10 Jul What’s the True Cost of Doing Your Bookkeeping In-House?
Among all the questions you have as a small business owner, “what’s the cost of bookkeeping in house?” should be moved closer to the top of your list.
If you’ve been running a small business for a few years, your questions have probably evolved.
First, you wonder things like, “Where will my next customer come from?” or “Will I be able to make payroll?” Now, your questions are more along the lines of “How can I leverage my time better?” and “What questions don’t I know to ask that could grow my business faster?”
You might be evaluating how productive and profitable your systems are, including how you’ve been managing your bookkeeping. Many small business owners start out doing their own books. After all, this may save on costs initially. But it also comes at the significant expense of spending time on other efforts that would grow the business, such as marketing or product development.
Maybe you’ve also been wondering, “Where does all my time actually go?”
The answer might come down to what it’s costing your business to keep your bookkeeping in-house.
What’s the true cost of bookkeeping in house?
The truth is a lot of that valuable time could be going to in-house bookkeeping. That means the cost of bookkeeping kept in-house could be a lot greater than you once thought.
While you figure you’re not losing direct dollars by doing your own bookkeeping, this is also time spent that could be billable client hours. Aside from that, time spent on bookkeeping means that you’re not doing other tasks that would grow your business indirectly. This includes things like building customer relationships.
Plus, if you’re a small business owner like Colleen Cruze Bhatti of Cruze Farm, you may find bookkeeping tedious and worry about whether you’re managing it correctly. (Have a look at this post for more on how Cruze Farm grew By outsourcing their bookkeeping services).
Or you might have the sense you could be getting a lot more out of QuickBooks, but you’re not sure which questions to ask or what you are or aren’t doing that might hurt you.
Speaking of QuickBooks, take a look at this post where we discuss why QuickBooks might not match your bank account.
The cost of bookkeeping in house comes down to more than money
The cost of bookkeeping in house isn’t always just financial. It can come at a great expense to the overall success of your business operations.
Some of the biggest headaches business owners deal with when it comes to maintaining their own books include:
- Errors and miscalculations
- Changing regulations and compliance issues
- Staying on top of paperwork and filing
- Preparing for and submitting taxes
- Managing payroll
When is it time to bring in the professionals?
These headaches, plus the amount of time spent on bookkeeping and stress overdoing it right, lead many small business owners to reach the point where they know it’s not smart to continue doing the books themselves. They realize the time has come for professional guidance that will take their business to the next level.
Here are some more signs it’s time to outsource bookkeeping services.
At that point there are two options: hire a staff bookkeeper, or outsource the books.
The average annual base cost of hiring an in-house bookkeeper is $43,591, according to salary.com’s most recent assessment. And that doesn’t include benefits. This is more than what many small business owners want to budget for.
In comparison, outsourcing your bookkeeping is a much more cost-effective way to make sure your books are in order. You’ll have a dedicated professional making sure your books are done right. This frees up your time to grow your business.
How outsourcing bookkeeping helps you save
Hiring a bookkeeping company can also save you money in other ways, such as:
- Tracking all expenses correctly to help you take advantage of all possible tax deductions
- Maintaining comprehensive data that helps you avoid IRS fines
- Tax-ready books save time and cost for your CPA or accountant
- Monthly reconciling of your books with your business bank statement and credit card accounts
- Managing payroll
- Financial support and problem solving
- Budget creation and management
- Cash flow forecasting
Let us help
If you’re a small business owner who’s considering hiring a bookkeeper, come talk to us and find out why clients like Cruze Farm choose Two Roads. We provide friendly, responsive, and proactive financial support and actually enjoy bookkeeping. We are passionate about helping our clients grow their businesses, and we do so by using the right software, by diligently tracking where all money is going, by staying on top of profit and loss reports and keeping a running balance sheet, and by providing tight payroll solutions.
At Two Roads, we have the privilege of doing bookkeeping for hundreds of small business owners who are leaders in their industry. We’d love to talk with you about your vision for your business and how we can help you achieve your goals. Learn more about our services, give us a call at (865) 212-0063, or schedule a call.
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This article was originally published in 2019, but has been updated in July 2020 just for you!