At the initial stage of their business, many small business owners do many roles on their own, but one can only maintain the workload until the business starts growing. Then hiring a bookkeeper becomes a necessity rather than a luxury.
Hiring a bookkeeper for your transactions can lead to a better financial picture of your business and give you more time to handle the day-to-day work of your business.
You can only make better decisions for your business when you know the complete financial picture. If your finances are not accurate nor managed correctly, you may be forced to move blindly, which in turn can cause financial hardship on your business. Apart from that, there are many other reasons to hire a bookkeeper.
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Eight signs it’s the right time to hire a bookkeeper for your business:
#1 Bookkeeping is taking up too much time.
One of the major reasons to hire a bookkeeper is because you don’t have enough time in a day.
Initially, if you are the sole proprietor, then you might not need to hire a bookkeeper at this stage. But, as the business grows, work and transactions increase, and posting entries may be too exhausting and time-consuming, and you’ll not be able to focus on other aspects of your business.
Hiring a bookkeeper helps you manage time to be able to do more valuable things. You’ll be able to concentrate on other parts of your business and future success. If your monthly transactions continually increase, then it’s the right time to get a bookkeeper.
#2 Your books are behind.
If you don’t have a bookkeeper, managing books consistently may be lacking. To track business progress, profits, and make adjustments, you need regular updates on books.
For the success of your business, one of the major keys is to keep your books up to date. To make wise decisions and control direction, analysis of financial statements – monthly or quarterly – is essential. Financial statements give insight into a business’s financial health and performance, and they should be updated regularly.
Hence, keeping books updated is a continuous task. As it shows the financial picture of a business, they need to be current and accurate. If your financial statements are unclear and outdated, then it’s time to hire a bookkeeper.
#3 It’s getting too complicated.
At the upstart of a business, it’s often easy to handle finances on your own. But, as the business grows, managing finances becomes complicated and time-consuming; managing bookkeeping tasks is hard.
If you feel frustrated while doing bookkeeping, as it’s not your expertise, then it’s time to hire a pro. Bookkeepers are experts in entries, finance, etc., and they will do the job more quickly and accurately than you.
#4 Your cash flow is unpredictable.
At the initial business point, cash flow is more important than profit, and one of the important documents during the initial growth of the business is a cash flow statement.
These statements need to be prepared on weekly and monthly bases. You must know in advance if there is a scarcity of cash flow, which will help you make wiser decisions about spending.
A bookkeeper will keep all the records up-to-date, and also make sure to post expenses and revenue daily. One will prepare cash flow based on this information, as you must know where your income is going and coming.
#5 Limited ability to make high-level business decisions.
As a business owner, you must be able to make business decisions for the growth and progress of your business. Without analyzing, tracking, and knowing about your business’s financial health, you can’t make decisions properly. If you spend too much time keeping financial statements up to date, you won’t have time to deal with other money-making aspects of your business.
A bookkeeper will provide all up-to-date insights about finances to help you make better decisions for business growth.
#6 You aren’t prepared for tax time.
Many owners prepare and send a multitude of emails and documents at tax time. If you do so, it shows you have had inadequate bookkeeping during the year.
The bookkeeper helps keep accurate entries at the right time and is in charge of updating accounts. So, you only need to make ledger copies and forward them to your accountant; hence, you will be able to relax and not stress come tax season. Also, your accountant should not have as many questions about your accounts and there would be fewer charges to complete your taxes.
#7 The risks are increasing.
Because of poor bookkeeping, have you ever accessed penalties, big tax bills, etc.? Have you needed the services of a lawyer?
Due to complex finances, there is a higher chance of making mistakes that cost you time, money, and effort. To save yourself and your business extra expense, stress, etc., then you should hire a professional bookkeeper.
#8 You’re underpaying your quarterly estimated taxes.
If you do the bookkeeping work and fail to keep your book up-to-date, you will not know how much to pay for quarterly estimated taxes?
There are stiff penalties for underpayment and late payments of quarterly estimated taxes by the IRS. Because of your poor bookkeeping, you will have to pay extra charges for late payments and unrequired penalties.
Save your precious money by hiring a bookkeeper who will take care of keeping records accurately, alerting you to pay for quarterly estimated taxes. This way, you can save your hard-earned money from going to the IRS for penalties and better invest it in your business.
We can help you manage both personal and business tax issues for small business owners. Sign up for our Tax Prep and Planning Service today!
We have discussed eight signs it’s time to hire a bookkeeper. If you face any of these, then it is time to get a professional. Your time is valuable! Instead of doing bookkeeping tasks for long hours, spend this time running your business proficiently. Another advantage of hiring a professional bookkeeper is saving your money as CPAs charge a high amount for bookkeeping services. Hence, it will be beneficial for your business success to hire a bookkeeper at the right time.