Bookkeeping Defined
If you’re a small business and thinking of hiring a bookkeeper, it’s important that you first understand what bookkeeping is and how it can benefit your business. Simply said, bookkeeping involves managing your business’ books, recording all transactions. Whether it be a sale or an expense, it should be recorded. A bookkeeper is someone responsible for keeping track of all the finances – oftentimes, this process involves making use of bookkeeping software. When done properly, the business owner will be able to make accurate financial decisions with the use of the information provided in the books. These bits of information can also be used to help the business file taxes, secure loans, and even show the company’s health financially. With that being said, keeping the books accurate and up-to-date plays a very important role, no matter the size of your business.
Should I Hire A Bookkeeper?
Always bear in mind that bookkeeping requires a lot of time. Maintaining and balancing your books can usually take a huge chunk of your time, especially if you have a lot of financial transactions. With that being said, if you have a limited number of transactions, hiring a bookkeeper may not be necessarily needed. To make it easier to understand, here are some examples :
Example #1: I own a small sole proprietorship business offering services. I run the business alone and have no employees with about 12 monthly transactions. With that small amount of expenses and invoices, I would only need about 1 hour every month to work on my books.
Example #2: I own an online e-commerce store and sell products. On average, I buy 200 products and sell all of them within that month. With about 400 transactions (buy and sell), it would take me 8 hours per month to do the books.
In general, there’s no specific number of hours that tells you that you’ll need to hire a bookkeeper. The only thing that you should always take into consideration as a deciding factor is whether keeping up with your books takes too much of your time. If you’ve been spending time on your books more and less on your business operations, you may want to consider hiring a bookkeeper. This way, you can focus on more important things and delegate the task of managing your books to someone with extensive experience in the field.
Another reason why you may want to consider hiring a bookkeeper is when you, the business owner, have little to no background when it comes to accounting. Accounting is a crucial knowledge that you need to have to be able to efficiently manage your books. Someone without account experience and knowledge may find it difficult to take care of complex transactions. Someone with extensive experience in this background may help you and your business to accurately take care of your books.
Various factors can take into account a business’s books to become more complex. The more that the books get complex, the longer the time it would take to maintain these books. Here are some of the most common factors that are to be taken into account:
Inventory
Payroll system (total number of employees)
Fixed assets such as buildings, furniture, cars, and equipment)
Product manufacturing
Advantages Why You Should Hire An Outside Bookkeeper
By hiring an outside bookkeeper, one of the benefits would be the time that you can save. You don’t have to worry about the tedious tasks of managing your books, but instead, you can focus your efforts and your time on running your business alone. Bookkeepers are equipped with the knowledge and trained to make sure that your books remain balanced and accurate. You’ll also have the peace of mind that you’ll make the correct financial decision because of the accurate information that’s provided in the books. While it’s true that a bookkeeper is an added expense to your business, you’ll have the peace of mind and get the burden off your shoulder of managing your transactions – these are things that money can’t buy.
As you can see, even small businesses can take advantage of hiring an outside bookkeeper. However, take into account the amount that you’re spending on this service. It may go up or it can get cheaper, depending on your books’ organization and format as well. If you have an entire box full of receipts, expect your bookkeeping services to be a bit more expensive as compared to those that have digital receipts.