By Katherine Pendrill
One of the best parts of becoming a small business owner is the opportunity to wear many different hats. One moment you’re an outbound sales expert, the next you’re an event planner. But one hat that you probably don’t want to wear is “bookkeeper.”
While many small business owners opt to do their own bookkeeping as a cost-saving measure, this DIY solution often ends up being more costly in the long run. If you’re not a financial expert, which most small business owners aren’t, you’ve likely found yourself spending hours of your time trying to sort out your books. This is time that could have been spent actually running your business or managing your team. In short, DIY bookkeeping stops many businesses from growing.
So what’s the solution? Well, in the words of Steve Jobs, “It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do.” In other words, hiring an outside bookkeeper could be one of the smartest moves you can make as a small business owner. Here are just six of the biggest benefits of outsourcing your bookkeeping.
1. Professional expertise
You may be a business legend, but no matter how successful you are at running your company, you can’t be an expert in everything. In the early stages of building a business, your time is precious, and spending several hours a week trying to understand how to maintain the general ledger is never going to equip you with the level of knowledge and training that a professional bookkeeping service can offer.
When you hire a bookkeeping service, you have access to trained professionals who can help you keep track of your most important financial documents. Bookkeeping requires meticulous analysis and even some legal expertise, which you’ll be grateful for as your business grows and your finances become more complex.
2. Track your financial health
You may think you know where all of your money is going, but if you’re muddling your way through your own books, you’re really just guessing. Indeed, your bank balance may look fine, but that number only shows you a fraction of the picture. Without proper bookkeeping, you have no idea when money is actually coming in and going out.
When you hire a bookkeeper, you’ll have a professional looking at the full financial picture—beyond your bank balance. When you know where money is being spent, where revenue is coming in, and which tax deductions can be claimed which will give you a better picture of the financial health of your business. You’ll not only know when you need to cut back on unnecessary spending, but also when your business starts to turn a profit.
3. Keep compliant
You may think that the worst part of DIY bookkeeping is the time that it takes, but there’s actually a bigger concern: the IRS. Believe it or not, the IRS is constantly updating its rules and regulations, and if you’re not on top of things, you could find yourself facing an audit, hefty fines, or in the worst case, jail time.
With a bookkeeping service, you no longer need to worry about compliance. Not only are bookkeeping providers up to date on the latest rules and regulations, but they also know how to prepare financial records to keep the IRS and lenders happy. If there’s ever a question about your finances, your bookkeeper will be able to show that your business is fully transparent and compliant. In other words, outsourcing your bookkeeping can help keep the IRS from breathing down your neck and satisfy lenders who may need to see your financial records.
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4. Leverage technology
If you’re trying to do the books on your own, you’re most likely using the pen and paper method. Like most business owners, learning how to get a handle on the books is time-consuming enough, leaving you with no energy for learning how to use modern bookkeeping technology. Ironically, doing things by hand just makes the process all that much slower.
Bookkeeping today is nothing like it was in the past. Today’s bookkeeping providers are tech-savvy firms that have invested in technological solutions like QuickBooks and Xero and mastered them so that you don’t have to. With most providers, the cost of the software and apps are included in the bookkeeping fee, so you not only save yourself the time it takes to learn these cloud solutions, but also the cost.
5. Keep employees happy
If you’re handling you’re own bookkeeping, you probably also are handling your own payroll. This may seem straightforward at first, but as soon as you need to hire seasonal employees or pay overtime hours, things get complicated real quick.
Most bookkeeping services can take these payroll problems off your plate. A bookkeeping service will not only make sure you properly classify your employees and pay them the correctly, but also ensure that you accurately calculate source deductions to keep the IRS happy. This is especially important as your business grows and you bring in more people.
6. Reduce your own stress
Even if you have the time to set aside for DIY bookkeeping, this doesn’t eliminate the stress that bookkeeping can cause. You’ve already got a million little things to think about on the business front and bookkeeping just adds to that long list of worries.
By outsourcing your bookkeeping, you can take one major thing off your to-do list. In turn, a lower stress level will give you a clear head for tackling more important business challenges head-on. You might even be a little happier in your personal life without the weight of bookkeeping worries on your shoulders.
At the end of the day, it all comes down to a little math. As a business owner, you know how much your time is worth. If that time could be better spent running and growing your business, hiring a bookkeeping service may be the most logical solution. After all, the more time you spend running your business, the more your revenue will grow—it’s hard to argue with that math.
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