Start up companies aren't trying to do everything at once, often with one or two people taking on the roles and responsibilities of many jobs. They don't want to outsource until it's critical. Especially bookkeeping.
With the options available online such as QuickBooks, most entrepreneurs think they can handle the books by themselves despite the risk of not getting it right. They are risk takers by default, but are they spending too much time on the details of their finances instead of growing the business? Probably.
As a start up grows, bookkeeping and accounting will become more and more complicated. The business owner who starts out doing his or her own books quickly discovers that a bookkeeper would have done a much better job and saved them untold hours and dollars.
When should a business owner start outsourcing their bookkeeping and what do they look for?
Should I hire an accountant or a bookkeeper?
A competent bookkeeper handles daily hand-ons transactions such as ensuring paperwork is filled out correctly, invoicing, and bill paying. They also keep track of a company's expenses will ensure every penny is accounted for, entered into the bookkeeping software and correctly recorded. This is crucial for preparing a business for tax season and easy creating accurate reports to investors and creditors. A bookkeeper will take all receipts and show exactly how much is going out, and how that compares to the budget and makes sure payments aren't missed or receivables aren't outstanding.
On the other hand, an accountant takes a look at the macro view of the company's finances and provide advice on strategy. Sometimes these duties can be handled by a bookkeeper if they have a CPA or accounting degree. They can give profit and loss statements, file taxes, and "kill two birds with one stone."
An accountant can become a CFO after tax time by strategizing with the owner on moving forward with their present financial situation.
When should I hire a bookkeeper?
Right away. When a start up is in the throws of getting off the ground, the last thing they should be spending time on is bookkeeping. Then, after things settle down a bit, the owner is prepared to take a closer look at what comes next. The books have been nurtured and taken care of from the beginning and there is an accurate view of exactly what's been going on. However, if current books are a mess, it's even more important to bring someone in to straighten them out before the situation gets worse.
Accountants can be utilized during tax time(s) and when making a big decision on securing a loan or line of credit.
Shouldn't I hire an in-house, on-site employee?
Unless your business is making more than $1 million, you will be wasting money on hiring an onsite bookkeeper. There's not enough work to justify that. The Bean Counters Bookkeeping team works with small business owners already established, as well as start ups and all have accounting degrees. We can see the micro and the macro of your business and want to partner with you in growing your business. Give us a call if you'd like to save time, money, and frustrations!