A make-or-buy decision is a common problem that businesses large and small have to solve. Small businesses have an even more difficult time deciding if it’s best to make or buy something, as they have limited resources in both time and money.
With your small business, you’re faced with the decision to prepare your books by yourself or to outsource your bookkeeping for someone else to perform. While there isn’t a single best answer that applies to all businesses, there are factors you should consider to come to a decision you’re most comfortable with.
Here are some of the key things to keep in mind when deciding to tackle your books yourself or to hire a bookkeeper.
Doing it yourself
While outsourcing your books might seem like the simplest and easiest option, it might not be the most efficient. Accounting and bookkeeping services can be costly, and depending on complexity and volume of your business, it might not even be worth it!
In many cases, the situation of a business owner who’s just starting out may be simple enough for them to perform their own bookkeeping. On top of that, the volume of transactions each month might be minimal enough that bookkeeping might not even be a time-consuming task.
Aside from saving money, a small business owner can definitely gain some value by preparing their own books.
First, performing your own bookkeeping can definitely teach you new business skills in accounting and finance. This knowledge can inspire business leaders at any stage to make better and more informed decisions for future growth opportunities.
Further, performing your own bookkeeping allows you to be more connected to your finances. Instead of looking at a single metric, such as your online bank balance, owning your books can give you a clearer picture of your finances on demand.
Business owners have resources available to help them learn how to perform their own bookkeeping. A great place to start would be blogs from entrepreneurs or companies that you trust and are familiar with, as well as a community of like-minded business owners where you can share tips and advice with each other.
Along with the informative resources, there are many powerful small business bookkeeping software applications in existence—some of which are free to use! Using the right accounting software can definitely make your bookkeeping a quick and simple task rather than a more manual approach of using spreadsheets. In addition, you can find a mentor to help teach you how to perform your bookkeeping in the software of your choice.
On the other hand, if bookkeeping is just not your thing, doing it yourself may cost you more than hiring someone else to do it. For instance, if you just can’t wrap your head around accounting concepts, it may cause you a lot of stress and time wasted on trying to prepare your books. Since time is money, it might actually be beneficial to outsource your books in such cases.
Hiring a bookkeeper
Saving time is one of the top reasons why you would want to hire a bookkeeper, but growth is also another key factor. When business picks up and you’ve got a lot on your plate, delegating the task of bookkeeping makes sense as you focus on the bigger picture. In addition, more complex issues usually arise the more you grow, and having a dedicated bookkeeper will not only keep your books accurate but give you immense peace of mind.
Putting your confidence in a competent and experienced bookkeeper can eliminate stress from complicated accounting concepts. Great bookkeepers will get to know your specific financial needs and can even provide you with expert insights into your business’s finances.
However, while hiring a bookkeeper does free up some time for yourself, it’s important to still pay some attention to your books. Your bookkeeper may be knowledgeable on accounting concepts, but they might not be an expert mind reader on what’s happening with your business. It’s essential to check in with them so that their treatment of your transactions is appropriate and relevant to exactly what happened in real life.
On a similar note, it’s important to check in with your bookkeeper so that you don’t completely lose ownership of your finances. If you outsource your books, you should still review your financial statements periodically to keep an ongoing picture of your financial situation.
What should you do?
There’s no exact answer that applies to all businesses. It’s up to you to consider and gauge your time, financial resources, as well as capacity and willingness to learn bookkeeping, in order to answer the make-or-buy decision for your books. Like any small business choice, this might require a bit of trial and error—but you’ll eventually find the solution that works best for you.
Written by Oliver Mathias