Whether you’re just getting started or are a seasoned business owner, deciding when to hire a bookkeeper is challenging. Many entrepreneurs must wear all hats when they plunge into business ownership; bookkeeping is just one.
There comes a time you need to hire a professional bookkeeper…not your sister’s kid who does your books for pennies on the dollar, but a real professional.
Accurate Records Drive Everything
Maintaining an accurate set of books prepare you for tax season, but what else can they provide?
They track bookkeeping activities so your tax return is correct and ensures you get your entitled deductions and tax credits.
Taxes are typically the very thing that prompts entrepreneurs to go back and recreate the year’s transactions to do their bookkeeping. This often results in missed expenses, misplaced receipts or forgotten cash expenses.
Accurate records also prepare entrepreneurs to present a financial picture to investors or lenders with a solid idea of what the business is worth.
Tools to Help You DIY Bookkeeping
You may have the time to do it yourself or may not be ready to invest in a full-service professional bookkeeper. There are several tools available to help you create accurate books and records.
QuickBooks probably has the most name recognition and is one of the most prominent vendors in digital bookkeeping software. Their software is used by bookkeepers, accountants, and businesses who DIY it. The software has a mild learning curve for learning the program. It allows you to link all your business accounts to import your transactions so you can set aside a couple of hours a month to stay on top of your records.
Similar programs to QuickBooks include Xero, Zoho, and FreshBooks. A quick Google search reveals many decent comparisons of the products, price points, and excellent overviews of their strengths and weaknesses. I liked this recent one by Business.com that reviews the features and provides insight into bookkeeping.
Even the best software can get overwhelming if you have a few hundred transactions coming in each week. In 2019, Xero reported that bookkeepers still spend 30% of their time entering manual transactions.
Professional Bookkeepers – Who, What, Where, When, & Why
The confusion between professional bookkeepers and those like the proverbial sister’s kid comes from the strict definition of what a bookkeeper does. Simply defined, a bookkeeper records your accounts and documents daily transactions.
However, professional bookkeepers take this quite a few steps further than standard data entry and classifying financial transactions. Today’s professional bookkeepers have an impressive list of qualifications and manage a variety of accounting-related tasks, including:
- Many are certified as QuickBooks ProAdvisors, enabling them to navigate the QuickBooks platform and offer reduced pricing.
- Ensure you get paid and pay your bills on time by managing accounts receivable and accounts payable.
- Document incoming cash and, in some cases, make deposits at the bank.
- Monitor transactions and variances for suspicious activity and report on issues in real time, helping to catch fraud or excessive spending.
- Reconcile your bank statements, which helps ensure no missed or fraudulent transactions.
- Watch debt levels and apply payments toward debts.
- Set and maintain an annual and monthly budget.
- Process payroll and payroll tax reports.
- Generate accurate financial statements for monthly, quarterly, and annual reviews.
- Send your CPA accurate statements and supporting information for tax time.
There is even a movement to get more bookkeepers certified, which would provide confidence when selecting a bookkeeper in the digital marketplace.
Ready to Hire a Professional Bookkeeper?
So we went over the who and the what of professional bookkeepers. Now let’s determine if you’re ready to pull the trigger and hire a pro.
There are three main reasons to hire a bookkeeper. The first is overwhelm. Many business owners put off bookkeeping or creating a financial plan because they feel overwhelmed by the task. So it gets pushed down the calendar. If this is you, a professional bookkeeper is well worth the investment to hand over the reins and reduce your anxiety. The stress reduction and added sleep are priceless.
Next is time. There comes a moment when your business has grown so that your time is more valuable and dedicated to your company, not bookkeeping. This typically occurs when doing it yourself takes significant time away from profit-generating activities. That 30% stat above wasn’t just for professional bookkeepers. What would you do with 30% more time?
The third is knowledge and financial acumen. A bookkeeper can give insight into where your money is going and who your top clients are and help you better understand the business’s cash flow. This information can help you build better budgets and make sound financial decisions backed by data. You’ll feel secure knowing whether you can buy that new equipment or hire another full-time employee next quarter. And hey, you better talk to Bob about that invoice from 2 months ago.
Are you thinking: All this information is great, but we might need a bookkeeper and more, like financial forecasting services and account analysis? Tax Time CPAs can help. We recently wrote about Fractional CFOs, discussing how a Fractional CFO could assist small businesses in growth mode. This is optimal for companies on the edge of needing in-house accounting staff but isn’t quite ready to dish out the hefty price tag associated with CFO salaries.
An entrepreneur needs accurate books and records as those records are used to prepare taxes, secure investments, and lend. There are options for creating your books yourself by using online products, and though we didn’t touch on it, you can also go with the handy dandy spreadsheet method.
Professional bookkeepers are worth their weight in gold. These professionals take the time to help an entrepreneur move beyond just data entry and transaction classification to help your business run more efficiently. They aid you in locating discrepancies and keep you on top of your cash flow.
At Tax Time CPAs, we offer a QuickBooks QuickStart to help you get your DIY set up correctly. We also work with QuickBooks ProAdvisors for all of our bookkeeping services. If you’d like to learn more, please get in touch with us or schedule a Discovery Call.