Why hire a bookkeeper?
This might be a question you’ve asked yourself recently. Maybe you recognize the importance of keeping organized financial records but aren’t sure if a bookkeeper is necessary.
Well, in this post we’re going to talk about how a bookkeeper can be advantageous to your business and talk about some pros and cons of hiring one.
11 Reasons Why You Should Hire a Bookkeeper
1. Efficient Financial Management: Expertise and Accuracy
“Why should I hire a bookkeeper when I have my own experience managing finances?” We believe in the importance of financial literacy and doing your own bookkeeping has its own advantages. However, you can’t deny the benefit that a certified bookkeeper can bring. For one, they have years of experience managing finances of multiple different businesses of varying sizes. Their years in the job mean they have valuable, tried-and-true methods, and faster processes. They are efficient but don’t trade speed for precision.
2. Time Savings and Enhanced Productivity
Probably one of the most attractive answers to the question “Why should I hire a bookkeeper?” is time-savings. Not only do you cut down on the time spent managing books, but you are also freed to do other business duties. When you can focus on core areas of your business, doing things you are good at and passionate about, you are more productive and motivated. This isn’t to say that people can’t or don’t enjoy doing bookkeeping. What we’re saying is that it’s highly unlikely they put up a business for that purpose – spending hours on balancing their books.
3. Compliance with Tax and Legal Requirements
I think it’s safe to say that the majority of people consider tax season to be a “not very fun” time of the year. If you do your books yourself, you need to be updated on tax regulations. You need to organize your books a certain way and compile and file all the necessary paperwork on time. The beauty of a bookkeeper is that are already familiar with the business tax laws and regulations. This is their career, so they need to stay on top of it to make a living. So, they are more likely to pay closer attention and know what exactly to do and how to do it.
4. Detailed Financial Reporting and Analysis
Bookkeepers know what financial statements to prepare, how to run reports, and how to analyze the results. They can help you track specified metrics and provide useful insights on your numbers. They assist in strategizing so that you can achieve your next business objective and achieve long-term goals.
5. Streamlined Invoicing and Accounts Receivable Management
A business with many customers in a day might not be able to handle tracking invoicing and payments for each one. A bookkeeper helps by assisting in setting up payment terms, reminding you and the client of payment dates, and setting up beneficial accounting automations through your accounting software.
6. Cost Savings and Avoidance of Costly Errors
A fresh set of eyes means they can probably spot areas of fat that need trimming. They can spot holes in your processes that are just leaking money out and help you come up with better strategies and processes to keep overheads down. Bookkeepers, being very detail-oriented individuals, can spot mistakes early so you don’t get fined or have to spend a ton more money trying to patch up a hole in the system.
7. Improved Cash Flow Management
Not only do bookkeepers track the incoming and outgoing cash, they can also help make the pipeline smoother. Daily reconciliation means all transactions are listed and able to be categorized and monitored. From there the bookkeeper can get an idea of your business health and start coming up with budgeting and forecasting projections. In their analysis, they can spot areas of revenue potential and wasteful spending. Through managing AR and AP they can help you pay and get paid faster so you dont incur debt. Why should you hire a bookkeeper? Well, if you want your cash flow to look like what we’ve described, you’ll consider it.
8. Scalability and Adaptability to Business Growth
“Why hire a bookkeeper if I only do a few transactions per day?” This is a valid question and we’ll discuss a little more about DIY bookkeeping later in this article. What we will say is that if and when your business grows, (and we hope it does!) a bookkeeper is able to scale with it. Whereas, you may not have the resources or the ability to do so. Bookkeeping services are trained to handle the many transactions that happen within a business. Though their rates may change depending on the amount of money generated, they are equipped to manage your books just as well.
9. Enhanced Financial Security and Fraud Prevention
Bookkeepers are like doormen for your financials. They observe the money that goes in and goes out. Why hire a bookkeeper? Because they act both as surveillance and security. They have developed certain procedures to ensure that no suspicious character (transaction) slips through the cracks without some interrogation. They can spot vulnerabilities and make sure they are dealt with before they can damage or slow down your business operations.
You can rest assured knowing that professionals are managing your finances and won’t let anything slip by without some background checks.
