Last week we talked about who needs bookkeeping and what the difference between a bookkeeper and a CPA even is.
This week, I want to talk about when you should consider hiring a bookkeeper or a CPA. Now, since I’m a bookkeeper and I offer bookkeeping services, you might think I’m just going to say “now” but that’s not necessarily true. My belief is that every small business owner should be able to hand off their bookkeeping at some point but that is different for everyone.
For me personally, I don’t think there is a magic number that says, “Ok, you’ve made it this far, now it’s time for a bookkeeper”. I don’t think there is a number of months or years that you reach that all the sudden justifies hiring a bookkeeper either. I really think it comes down to a few key things – I’m going to break it down between knowledge, emotions and efficiency.
So, you don’t have an Accounting, degree? That’s ok. That’s not really the knowledge I’m talking about right now anyways. I want you to think about how much you really know about what is going on with your business finances. I’ve got a great training in the works about reading your financial statements and really knowing what they mean and I based these questions off of a lot of the info I’ll be talking about in that training when it comes out. I want you to answer these few questions honestly and with a simple yes or no.
Do I know how much sales income my business made last month?
If yes, do I know where that income came from specifically? (What services or products)
Do I know if my sales were up or down from last month?
Do I know how much I spent to produce the services or products I’m selling (Cost of Goods Sold)?
Do I know how much I spent on expenses, whether recurring or one time purchases?
If yes, do I know specifically what I spent money on?
Do I know if my expenses were up or down from last month?
Do I know if my bottom line was a profit or a loss?
If yes, do I know how that compares to last month’s profit or loss?
Do I know what people owe me and what I owe to others?
Do I know how much debt my business has and if so, do I have a plan to pay it off?
If you answered no to any of these questions, I’d urge you to either consider hiring a bookkeeper or at least consider some consulting such as my Bookkeeping Breakthrough Sessions so you can confidently answer yes to these questions! Answering yes to these questions is essential in running a business and knowing how you’re doing, where you’re going and how you should be proceeding. Our bookkeeping services include monthly financial reports which break down all of the info I asked about above so you always have this info at your fingertips and we’re always here to go into more detail about what is on your reports if you wish.
What do your emotions have to do with bookkeeping? Well, a lot actually. I’ve got a few more questions here that I want you to answer with an honest yes or no.
Do I enjoy doing my bookkeeping?
Do I feel confident in the bookkeeping system that is set in place right now?
Do I feel at ease when preparing for tax season, knowing everything is accounted for already and just needs to be handed over to my CPA?
Do I have peace of mind when it comes time to make a big purchase for my business knowing that the money is available because all of my bookkeeping is up to date?
Do I feel like bookkeeping comes natural and it does not cause me frustration?
If you answered no to any of these questions, I again am going to recommend that you consider hiring a bookkeeper so that you can start to answer yes to these questions. Whether you want someone to handle everything or whether you want an extra boost of confidence each month knowing what you’ve done is correct, check out our services to see how we can help.
I love the definitions of the word efficient. They say things like “achieving maximum productivity with minimum wasted effort” and “working in a well organized and competent way”. Isn’t that the dream for our businesses? We want to achieve maximum productivity, but we don’t want to waste too much time or effort doing it and we ultimately want to run like a well oiled machine, right? Here’s some questions on efficiency that I want you to answer with an honest yes or no.
Do I have plenty of time to keep my books up to date?
Am I able to complete bookkeeping tasks without it affecting time I should be spending on client work or creating new products?
Am I able to complete bookkeeping tasks in normal working hours without it taking away from time with family & friends or even time away from sleeping?
Am I able to complete my bookkeeping tasks quickly but effectively at the same time?
Do I feel like the hours I spend on my bookkeeping is saving me money and worth it not to have to pay someone else to do it?
If yes, have you calculated the cost of doing your own bookkeeping and figured out how much revenue you could be bringing in that same amount of time?
By this point, I guess you know what I’m going to say. If you answered NO to any of these questions, it’s probably time you hire a bookkeeper. Why would you let bookkeeping hold you back from booking one more client or selling a few more products? Why would you stay up half the night trying to do it when you could just hand it off and know it’s taken care of? Be efficient in your business and make decisions that continue to increase that efficiency not take away from it.
If you were able to answer YES to these questions, then you are a rockstar and it sounds like you already have a great bookkeeping system in place and you should be proud – go you! If you answered yes to some or most of the questions but feel like you could improve in some areas, that’s ok – go ahead and take that first step and make a difference in your business.