When you first start a business, you are likely to be wearing many hats as you figure things out. But one thing is for sure, the key to a successful venture starts with proper bookkeeping. Bookkeeping can be simple or complicated, depending on the size of the company.
If you run a small business, you might be able to get away with doing the books yourself. But, if there are many moving parts to your business, it might be better to hire a professional.
Let’s take a closer look at the concept of bookkeeping below. This will help you determine if you should hire a bookkeeper for your small business or if you’ll be fit to take on the challenge yourself.
Decide If You Need a Bookkeeper or Accountant
It’s crucial to determine your company’s financial needs first. Every small business will need to do bookkeeping. But not everyone knows how to keep books for a small business.
When first establishing your business, you’ll need to perform all the minor accounting tasks yourself. Examples include paying bills and recording transactions.
It is vital to provide accurate financial information for your company and adhere to state and federal regulations. Organizing this information will become more critical as your business grows.
Once you’re ready to bring on a professional it’s a good idea to determine what type of responsibilities you need taken care of before hiring a full-time employee to manage your books. For example, accountants provide expertise across the board and require less oversight than bookkeepers.
You may decide to hire an accountant to help you put together your fiscal data. An accountant provides insight into your organization’s profitability through financial analysis and reporting. These analyses prove invaluable when making intelligent business decisions.
As you might expect, salaries for experienced accountants are higher. But investing in a good accountant can be an excellent method to grow your profitability and keep your records in order.
What Does a Bookkeeper Do?
You might be asking yourself, what can a bookkeeper do for my business?
There are several primary responsibilities of a small business bookkeeper. They must keep track of expenses and revenue and they are also responsible for maintaining financial records for both the business and tax purposes.
Essentially, their job is to record every financial transaction and collect information to create a report that you can use to make financial decisions to help drive a company’s profitability and growth further.
A bookkeeper’s responsibilities could include:
- Compilation of financial data
- Paying your bills
- Management of inventories
- Creating invoices
- Financial reconciliation
- Keeping up with vendor & client order and invoice lists
- Organize and prepare critical financial documents
- Recovering past due payments
How Much Does a Bookkeeper Cost?
The cost of bookkeeping varies based on the industry, business size, and the financial services provided.
Another solution is to outsource your bookkeeping to a dedicated company. Some companies charge as low as $99 a month for bookkeeping services.
Cost of an In-House Bookkeeper
Depending on the education, experience, and additional skill sets required, bookkeeper rates can range from $18 to $23 per hour in the United States.
Whether you need a full-time or part-time employee will significantly impact how you calculate labor costs.
Many businesses do not benefit from hiring an in-house bookkeeper because of the cost of training, payroll, and the lack of projects to fill their time, which is why so many opt to hire a freelancer on an as-need and part time basis.
Cost of an Outsourced Bookkeeper
Hiring a bookkeeping agency or freelancer may seem overwhelming, but it can be a simple, cost-effective option with many advantages.
Here are some benefits of hiring an outsourced bookkeeping freelancer or company:
- Business owners have more peace of mind because collective experience is generally higher than individual experience.
- Bookkeeping staff needs no training or onboarding.
- It is a time and cost-efficient solution.
- It provides a chance to use tech solutions that integrate internally and externally.
- There are options for bookkeeping support and mobile access to your accounts.
- You can secure your financial data with advanced security solutions.
- You can analyze business insights and areas for improvement with centralized account management and tracking.
Can I Do My Bookkeeping?
Self-entry may be the best option for someone starting to do their books and still in the early stages of business.
However, learning how and then properly keeping books for a small business can be incredibly time-consuming and challenging.
If you’re going to keep your books, here are four things you should consider:
- Monitor your receivables closely.
- Keep an eye on your cash flow.
- Log expense receipts.
- Record every single cash expenditure.
But you may find that with time, it isn’t worth the hassle to keep your own books. In that case you’ll likely be better served by hiring a bookkeeper.
How a Bookkeeper Can Save You Money
Hiring a bookkeeper will save you money in the long run, but most importantly, it frees up your time.
Saving Money on Taxes
With the help of a good bookkeeper, you can take advantage of all possible tax deductions and track everything correctly so that you don’t get fined by the IRS.
Reduction in Accounting Fees
Bookkeepers are much cheaper than accountants. If you’re unsure that your books are tax-ready, an accountant will charge you $150 to $400 per hour for work that a bookkeeper could do for a much cheaper rate
Plus, having your books sorted before sending them to your CPA will make filing your taxes cheaper.
Free Up Your Mental Bandwidth
Unfortunately, it’s easy for things to slip through the cracks when you work sixty plus hours a week as a business owner. A bookkeeper’s job is demanding, detail-oriented, and probably the last thing a business owner needs to take on. Hiring a professional can help keep stress levels down, while making sure everything is properly sorted.
Should You Hire A Bookkeeper?
It’s common to hire a bookkeeper for small businesses on a part-time basis in the beginning.
Part-time bookkeepers and outsourced bookkeeping firms are viable options, while full-time bookkeepers are more beneficial to more established companies.
Companies must decide the most appropriate solution for maximizing profitability and ensuring growth, and having an experienced bookkeeper can help keep your financials in perfect order!