Why to Hire a Professional Bookkeeper
Written By Geoff Burns
According to the Small Business Administration, 67% of all businesses fail within the first 10 years. The primary reason for this is lack of cash flow. In fact, 82% of businesses that fail, do so because of cash flow problems. In addition to cash flow problems, poor or inadequate management often contributes to the demise of a small business. Today, we are going to look at some indicators that show when it may be time to invest in a professional bookkeeper and why Entrepreneur Magazine says that a bookkeeper should be the first thing you outsource in your business.
Time is Money
As a business owner, what is your time worth? Are you increasing sales and improving processes when you are working on your books? Obviously not. So why are you spending your valuable time on bookkeeping?
Your most valuable asset is your time. If you spend 10 hours each week on bookkeeping and you hope to make $100/hour on your time investment in your business, that means that by managing your own books, your time investment is worth approximately $4,000 each month. Unless you cannot find a better bookkeeper than yourself, how can you better use your time?
Cash is King
Are you constantly trying to collect outstanding balances and missing payments? Do you wonder if there is enough cash to pay staff? Cash flow problems are the most common cause of business failure. What is it worth to delegate the responsibility of preparing weekly reports and bills for payment? Do you have an efficient system in place that allows you to collect from your customers and clients while ensuring that you pay your obligations in a timely fashion?
Are my Books Accurate?
Do you know the answer to that question? Do you spend time asking yourself that same thing? Are you still mixing business and personal expenses in the same accounts?
The Value of a Great Bookkeeper
We are not talking about simply hiring your sibling or your spouse to manage your books. While that is a common approach to managing the books for many business owners, a professional bookkeeper is much more than a receipt manager.
A professional bookkeeper works with your CPA to customize your chart of accounts (COA) and prepares your standard financial reports along with any industry specific reporting needs. A professional bookkeeper will get your books cleaned up, caught up and categorized correctly. A professional bookkeeper is invested in the success of your business and is a critical member of your team.
The value of a professional bookkeeper is about $67,000 with taxes and benefits, if you are looking to hire an in-house full-time bookkeeper. Outsourcing your bookkeeping can save you significant time and money. A professional bookkeeper will screen you as much as you should screen your potential bookkeeper. That is because a professional wants to know that you are serious about your business and that there is a mutual benefit. Your investment in a professional bookkeeper can be the difference between growing your business and closing your doors.
Business owners have enough to do managing the business and interacting with clients and customers. Many business owners struggle to maintain accurate books and manage their business as well as they could. A professional bookkeeper should be an asset to a business. However, if you are looking to hire a professional bookkeeper, make sure you do your homework.
You should consider a background check and a credit check of any potential independent bookkeepers. Most firms have already done this, but it is a good idea to check.
If price is your primary concern, then you may need to re-think your priorities. Many of the best bookkeepers will not compete on price. There will always be a cheaper option. Make sure you are comfortable and don’t settle. Do you homework and make sure you have the right person. The right investment will pay dividends in the long run.