Hiring a bookkeeper depends on what stage of growth your business has reached and how comfortable you are doing your own bookkeeping. So, when should you hire a bookkeeper?
If your business is new and your bookkeeping is minimal, you may be able to do your own bookkeeping with a simple spreadsheet. But as your business expands and becomes more complex—and profitable—it’s time to consider professional assistance.
When you begin weighing the pros and cons of hiring a bookkeeper, consider the following questions:
- How much time do you spend on bookkeeping each month? And how much time do you have to spare?
- Does the thought alone of bookkeeping add extra stress to your day?
- Are you behind on your bookkeeping, or unsure of your accuracy?
- Do you ever feel unsure whether your financial records or tax filings are correct?
Your answers will give you an indication of how urgently you need to bring on a bookkeeper. Follow your intuition.
The benefits of working with a bookkeeper.
If you’re unsure whether you’re ready to hire a bookkeeper, consider these major benefits and how they can positively affect your work days and business success.
1. You get “mission critical” info.
Every month, your bookkeeper prepares a balance sheet and an income statement, and—depending on what style of accounting you use—a cash flow statement. These financial statements give you the essential info you need to run your business and file taxes.
When a qualified bookkeeper is on the job, financial statements are prepared properly and according to accounting standards—so your accountant can quickly and easily file your taxes.
2. You gain the potential to pay less in taxes.
When a bookkeeper is experienced with businesses in your industry, they understand common expenses—and can let you know which business expenses are tax deductible.
For instance, a bookkeeper who works with other yoga studios can tell you whether the cost of additional training for one of your instructors can be deducted on your taxes.
Plus, the cost of hiring and working with a bookkeeper is also tax-deductible.
3. You could pay less in accounting fees.
Suppose you went all year without preparing monthly financial statements and then handed off your business records to an accountant to file your taxes. They’d have to go back and prepare financial statements retroactively—effectively, doing a bookkeeper’s work.
Since accountants generally charge more for their time than bookkeepers do, it means you’ll end up paying more. If you have a bookkeeper do the job properly in the first place, you’ll save money in the long run.
Even if you prepare your own monthly financial statements and deliver them to your accountant come tax time, you risk being charged extra if they need to correct any errors. A qualified, professional bookkeeper should be able to deliver flawless books on your behalf.
4. You’ll save time.
When you spend less time on administrative tasks like bookkeeping, you’ll enjoy more time to focus on your clients and business success.
If you’re self-employed, it can be hard to put a price on your time. Use an online calculator to determine how much your time is worth. This can help you better determine whether bookkeeping is worth the hours it takes you to complete on your own.
5. You might even increase your profits.
One survey shows that, on average, companies’ profits increase 16% after they hire bookkeepers. One reason for this is that bookkeepers have the experience to efficiently manage your bookwork, giving you more time to focus on other areas of your business (like increasing profit).
For a more in-depth guide, check out our article Signs You Need to Hire a Bookkeeper.
Written by Cameron McCool for Mind Body Business