Hiring the wrong bookkeeper can be very costly. A knowledgeable bookkeeping firm is the bridge between your in-house staff and your tax preparer. Having one person try to do all the in-house finances, payroll, bookkeeping and tax preparation or CPA work is a recipe for disaster. Here are seven signs you need a bookkeeper or have hired the wrong one.
Bookkeeping takes you away from what you do best – running your business.You need to focus on your customers, your sales, and your operations. The paperwork takes time and energy away from what you do best. No one can run your business or sell your products like you can. Unless you are a natural, leave the tedious paperwork up to someone else. Just be sure that ‘someone else’ is qualified to do it.
- You are not a numbers and paperwork person.You know how to produce and sell and you have your operations down to a science, but numbers are not your game and the thought of sitting at the desk for hours doing paperwork makes you want to jump in your skid loader and go move a dirt pile just for the sake of not being at your desk.
- Your bankers or investors want professional financial reports.Businesses often rely on the bank for financing startup costs, growth, and bridging cash flow needs. Banks require accurate financial reports and forecasts to make funding decisions. Your investors will want to see how their investment is performing. Professional, accurate and complete financial reports are a must.
- You hired employees.Employment and payroll tax laws are complicated and you want to be sure you are in compliance. Your off the shelf software may make processing the payroll appear easy, but it doesn’t ensure you set up your payroll correctly, file your taxes for you, or tell you if how you are paying your employees is legal. It willcalculate the payroll based on how you set it up and if you make an error, so will your software. Most likely it will not tell you the data is entered wrong and therefore calculating incorrectly either.
- You are growing.Perhaps you started as a small operation or one man show and now your sales base is growing and so are your employees and vendors. You need to understand if that growth is profitable and if your expenses are in line with your industry. You might need to track more closely what segments of your business are contributing to your profitability and what might be hurting it. Detailed reports can provide critical insights about your profitability.
- You want confidentiality.You may have a great staff, but you do not want them knowing the details of your business, its profitability, or what other staff members are paid.
A payroll platform, for example can allow for your staff to enter payroll hours and add new employees while hiding confidential information such as pay rates, and benefits information. Bookkeeping software can be set up to allow for only certain permissions and information by user. A bookkeeping firm can recommend the right platforms and set them up as well as perform some or all of the actual work.
- You think outsourcing your bookkeeping is too expensive.One of the most costly things you can do is to hire someone unqualified to do your books. You may hire someone with accounting experience, but when it comes to proper set up, the detailed reporting, calculating and filing employment and sales taxes, payroll tax and employment laws, they may not have the knowledge required to accurately perform those duties.
The results can be very expensive and include inaccurate information about your business which could lead to wrong decisions, costly tax penalties, employment law violations, and paying thousands more to have the work corrected.
The solution for many small businesses who want to control costs and ensure accurate financial and tax reporting is a combination of in-house staff and a professional bookkeeping service. The professionals can set and perform the higher level functions, and provide report services to give you the best information about your business. They can also assist with in-house staff training and oversight to avoid those costly mistakes.