The decision on whether or not to do your bookkeeping should be made with careful consideration of two critical factors: first, do you have the necessary bookkeeping skills? And second, do you have the time? If you meet both conditions, you could save money in the initial stages of your business. However, as your business grows and you have to prioritize your time, doing your own bookkeeping may become challenging and you might find yourself asking, do I need a bookkeeper?
What do professional bookkeepers do?
A professional bookkeeper performs essential tasks in the accounting cycle, from collecting data on financial transactions to recording it in the appropriate books and accounts, compiling reports, keeping records in order for tax time, and paying bills. These functions are explained in more detail below:
Record Transactions
The financial cycle begins with the pulling transaction of data from documents such as receipts and invoices. If this is done inaccurately, the entire process will be thrown off, leading to unreliable information and inaccurate records.
Report Creation
All that data is used for creating financial reports which provide decision makers information relevant to the health and performance of a business. This is one of the main tasks bookkeepers perform.
Tax Prep… Setting Up for Successful Tax Time
Every business needs to pay taxes, and this needs to be done in accordance with local and federal laws, and in a timely manner. Tax computation can be complicated and intricate at times. Professional bookkeepers help keep accounts organized and holding on to supporting documents. By having your books in order, a good bookeeper will set you up for a less stressful experience during tax time.
Paying bills & Producing Invoices
Like taxes, paying the bills needs to be done on time, or you run the risk of incurring penalties and late-fees. Figuring out which bills are due and getting them paid accordingly, is one of the many tasks professional bookkeepers handle. A bookeeper will also help by creating invoices fo services rendered and keeping track of whether or not a payment was received.
So are you still asking yourself, do I need a bookkeeper?
Here is how you can tell if you may need a bookkeeper.
You are overwhelmed by your books
If you find yourself overwhelmed or confused with your books, it likely means you should hire a bookkeeper before your books get messy. Small bookkeeping errors can easily lead to more serious complications, and if you are in any sort of doubt, you should consider a professional.
Doing your own books is taking time away from critical business activities
If doing your bookkeeping by yourself does not allow you to devote an adequate amount of time and attention to other important business functions and processes, then you should consider hiring a professional to handle your books, while you focus on activities critical to your business’ growth.
Your number of accounts are increasing
Depending on the nature of your business, you may have multiple bank accounts. Businesses have become more complex, people do more transactions online and they also may work with companies overseas. Each of these activities may require different accounts. For example, you may have a line of credit with a local bank, but may need a larger bank to perform international wire transfers. Or perhaps some companies are overseas and only accept paypal. All of those transactions must be reconciled and money should be tracked appropriately… which takes time that you may not have.
You are overpaying for an accountant
Accountants typically perform more advanced tasks and you, as a small business owner, may not need one. Since professional accountants have more experience and a wider skillset, compared to bookkeepers, they tend to charge high fees. If you are currently paying an accountant to do bookkeeping work, you may not be getting the most value for your money, and should consider hiring a bookkeeper instead.
Should you hire a full-time bookkeeper or outsource?
This question is almost as important as the question of whether to hire a bookkeeper or do your bookkeeping by yourself. If you have decided that you do need professional bookkeeping services, then you may either decide to hire an in-house bookkeeping staff that could be part-time or full-time, or you could hire a bookkeeping service.
Here are some of the advantages of each approach:
In-house staff
With an in-house bookkeeping staff you have full control over the process and you can easily watch over their shoulder if you would like to keep up with your bookkeeping in real time. This approach is significantly more expensive than hiring a bookkeeping service, and might not be financially justifiable if you don’t have enough bookkeeping work to keep an in-house bookkeeper busy.
Bookkeeping service
A bookkeeping service is a firm that offers professional bookkeeping services, and there are two major advantages to hiring one. The first benefit is that with a bookkeeping service you can expect a very high standard of service delivery, and the second benefit is that outsourcing your bookkeeping is usually much cheaper than hiring an in-house bookkeeper.
Park City Bookkeepers offers full-service bookkeeping packages for business owners who need need some extra help with their books and want to free up some extra time.