Why you need a Bookkeeper
As a business owner, you often find yourself juggling several different aspects of your company. It can prove to be very difficult, especially when it comes to areas with which you are not completely familiar. A common sector of the business with which many owners seem to struggle is finances; even with DIY instructions, a lot of people just are not confident handling the numbers. For situations like these, the smartest move to make is bringing in an expert, and in this case, that would be a bookkeeper.
The job of a bookkeeper is to organize records of financial transactions through establishing accounts and posting those transactions (a.k.a. “keeping the books”) all while ensuring that the company complies with specific legal requirements. Bookkeepers are also responsible for reconciling your accounts in order to maintain as much accuracy as possible.
There are a number of qualifications that define a bookkeeper, such as the ability to correctly analyze data, successfully report results, and implement accounting skills. Nowadays, most bookkeeping services are completed virtually with the availability of electronic documents, so any potential hire should be well-versed in accounting software like QuickBooks.
A bookkeeper’s job is to manage your money and, overall, make your job easier by taking over in his or her area of expertise. However, most jobs require a great deal of effort, so how do you know if your business really needs a bookkeeper?
Signs You Need a Bookkeeper
Sure, doing the bookkeeping yourself might be stressful, but you can handle it, right? Wrong. Most of the time, it is significantly more beneficial in the long run to hire a bookkeeper for your business. Bookkeepers are trained to do what they do, and, to be frank, most business owners like you are novices when it comes to accounting. Even as a novice, though, you can learn the ropes–so how do you know when your business is truly in need of a bookkeeper?
There are a number of telltale signs, but five key factors will typically point to whether or not you need to hire a bookkeeper.
Your time feels wasted on DIY bookkeeping. When doing your own bookkeeping begins taking up more time than you can afford, you need to assess the reality of the situation. You should not take your time for granted; as a business owner, every minute you spend on a task is worth a certain amount, so you need to determine if you are throwing away money doing your own bookkeeping. What is the point in DIY bookkeeping if it is not saving you money? Instead of crunching numbers in the office, you could be making money and closing deals out in the field!
Your books are practically never up-to-date. The moment you start to fall behind on bookkeeping is the moment your books stop representing your actual financial situation. As a blatant consequence of out-of-date bookkeeping, your cash flow and financial reports do not provide accurate insights into your company’s performance. Not only do out-of-date books cause short-term consequences, but they stir up trouble in the long-run as well. Once tax season rolls around, you need to catch up on bookkeeping, meaning you will have to drop everything you are doing in order to get your books up-to-date–and then the cycle will repeat itself.
Your cash flow has become unpredictable. When you reach a point in your work where you cannot closely predict the amount of money coming your way, you have a serious problem. You might take a look at your cash flow statement and realize, “Oh, this tells me nothing I need to know.” Cash flow statements are supposed to help you figure this out–how much people owe you and how much you owe others–so when your statements do not do their job, you need to find somebody who can fix them.
Your profits do not increase with your sales. Picture this: you work hard day and night, developing new methods to attract and keep more customers than ever before–and it works! Your sales begin to increase dramatically, and you feel the excitement until… your profit margin remains plateaued. It does not matter that your revenue increases if your profit margin is stagnant; after all, more money in the bank does not always equal profitability. All of your hard work does not really pay off if… well, you are not getting paid for it.
Your estimated taxes are exhausting. You always want to be as accurate as possible when it comes to paying your quarterly estimated taxes; if you underpay your taxes, the IRS can hit you with a bunch of fines, and if you overpay your taxes, the IRS receives a free loan and your temporarily short on money. Correctly calculating your estimated taxes is next to impossible if you do not have your bookkeeping in order; out-of-date or inaccurate bookkeeping makes an already stressful process even more frustrating.
While there are obviously more indications that your business might be in need a bookkeeper, these five major signs are critical. If your business struggles with bookkeeping, especially around tax time, it is time to start looking to hire.