When most of us think about running our business, we think about the fun things like product development, marketing and customer outreach. For most business owners, the idea of accounting is, to say the least, not exciting. We know we need it, and moreover, we love to do everything ourselves. But at the end of the day. We need to look at the cost effectiveness of having our hands in everything versus hiring someone with the knowledge and skill to do it for us. Bookkeeping is a very important part of your business. It is what helps you determine areas of growth, where you need to trim back, how you market, how you staff, what taxes need to be filed, and will in general be part of every informed decision you make about your business.
The actual act of preparing the books is not something that makes us want to jump up and down with excitement. At the same time, many business owners put off hiring a bookkeeper, choosing instead to do it themselves. Sometimes this is because the thought is why pay someone to do it, when you can do it yourself. But can you? Do you have the knowledge? And what will it cost you in time, effort and daily impact? The reality is that even though you may want to run every aspect of your business, you simply won’t have time to do everything. And some things are better left to the people that do it day in and day out. Startups and even well-established businesses need the attention of their owner. You are the heart and soul of the business. You are the one that will determine new directions, new product and guide customers to your wares. This means that you need to be focused on the business, marketing, strategy, funding and growth. If you are bogged down in the administrative areas of the business, your focus is split. Many owners do not have the financial background or working knowledge of recording and categorizing transactions, creating and tracking accounts payable and receivable, moving inventory through the system from purchase to cost of goods sold. And while you certainly could learn it, but why? If a number is entered wrong, it could significantly impact your business down the road. If vendor bills aren’t entered or paid, or a customer hasn’t paid for their service, or even if a figure is transposed, the mistakes and unwinding can be costly. Imagine spending three hours completing a credit card reconciliation, an action that may take a good bookkeeper thirty minutes. What more could you have done with that time? What is getting back three hours worth to you?
A bookkeeper provides not only a professional that actually likes working with the numbers, but also a second pair of eyes. They will make sure that 1 isn’t really a 7, or that the budget is being met. They can provide you with reports that will help you assess the impact of a certain product line, a new office location, or the overall health of the business. At times, they will see something that you miss, having a different perspective on the data and its meaning. Having someone else working on these items in the background will provide you with more time to devote to the business and yourself. This will help create work-life balance, which is a key to preventing burn out. Additionally, bookkeepers know where to put each transaction and how to track them. They can make sure that your taxes will be correctly filed because you know you have the right gross and net income. They will ensure that business and personal expenses aren’t mixed together; make sure bills are paid on time which will prevent late fees; and guarantee that customer are invoiced, and funds are received timely which will assist in cashflow.
A bookkeeper is used to looking at figures and knowing how they go together and what they mean for the health of the business. They can assist you in learning what to look for, clarifying any confusion you may have, and identify irregularities. They can also assist in providing financial statements for investors, Boards, business partners and potential buyers. They become essentially a third-party gatekeeper of the numbers which helps you create a positive feel for other parties.
It is a bookkeeper’s job to keep the numbers up to date. Often owners don’t have time to make daily entries because they are focused on the business, and books are often woefully behind and out of date. When it comes to needing financial statements, waiting for a month or more worth of entries to be made just isn’t possible. When you fall behind in your books, it makes it nearly impossible to figure out where your company stands and what you need to do to get where you want to be. Many businesses wait until year-end to contract their tax preparer to complete their books. Not only is this a stressful time for tax preparers but entering your books at year-end can mean missed chanced at deductions throughout the year. Many accounting firms have a bookkeeper on staff that can assist you during the year and work alongside your preparer to ensure that you are taking advantage of as many opportunities as possible for tax savings.
While keeping your books yourself sounds like a good idea, and is even maintainable for the initial period, a professional bookkeeper can save you more time and money in the long run. There is a greater reduction of error with someone that has the knowledge, and time to devote to your books. They understand the financial side of your business and what it takes to keep it in good reporting form. The biggest issue is that your time is money and having the time to put towards the growth and development of your business is crucial to maintaining and increasing your product. From the perspective of time, money savings, and focused expertise, a bookkeeper makes good business sense for your startup or established business.