By Katherine Pendrill
One of the best parts of becoming a small business owner is the opportunity to wear many different hats. One moment you’re an outbound sales expert, the next you’re an event planner. But one hat that you probably don’t want to wear is “bookkeeper.”
While many small business owners opt to do their own bookkeeping as a cost-saving measure, this DIY solution often ends up being more costly in the long run. If you’re not a financial expert, which most small business owners aren’t, you’ve likely found yourself spending hours of your time trying to sort out your books. This is time that could have been spent actually running your business or managing your team. In short, DIY bookkeeping stops many businesses from growing.
So what’s the solution? Well, in the words of Steve Jobs, “It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do.” In other words, hiring an outside bookkeeper could be one of the smartest moves you can make as a small business owner. Here are just six of the biggest benefits of outsourcing your bookkeeping.
1. Professional expertise
You may be a business legend, but no matter how successful you are at running your company, you can’t be an expert in everything. In the early stages of building a business, your time is precious, and spending several hours a week trying to understand how to maintain the general ledger is never going to equip you with the level of knowledge and training that a professional bookkeeping service can offer.
When you hire a bookkeeping service, you have access to trained professionals who can help you keep track of your most important financial documents. Bookkeeping requires meticulous analysis and even some legal expertise, which you’ll be grateful for as your business grows and your finances become more complex.
2. Track your financial health
You may think you know where all of your money is going, but if you’re muddling your way through your own books, you’re really just guessing. Indeed, your bank balance may look fine, but that number only shows you a fraction of the picture. Without proper bookkeeping, you have no idea when money is actually coming in and going out.
When you hire a bookkeeper, you’ll have a professional looking at the full financial picture—beyond your bank balance. When you know where money is being spent, where revenue is coming in, and which tax deductions can be claimed which will give you a better picture of the financial health of your business. You’ll not only know when you need to cut back on unnecessary spending, but also when your business starts to turn a profit.
3. Keep compliant
You may think that the worst part of DIY bookkeeping is the time that it takes, but there’s actually a bigger concern: the IRS. Believe it or not, the IRS is constantly updating its rules and regulations, and if you’re not on top of things, you could find yourself facing an audit, hefty fines, or in the worst case, jail time.