08 Sep Do You Need a Bookkeeper?
That’s why sole proprietors do the work of janitor, stock clerk, greeter and other tasks in the business’ 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 financial position of the business and chart its future. Although the work requires a competent employee, entrepreneurs may be required to keep the records.
Employer Employs Self
If the owner is familiar with accounting principles, he or she may buy a bookkeeping software package. Transactions may be recorded during slow periods or after hours. Unfortunately, entrepreneurs are usually pressed for time; therefore, this routine cannot be sustained for a long period.
If the owner is not familiar with accounting principles, he or she might engage an accountant to set up the accounts, teach him or her 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.
Outsourcing the Bookkeeping Department
As the business grows, transactions increase. When the owner discovers that help is needed, he or she 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 would include bids from local and online accounting firms. In-house operations would include salaries, taxes, benefits and additional office equipment associated with the bookkeeping operations to be outsourced.
Advantages of Outsourcing
• Cost Effective
• Access to Expert Advice
• Gives Management Time to Focus on Other Business Operations
• Trained Experts Keep Business Compliment with Filing Taxes
Hiring a Bookkeeper
Since business conditions are constantly changing, management should keep track of outsourcing costs. Any substantial increase or decrease should be analyzed to determine the reason. Either of these conditions could indicate that an in-house bookkeeping operation would yield a cost reduction.
If it is determined that an in-house operation is the best option, management should do further analysis to 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 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.
We make your life simple.