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How to Know When to Hire a Bookkeeper or CPA

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May 26, 2021

There comes a time in your business when it doesn’t make sense for you, as the Business Owner/CEO, to be handling the ongoing bookkeeping.  Or to spend time worrying about filing taxes. But how can you recognize when it’s the best time to hire a bookkeeper and/or CPA?

There’s a big difference between a bookkeeper and a CEO or someone who manages cash flow for the business.  There are things that you don’t need a bookkeeper for. Things they can’t or shouldn’t be expected to do.

Before reading on, you may want to read about this difference in the post You Need More Than Just a Bookkeeper.

But there are times when you need to hire a bookkeeper or CPA.

Before You Hire a Bookkeeper, Know the Difference

Before you decide which to hire, you need to know the difference between the titles.

  • Bookkeeper: a person whose job is to keep records of the financial affairs of a business
  • CPA – Certified Public Accountant: A CPA can hold a wide range of responsibilities in various positions but when you think of hiring a CPA for your small business, it usually relates to taxes.

When Should You Hire a Bookkeeper? 

A bookkeeper is a person that is keeping financial records for the business.  When to hire one is different for every small business.

Because every business is different and is operated by different people. 

You Can WAIT To Hire a Bookkeeper, If…

Sometimes, as the business owner, you are able to put a good system together, you teach yourself how to use software like Quickbooks Online or similar. And you actually don’t mind doing the bookkeeping. 

If that’s you, then ask yourself:

  • Do you feel confident doing it?
  • Do you have the time to do it? 
  • Is it free time that isn’t better spent?
  • Do you enjoy doing it?

If you answered yes to all of these, then keep at it until some of those factors aren’t true anymore. 

I encourage you to evaluate this every so often.  Ask yourself whether you really feel confident in how you’re doing it, do you really have the time to do it, and is your time better spent on something else?

Also, if every time you open Quickbooks you feel a sense of dread, it may be time to hire a bookkeeper.

If you are constantly putting it off and end up a few months behind, it’s time to hire a bookkeeper.

But, otherwise, as long as you’re on track, it’s not prohibiting you from something else, or causing you stress, it might not be time to hire a bookkeeper yet.

You NEED to Hire a Bookkeeper If…

Now, if you are on the other side of that and you hate the idea of numbers.  If Quickbooks confuses you.  If you aren’t sure what “reconcile” even is, let alone how to go through that process each month.  And you don’t have the time to do it yourself…

That’s when I’d say ok, it’s time you hire a bookkeeper.

Here at Steadfast, we see both sides of this all the time. Sometimes we start working on the books for a business from day one because the owner knows they’ll need the help. 

Sometimes we have business owners come to us with a clean set of books or even a good spreadsheet that they’ve been using to do it themselves for a while.  But they know that now is the time to bring someone else on board to do it for them. 

You be the judge of that and figure out when is the best time for you.

Can You Wait on Hiring a CPA?

The primary purpose a small business would use a CPA for is taxes.  I say that you need to hire one from DAY ONE!  

From the very beginning of your business, you should consult with an accountant.  They should file your tax return and maybe even work with you on some tax planning and strategy. 

Why The Big Difference Between When To Hire A Bookkeeper And A CPA? 

Remember, a bookkeeper is recording your financial transactions. Outsourcing to a bookkeeper could result in a cleaner, more accurate set of books.  And while bookkeepers are very skilled in what they do, a CPA is a certified accountant that spends hours and hours and hours each and every year researching and staying up to date on tax code.

This is NOT something you want or should be doing as a business owner. 

There’s a big difference between learning bookkeeping software one time and learning tax code each and every year. The tax code is ever-changing and it’s not something you should be worrying about.

How a CPA Helps Your Small Business

By hiring a CPA to file your tax returns, you’re ensuring that your taxes are done correctly and you have someone on your side guiding you through the entire process.  Not just software asking you a bunch of questions. 

Plus, here at Steadfast, something that we’re really big on is tax planning and strategy. This is where a CPA will work with you throughout the year to make sure you’re doing everything you can to ethically and legally reduce tax liability.  They’re there to guide you through investments.  This helps you to make the best business decisions to help your tax situation.  

And they’ll even look at your business and personal finances as a whole and ensure that your business entity is the best one for you. Maybe you should be an S Corp, etc.

At the end of the day, it’s just not worth the risk or the headache to try and tackle taxes on your own – let a professional handle that for you!

How To Learn More About Your Business Finances

When to hire a bookkeeper versus a CPA is likely one of a thousand business finance questions you will have.  Because we get so many at Steadfast and we see so many business owners struggle through this part of their operations, I put together a workshop to walk you through many of them.

If you want to know how to master your finances without all the accounting mumbo-jumbo that makes your head spin, sign up for the next workshop

In this completely free workshop, we’re going to talk about money mindset, your personal finances, your business finances, and the steps you can take to finally achieve all of your goals! 

 Click Here: thesteadfastmethod.com/workshop to save your spot today!

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