-house bookkeeper
Who should you outsource to? There are a few choices:
1. Online Bookkeeping Service
A cloud-based software interface is combined with professional bookkeepers to provide an online bookkeeping service. This is a cheaper option than hiring freelancers or firms. Additionally, because you pay monthly, you won’t have to deal with the same paperwork as when you hire employees and independent contractors. Online bookkeeping services can be a great option if you are ready to go beyond DIY and feel comfortable with secure cloud accounting. You also want the ability to communicate with your bookkeeper from any computer or smart device and keep track of your finances.
Bookkeepers who are freelance work for an hourly rate or a fixed fee. They can work remotely or online. Local freelancers are available to visit your office and assist with paperwork. You can find them online at Upwork, or in your local business listing.
3. Local Firm
- Firms tend to be more expensive than freelancers and online services. Firms may offer services with a guarantee, such as a minimum amount of experience for their staff. Although bookkeeping firms can be located far away, it is possible to visit a local company and discuss your requirements.
- The best advice of all is to find a trustworthy bookkeeper with experience in servicing clients within your niche. For example, a bookkeeper with limited experience in bookkeeping for landscaping companies may not be able to transition to eCommerce bookkeeping.
- There are many options when it comes to outsourcing your work to a local company or to an online freelancer. Results may differ. You have the responsibility to find reliable bookkeepers who are familiar with working with clients within your industry. You will find prices for each option to be different so make sure you shop around and compare the packages.
- You should not give up control of your treasury functions if you decide to outsource bookkeeping. This means that you are the only authority when it comes to investing, signing checks, making online payments, wire transfers, and making online payments.
You can hire a bookkeeper if your business grows to the point where it requires more bookkeeping than a freelancer. This could be a part-time or full-time position.
According to Entrepreneur.com hiring an in-house accountant is a smart move when:
- Your annual revenue exceeds $1 million
- More than 30 people are employed
Also, you should do the math to confirm that hiring a bookkeeper full-time is feasible. expected annual earnings for bookkeepers in 2012 ranged from $35,700 to $55,050.
You may need in-house support, but your business doesn’t have the budget for a full-time accountant. A good option is to hire someone part-time and then increase their hours when you have the time. To create a full-time position, some business owners combine bookkeeping and administrative work.
Even if you are one of the few business owners who love to do their books, it may not be the best use of your time. You’ll be able to spend more time focusing on the bigger picture and growing your business if you have bookkeeping off your list.
No matter which option you choose to take, it is important to remember that even if you hire a professional to manage your books, you still need to be involved with them. Keep track of the cash flow in your business and monitor seasonality and cash flow trends. You’ll be able to make the right decisions and help your business succeed.