10. Stress Reduction: Alleviating Bookkeeping Burden
Why should you hire a bookkeeper? Well, to put it simply, they can make your life a whole lot easier. Consider all the bookkeeping duties needed to be accomplished accomplish from tax compliance to the daily, weekly, or monthly updating of books. A bookkeeper not only has the experience to manage these things, but also has training in tools that make it even more streamlined.
Pros of Hiring a Bookkeeper
Experience
A bookkeeper knows how to handle records, what metrics to track, and run multiple reports. They can bring valuable knowledge if they’ve worked with similar businesses in the past. They generally know where to look for errors if they spot discrepancies and have protocols to solve them in no time.
Expertise
Benefit from expert level financial organization. A bookkeeper can get your financials in order and get your business running smoother. They also bring guidance, advice, best methods, and best practices to the table. They can explain complicated financial language and processes in simple terms for you to understand. There are people who are great at business but bad with numbers. A bookkeeper can be his support team.
Outside Perspective
They offer a professional, outside, unfiltered, unbiased view of your business. They can help you make rational decisions based on the numbers.
Long Term Cost Benefits
While there are affordable bookkeepers and services out there, it can still look like a lot at first. However, you’ll soon realize that it pays dividends to hire a bookkeeper because of all the money you save through:
- Avoided penalties
- Corrected transaction errors
- Strategies and insights for better spending and profitability
Time Savings
Expertise plus experience equals efficiency. Growing a business takes time. Time is money. Spending hours on your books takes away from other business areas. Therefore, hiring a bookkeeper can help you save time, save money, and allow you to focus on your business growth. Be the money-maker and let your bookkeeper be the money manager.
Cons of Hiring a Bookkeeper
Not Recommended for Startups
It can be expensive and not the best option if you’re just starting out. Why hire a bookkeeper when you may experience the full benefits because your generated sales aren’t high enough? Instead, you can do it yourself at the start and learn these things as you go. No degree is necessary to carry out bookkeeping. There are tons of software, tools, and resources available to help you but it may take away a significant amount of your time.
Data Risks
The risk of data leaks is low but never zero. You are giving control over to someone else that you can’t monitor 24/7. They have access to your, bank details, account numbers, purchase records, and all that you spend on. You will need to put up measures in place to ensure there isn’t any funny business going on. For all you know, they are a spy stealing company secrets and selling them to the enemy!
All jokes aside, data security is a major cause of concern for a good reason. Some just aren’t comfortable letting a stranger have eyes on sensitive business data.
Note: There are multiple safeguards in place. Just be sure to go through the best practices and for finding a bookkeeper. That way, you can have more confidence about the quality of their work and the integrity of their character.
Hidden Fees
Some bookkeepers and services may charge hidden fees that you don’t know about until the work is already being conducted. Communicate the specific work needing done. Ask very specific questions about the fees they charge and the scope of their services during the onboarding process.
Unavailability
They might not be available to contact anytime, which will make it difficult for you to work closely with them. Full-time access to financial data and lack of full control over that data are two major reasons why people still have qualms about hiring a bookkeeper.
What Is EcomBalance?
EcomBalance is a monthly bookkeeping service specialized for eCommerce companies selling on Amazon, Shopify, Ebay, Etsy, WooCommerce, & other eCommerce channels.
We take monthly bookkeeping off your plate and deliver you your financial statements by the 15th or 20th of each month.
You’ll have your Profit and Loss Statement, Balance Sheet, and Cash Flow Statement ready for analysis each month so you and your business partners can make better business decisions.
Interested in learning more? Schedule a call with our CEO, Nathan Hirsch.
And here’s some free resources:
- Monthly Finance Meeting Agenda
- 9 Steps to Master Your Ecommerce Bookkeeping Checklist
- The Ultimate Guide on Finding an Ecommerce Virtual Bookkeeping Service
- 6 Reasons Accurate Ecommerce Accounting is Crucial for Your Business
- Accounting Basics 101: What Small Business Owners Must Know
- Generally Accepted Accounting Principles (GAAP) Cheat Sheet
- How to Read a Balance Sheet & Truly Understand It
Final Thoughts on Why You Should Hire a Bookkeeper
We hope your question of “Why hire a bookkeeper?” has been answered. We also hope that this post has gotten you one step closer to orderly finances and a profitable business.
