Bookkeeping is often considered as one of the more dull aspects of entrepreneurship because you’re spending less time on creating your business and more time on taxes, payroll, and numbers. However, some business owners try to do bookkeeping themselves as a way to cut costs, even if they have no idea what they’re doing.
The truth is, bookkeeping doesn’t have to be a problematic or anxiety-inducing endeavor. For example, if you have an independent contractor as an employee and you need to fill out a 1099 for your own purposes, this 1099 generator can make that process easier. However, if you don’t even know what a W-2, W-4, or 1099 is, you may need to hire a bookkeeper.
Let’s look at some other telltale signs you need to hand over bookkeeping to the professionals.
How to Know You Should Hire a Bookkeeper
You Have Limited Free Time
When you’re starting your business, you likely have to juggle multiple responsibilities like child-care, a full-time job, and eating and sleeping. If you have the capital to hire a bookkeeper, save yourself some time during the day, we recommend doing so.
There are too many things a business needs to accomplish during the day, and delegating this job to another department will help you focus on other aspects of your business. Effective management is incredibly important to entrepreneurs, especially if they’re the only employee. Plus, an inexperienced bookkeeper will take longer to do the same task as a savant.
You Have Limited Knowledge on Taxes and Payroll
Just because you have no personal experience doing your own taxes doesn’t mean you don’t know a thing or two about the process. Most of us have a passing knowledge of what forms an employee needs to get started, which is more than enough experience to start doing your own. However, problems can arise if you don’t have the time to supplement limited research.
If you have no experience, no knowledge, and no time to research how to do your own bookkeeping, it’s always smart to let someone else do it. Otherwise, you could face audits, penalties, or jail time due to improper filing.
You Really Hate Filing Taxes or Doing Payroll
There are plenty of things we have to do that we don’t like to do, it’s a natural part of life, but if you cringe or hold off tax filing to the last minute, you’re better off hiring a bookkeeper. Number crunching and filing taxes is boring for the average individual, which can lead to many mistakes or neglectful filing that could cost you thousands of dollars.
Doing everything yourself is a great goal to have, but it’s also important to understand when something is beyond your expertise or your patience. A bookkeeper is better equipped at filing. Plus, they probably have some passing love for their job.
Why Hiring a Bookkeeper is Usually the Best Choice
Keeps you Focused on Your Business
Passing off bookkeeping to someone else gives you the ability to focus on your business and your core needs. The main reason why CEOs hire employees in the first place is because their business has become too large for them to run by themselves. Having extra help and the capital to spend on that help implies your business is growing – which is a good thing.
Creates a Work-Life Balance
One of the pitfalls of doing everything yourself means having less time for your family, relationships, and hobbies. You’ll be missing out on staying healthy, exercising, and taking care of yourself, which can lead to burning out. Having balance in your life is healthy, so allow yourself to shut yourself off from the business and have fun by hiring more employees or independents.
They’ll See Things you Won’t
While you’re developing your business, you may miss out on the financial aspects of your company you may not be aware of. Plenty of startups will spend too much money in the wrong places, and an experienced bookkeeper who has helped other startups will notice these problems before you do if this is the first business you’ve created.
Keeps Everyone Paid
Let’s be honest: it’s discouraging to see money leave your wallet, no matter who’s getting it. The unpleasant feeling of cash leaving your account can cause you to neglect payroll, but a bookkeeper has no attachment to your personal cash flow. Plus, they can ensure that your employees are paid on time regardless of holidays or time off.
Correct Tax Filing
There is nothing scarier for a business than a call from the IRS explaining that you’ve filed your taxes incorrectly and you’re going to receive an audit. An audit or penalty can cost you thousands of dollars, but your bookkeeper will know how to file your taxes correctly, so the likelihood of the IRS auditing you is slim to none.
Maintains Cash Flow
As a CEO, you’re likely busy and don’t have the time to focus on outstanding payments or maintaining cash flow once your business continues to grow. A bookkeeper will stay on top of this and send out reminders to ensure your cash flow stays optimal. Keeping a record of cash flow will also be helpful in case you seek another round of funding from investors.
Could Repair Relationships with Business Partners
Without outside help, businesses will try and discuss how each partner should spend their money, which could lead to arguments and conflict. A bookkeeper can act as a gatekeeper of the money and a mediator that can decide where to place your funds while also preventing your partners from withdrawing money unnecessarily.
While hiring another employee seems counterproductive in reducing costs, it actually saves you money to have a professional on the team because of the reduced risk of human error. Plus, your time is money, and if you’re spending most of your time balancing your books or dishing out payroll, you’ll spend less time focusing on your business’s needs.
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