Do you need a bookkeeper? We're glad you're asking! And today, you'll get the answers you need according to your unique small business and what suits it best.
Starting a small business is expensive.
That’s why sole proprietors do the work of janitor, stock clerk, greeter and other tasks in the business’s early months.
Unfortunately, it takes time to build a reputation that generates enough sales for the enterprise to make a consistent profit. Fortunately, entrepreneurs know the importance of keeping accurate records. They know that financial statements are interpreted to determine the business’s financial position and chart its future. Although the work requires a competent employee, entrepreneurs may be required to keep the records.
But if you're an employer who employs yourself, you might be asking that big question: Do you need a bookkeeper? Well, let's start by looking at a few solutions and considerations to help you find out.
If the owner is familiar with accounting principles, they may buy a bookkeeping software package. They might record transactions during slow periods or after hours. Unfortunately, entrepreneurs are usually short on time. So ultimately, this routine isn't sustainable for long.
If the owner is not familiar with accounting principles, they might engage an accountant to set up the accounts, teach them the basics and periodically check the work. This solution may not be cost-effective, and owners should compare these costs with hiring a bookkeeper and outsourcing.
As the business grows, transactions increase. When the owner discovers they need help, they should consider outsourcing some or all of the accounting department. Companies may outsource payroll, accounts receivable, accounts payable or any other accounting tasks.
To determine the profitability of outsourcing, management should do a cost analysis to determine the difference in cost between outsourcing and in-house operations.
The analysis includes bids from local and online accounting firms. In-house operations include salaries, taxes, and benefits. And, of course, the additional office equipment associated with the bookkeeping operations to be outsourced.
(Visit this post next to learn even more about the benefits of outsourcing your bookkeeping)
(Speaking of taxes, did you know Two Roads offers year-round tax services for small businesses? Click here to learn more about our comprehensive services)
Since business conditions are constantly changing, management should keep track of outsourcing costs. Be sure to analyze any substantial increase or decrease to determine the reason. Either of these conditions could indicate that an in-house bookkeeping operation would yield a cost reduction.
If you decide an in-house operation is the best option, management should determine the most cost-effective solution. For example, a part-time bookkeeper would cost less than a full-time employee.
In addition, an entry-level bookkeeper begins at the minimum wage, whereas an experienced bookkeeper would receive a higher wage. Don’t overlook the possibility that someone on the administrative staff might be able to do part-time bookkeeping.
Good entrepreneurs know and evaluate all of their options before hiring a bookkeeper.
If we can help in any way to help you make some important decisions about your bookkeeping, please don't hesitate to contact us at Two Roads. Our bookkeeping services include account reconciliation, payroll, financial reporting, bill paying, and more. Don't wait another day to find out firsthand what outsourcing bookkeeping can do for your business.
This post was first published in 2014, but it was updated in 2021 just for you.