When you first launch a business, hiring a bookkeeper might seem like an unnecessary expense. You may feel confident in your bookkeeping skills and opt to do it yourself. But as your business grows and you hire a few extra employees, spending more time doing the books can easily overwhelm you and divert your focus from growing your business.
While there is no hard-and-fast rule on when you should hire a bookkeeper, there are some common telltale signs that business owners often experience before they reach the tipping point. If you notice any of the following symptoms, it could be time to hire a bookkeeper.
1: Your Books Are Always Outdated
If you have a backlog of paperwork, untracked receipts, unassigned income and expenses, and payments you haven’t reconciled, then your bookkeeping process is getting out of your hands. While tackling accounting and bookkeeping may feel daunting and overwhelming, there may also be other reasons for having outdated books.
One common cause of outdated books is siloed systems that don’t communicate with each other, resulting in a lot of manual tracking that often causes data entry errors. Hiring a professional bookkeeper can help you keep your books up to date and help you get a firm handle on your financials.
2: You Lack Time to Handle Your Books
A growing business means more employees, clients, and invoices, resulting in extra back-office paperwork. Your to-do list will always increase as your business continues to grow. So, if you can’t find adequate time in the day to complete everything, you should reprioritize and focus on the tasks most critical to your business’ success. Outsourcing crucial yet time-consuming tasks such as bookkeeping will free up time to complete your core business tasks.
3: You Missed Out On Tax Deductions
Certain business expenses are tax-deductible, such as office equipment, phone bills, and continuing education. You can take advantage of these deductibles to offset your overall business costs and minimize the tax owed.
Without proper bookkeeping, you may overlook deductible expenses and miss out on tax write-offs. Thankfully, experienced bookkeepers record transactions and assign the correct expense categories to help minimize your total tax bill.
4: You Have Unpredictable Cash Flow
If you’ve ever failed to cover your expenses at the end of the month, it’s likely that your costs have exceeded your income, leading to a cash flow problem. A professional bookkeeper will track your accounts receivable and accounts payable and follow up on any overdue invoices, ensuring you’re always on top of cash flow.
Conclusion
As the owner of a small or mid-sized business, you may pride yourself on self-sufficiency. This trait is valuable to entrepreneurs and can serve you well when starting a business. However, a DIY approach to bookkeeping may become counterproductive as your business grows. As you take on new responsibilities and stretch your to-do list, hiring a professional bookkeeper may be one of the best business decisions you can make.