They assist in strategizing so that you can achieve your next business objective and achieve long-term goals. However, it is easy to overlook this integral part to focus on other priorities like meeting clients and filling customer orders – among other things. It’s understandable since those things keep your business running, but bookkeeping is essential.
You need to organize your books a certain way and compile and file all the necessary paperwork on time. The beauty of a bookkeeper is that are already familiar with the business tax laws and regulations. This is their career, so they need to stay on top of it to make a living. So, they are more likely to pay closer attention and know what exactly to do and how to do it.
Scalability and Adaptability to Business Growth
If your accountant also does your bookkeeping, you don’t need to hire a bookkeeper. Some accountants don’t perform bookkeeping tasks, in which case you may want to hire a bookkeeper. Having an accountant that handles both responsibilities can sometimes be more costly. The business is growing and sales are coming in, but it doesn’t seem like you’re making a profit.
Not only does overworking lead to burnout, but every minute you spend on a task has a dollar equivalent. If you see that you’re going to have a cash-flow shortage, you need to know in advance. This will give you time to either apply to a lender for funds or solicit additional capital from investors to avoid the cash deficit.
Using those accurate financial statements, you can monitor key financial metrics, including expenses, inventory costs, sales, and payroll. With accurate statements, you can easily identify potential issues or notice trends where expenses are https://www.bookstime.com/ increasing and your accounts receivable have a large number of outstanding invoices. Every month, your bookkeeper prepares a balance sheet and an income statement, and—depending on what style of accounting you use—a cash flow statement.
Doing the books is taking your time away from productive business activities such as looking for new customers and managing your employees. If you’re hiring an in-house bookkeeper, your costs include their salary and benefits. You can save money by going with an online bookkeeper or a third-party bookkeeper.
Hiring a bookkeeper
Hiring a bookkeeper will allow you to become more organized with your cash flow statements to get a better view of your financial situation. So, hiring an accountant for small business bookkeeping is unnecessary for the day-to-day posting of transactions. You would use your accountant more on an annual basis to review your financial statements and get professional advice. If you’re still doing the books, and they aren’t up to date, how do you know how much to pay for your quarterly estimated taxes? The IRS has stiff penalties for underpayment and late payment of quarterly estimated taxes.
This means that as a founder, your time should be focused on marketing, strategy, funding, and other important areas that need your focus as part of the daily business operations. Between traveling, keeping the startup moving forward, putting out the daily fires that pop up and staying balanced, something most likely gets left out along the way. That way, mistakes will be less likely, as well as issues that could cost you more money. Remember, if you miss a bill or forget to pay something important, this will significantly impact your business credit.
Your bookkeeper is the lynchpin to make sure your financials accurately reflect your company’s financial health. Expanding your business is an exciting time as you see your time and effort paying off in growing sales and increasing profits. But that also leads to another challenge, which how to hire a bookkeeper is how to keep up with all the transactions and keep your financial records in order. It might be time to expand your team with the addition of a bookkeeper. Before you hire a bookkeeper, let’s discover what they do and how they can transform your business to reach the next level.