Running a small business can be overwhelming, especially when managing your finances. The most minor of mistakes could cost you in the long run or even get you in trouble with the law. We’ve previously written about the difference between accountants and bookkeepers, where bookkeeping is about recording data, and accounting turns that data into information. While these processes are doable on your own when you’re just starting, you might find it more overwhelming or time-consuming to keep up with as your business grows. This is where hiring professionals comes in.
The demand for qualified bookkeepers is in high, especially as the number of accounting graduates is dropping. As a result of this, top educational institutes have opened up their courses through offering online accounting degrees. This has helped a more diverse pool of applicants gain an accounting qualification, which is also why there is a projected 7% growth in the field from 2020 through to 2030. For small business owners, hiring an accountant can help with financial tax compliance procedures and keep you updated with your business’ budget and profits. They can also bring you valuable insights and analysis based on your business’s financial records so that you know the next steps to take. While finding a reliable, professional accountant nowadays is much easier, thanks to a booming industry, most small businesses are likely to overlook the importance of working with bookkeepers.
What do bookkeepers do?
Accountants can be bookkeepers, but not all bookkeepers can be accountants due to the difference in formal training required. Still, bookkeepers are necessary because they can provide you with the “pulse” of your business, so to speak, as they record financial transactions, balance the books, and cross-reference data against bank statements or other documents to confirm accuracy. A bookkeeper’s reports help business owners make decisions or rethink their strategies. Their day-to-day administrative tasks support accountants by providing clear, up-to-date, and accurate data.
To cover your bases as a small business, you might benefit from having both accounting and bookkeeping services to help keep you on top of your finances. In this article, we’ll get into when the right time for hiring a bookkeeper for your small business is.
Why you should hire a bookkeeper
As stated above, doing your bookkeeping for your small business is a good start and an acceptable way to familiarize yourself with your business’ finances. However, as your business grows, you may realize that bookkeeping is becoming a dreaded chore, especially when you could spend your time on other aspects of running your business. When this happens, it may be wise to look into hiring a bookkeeper. This way, your books stay up to date instead of staying untouched because of procrastination and postponement.
Another reason you will want to hire a bookkeeper is for tax compliance. Bookkeeping is an important aspect of having a tax-ready accounting system for your business, and it might save you from any unnecessary legal troubles in the future. While bookkeeping software — both cloud-based and desktop-based — exists, hiring a bookkeeper to help you with the process can save you long hours managing things like inventory tracking. In fact, most bookkeeping software programs are designed with accountants and bookkeepers in mind rather than business owners. Having a bookkeeper on your team can help you stay on top of the required data to file taxes and generate timely financial reports to avoid bounced checks.
Signs your small business needs a bookkeeper
It’s never too late to hire a bookkeeper for your small business. When it gets too overwhelming or complicated for you, it might be time to rely on the expertise of a qualified bookkeeper rather than get frustrated with your records. Some of the red flags you need to look out for when managing your business’ finances include the following:
You see an increase in sales, but not profits: Proper bookkeeping can help you come up with financial statements that let you know which areas of your business you may need to cut costs on to make your business more profitable. Increasing your profit margins is vital to running a thriving business, and a bookkeeper can make your life easier in that department.
You suspect employee theft: Staying on top of your business’s books is important for keeping track of your profits and losses. Unfortunately, for various reasons, some of these losses may be caused by employee theft. When you aren’t up-to-date with your business’ finances, it can be hard to detect theft until it’s too late. A trusted bookkeeper can give you a heads-up in case something is amiss.
You want to manage unpredictable cash flow: Running a small business can have you hiring so many people at once that paying them — and paying them on time — can be an overwhelming and messy time of the month. One of the advantages of good bookkeeping is that your bookkeepers can be in charge of your cash flow statements so that you don’t lose track of who to pay and how much.
Tips on hiring a bookkeeper for your small business
One of the crucial things to look out for when hiring a bookkeeper is to make sure you hire the most qualified person for the job — but also a trustworthy and reliable one as well. After all, your bookkeeper will handle a lot of your business’s finances, and if something goes wrong, you are most liable as the business owner. Some of the hiring options available today include:
- Hiring a freelancer
- Working with a bookkeeping firm
- Using remote bookkeeping solutions
Which one to choose wholly depends on the size of your business and how much of your finances need handling. Hiring a freelancer can be a good start, but you must make sure the freelancer you decide on is honest and dependable and that your business’ data and finances will be taken care of. Relying on remote bookkeeping solutions is also affordable, but you won’t have an in-house bookkeeper, so offsite coordination will likely be challenging, and they won’t always be around to answer your questions.
Finally, working with a bookkeeping firm means working with a team of expert bookkeepers whenever you need support. At EcomBalance, we’re dedicated to providing clarity on your numbers through fast and reliable communication.