Do You Need an Outside Bookkeeper?
One of the most important tools you can use to become more competitive and profitable is a bookkeeping service.
After they hire professional bookkeepers, businesses enjoy average profit increases of 16%.
Does your business need a bookkeeper? Here are some things to consider:
Key responsibilities of a bookkeeper include getting financial processes in order, preparing financial statements and providing data for budgeting, raising capital and other uses.
A skilled bookkeeper should have the ability to:
- Maintain a general ledger and record incoming and outgoing funds
- Reconcile your books with balances from your bank(s), and correct any inconsistencies
- Send you financial statements that share the financial health of your company your monetary trends
- Keep accurate records to improve your reporting and analysis
- Get tax data ready at tax time
- Adhere to all laws and regulations
When a Business Needs a Bookkeeper
If you have trouble keeping up…you won’t know how much you’re earning and what actions might increase your profits. If your books are a mess, you’ll have to play catch-up at tax time (no fun).
If sales are up but profits aren’t…tax-ready financial statements from your bookkeeper can show you places to reduce costs or raise prices.
If you don’t know your cash flow…you need a monthly cash flow statement that shows your receivables and payables so you are always prepared to pay your employees or vendors.
If bookkeeping takes up too much of your time…note the time you spend on bookkeeping weekly. Determine your hourly value, then assess how much you spend on this role monthly. When you treat bookkeeping time as the expense it is, you’ll know whether to keep doing it yourself—or not.
How a Bookkeeper Can Help Your Small Business
The following are some ways a bookkeeper can help your business grow:
Manage accounts day-to-day
Every day, your bookkeeper will record all transactions for the business’s. Their software will automatically register income and expenses, making it much easier to stay up on your cash flow.
Maintain accurate, current records
Your bookkeeper will keep all your records up to date. It will also be their responsibility to find any inconsistencies between your books and your business accounts, so these can be resolved as quickly as possible.
Manage accounts with the bank
Bank feeds linking accounting software with your business account let you see transactions when they happen.
Prepare statements showing your financial position
Your bookkeeper will prepare reports for your businesses such as P&L statements, balance sheets and cash flow statements. These reports show where you stand, how much you are spending on operations, your current assets and liabilities, and cash flow.
How to Choose a Bookkeeper for Your Small Business
There are three options for hiring bookkeeping:
- hire a solopreneur
- work with a company that only does bookkeeping or
- use a virtual-only bookkeeping firm
Each approach has pros and cons:
- A freelance bookkeeper is the most affordable but may not be available when you need them.
- Bookkeeping firms have several bookkeepers on staff. Someone will always be available if you need help.
- Online bookkeeping solutions connect you with a stable of bookkeepers (who may be overseas). This will usually be a no-frills, completely-virtual relationship.
Whoever you choose, make sure they will be available when you need them, capable of communicating in layman’s terms, and able to protect your data from a cyberattack.