It’s the end of the month and you’re looking at a stack of receipts and outstanding invoices. You’d rather be working the sales floor or managing new customer relationships, but instead you need to find out if you’ve made a profit this month. Is it worth it to hire a bookkeeper to manage your small business finances? We’ll tell you what we’ve learned.
When should you hire a bookkeeper?
Hiring a bookkeeper might seem like an extra expense you can’t afford in the bootstrapped days of a small business or startup, but it’s likely that you can benefit from bookkeeping services in a myriad of ways despite the hiring cost.
5 signs it’s time to hire a bookkeeper
1. You are strapped for time.
Time is a resource we cannot renew or stockpile. As a small business owner there is a premium on your time, and at some point it doesn’t make sense to spend hours on bookkeeping when those hours would be better spent managing customer relationships or making new sales.
2. You’re missing things.
Not everyone is blessed with the meticulous attention to detail and mathematical gifts it takes to be an efficient bookkeeper. Do you know how to properly document and categorize each and every transaction to maximize your tax deductions and optimize cash flow? Are you incurring late fees or interest because you can’t stay on top of all the finances each day? It might be time for a professional bookkeeping service who can.
3. You’re behind.
How up-to-date are your books? If you are using stale, “dead” data, you don’t have an accurate picture of revenue or future cash flow. You’re not equipped to make the smartest decisions for your business. You need your financial data tracked daily—not just when you have time to stumble through your books.
4. Taxes are torturous.
Properly kept books should actually make tax season a breeze for both you and your accountant. If tax season means painful, constant phone calls and emails between you and your accountant, it’s likely that your books have not been kept clean during the year. Similarly, many small businesses find that they missed out on tax benefits because they weren’t aware of the breaks and documentation they require. A bookkeeper with boots on the ground will be uniquely prepared to help you take advantage of taxes year-round and make filing your taxes much more smooth.
5. Profits aren’t increasing.
When you aren’t seeing the gains you’d like, it’s tempting to just focus on working harder and selling more. But perhaps the numbers are telling a different story? Bookkeepers can help you keep your finger on the pulse of your business by helping you decrease operating expenses and optimize cash flow, as well as identifying trends and problems.
Common bookkeeping FAQ
What is a bookkeeper?
A bookkeeper is a financial professional tasked with organizing the transactions, cash flow, and day-to-day financial data of a business. Bookkeeping is one of the many tasks that is assumed in the role of an entrepreneur. It’s well-named: keeping the books of the company. Managing invoices, data-entry, and reconciliations is critical to running a business, but can quickly progress beyond the scope of a business owner—no matter how savvy that business owner may be.
Bookkeepers are hired to manage the day-to-day bookkeeping tasks of the business, and can often be part-time, remote, or freelance positions.
Which type of bookkeeper should I hire?
Bookkeeping is a unique and flexible role that should meet the needs of your business. Don’t jump to hiring a CPA just because it seems like the most traditional approach. Find the solution that meets your needs for financial data.
- In-house: An in-house bookkeeper will work in your office or workspace and be integrated into the day-to-day operations of your company. Paid wages or salary, an in-house bookkeeper is best for a hands-on, maximum accessibility arrangement.
- Virtual: A virtual bookkeeper is a common choice for growing small businesses, as it provides the financial support that you need with the speed and efficiency you crave. Cloud-based bookkeeping software applications allow you to instantly share all of your financial data with a virtual bookkeeper for real-time expenses and statements.
- Freelance: Freelance bookkeepers can be a great option if you don’t need daily and detailed financial data management. Freelance bookkeepers can be paid for a few hours a week or a month, depending on what you need.
- CPA: Hiring an accountant is recommended for filing taxes, managing audits, navigating acquisitions, or when you need to make major decisions regarding the company’s financial future. CPAs can also be hired on a virtual or freelance basis, as needed.
How much does it cost to hire a bookkeeper?
Bookkeepers typically charge $30-50/hour with a monthly minimum retainer that varies by provider. The exact pricing will vary based on your location and the level of experience you seek, but hiring a professional bookkeeper or bookkeeping service is usually less expensive than hiring an in-house CPA to manage your business finances. An in-house CPA has a median salary of $62,000 per year.
How to hire a good bookkeeper
Like any other position, you’ll want to carefully consider your needs, budget, and ideal candidate when hiring the right bookkeeper for your company. Here are some steps to help you find the right bookkeeper for you:
- Assess needs. Go over the number of accounts and transactions you can expect during a typical month. How much analysis and reporting would you like from your bookkeeper?
- Consider extras. Beyond daily transaction accounting, do you need credit management, invoice servicing, tax deduction categorization and optimization, or payroll services? How much would you be willing to pay for those services?
- Determine a schedule. What are the key dates and cadence with which you’ll need reporting? Some businesses are fine with monthly reports and tax season, while others need more frequent attention. Will a single consultant be enough, or will you need a firm? You may even be large and complex enough that a full-time, in-house solution makes more sense.
- Seek referrals. Once you know the type of bookkeeping you need, begin looking for referrals you can trust. Local bookkeeping firms can provide references, and governing associations (AIPB, NBA, NACPB, etc) may list job boards or certified bookkeepers available for hire.
- Choose a good fit. When hiring a bookkeeper, it’s about more than just numbers. It’s important to find someone who works well with your team and elicits trust. The ability to communicate in ways that fit your needs is a must.
Better books, better profits
A bookkeeper is an investment that signals a big step up for your business. When you’re ready to focus on your strengths and turn over finances to the professionals, you can greatly benefit from the expertise of a bookkeeper. Every choice you make to sharpen your business finances is a step in the right direction.