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What are the Appropriate Circumstances for Hiring a Bookkeeper?

Understanding the appropriate timing to engage a bookkeeper for your business can determine whether you stay ahead of crucial accounting tasks and responsibilities or risk falling behind.

While numerous business owners initially handle their own bookkeeping to cut costs, as a business expands, the intricacy of its bookkeeping also increases. During such instances, relying solely on user-friendly accounting software like QuickBooks might not alleviate the pressure of time constraints or provide clarity on record-keeping obligations.

Here are a few unmistakable indications that it's time to seek assistance in maintaining accurate and current bookkeeping records.

Circumstances for Hiring a Bookkeeper

Circumstances for Hiring a Bookkeeper

1. Bookkeeping is Consuming an Excessive Amount of Your Time:

Even prior to the pandemic, when the average workday was extended, over 40% of Canadian small business owners were putting in 50+ hours per week. Are you questioning whether a significant portion of those hours is being spent grappling with your bookkeeping?

Try this:

  • Monitor the number of hours you dedicate to bookkeeping on a weekly basis.

  • Calculate the total by multiplying this number by the hourly rate that represents the value of your time.

  • Compare the resulting value with the prevailing rate charged by outsourced bookkeepers.

Considering bookkeeping as a legitimate business expense will enable you to evaluate whether it is the most efficient utilization of your time.

In the words of Lars Kristensen, CEO of Nice Job and an Enkel client, "I used to dedicate my evenings to bookkeeping, and every month's end would be a source of dread. However, I realized that bookkeeping is neither an efficient use of my time nor a task I excel at. I have found that my energy is better directed towards developing the product and expanding the business."

2. You Consistently Find Yourself Lagging on Your Bookkeeping Tasks:

Due to the tendency of business owners to prioritize more urgent or financially rewarding activities, it is not uncommon for their bookkeeping to be neglected, resulting in disorganized and outdated records.

When this occurs:

  • The current state of your business finances is no longer accurately represented in your books.

  • Comprehending your company's financial data and overall health becomes increasingly challenging.

  • There is a higher probability of navigating your organization without proper guidance or insight, akin to "flying blind''.

To illustrate, suppose your business has experienced revenue growth, and you wish to ascertain the profitability of the previous quarter. However, if your cost of goods sold (COGS) and expenses are not kept current, you won't be able to deduct them from your revenue on a profit and loss (income) statement, making it impossible to determine your quarterly profit accurately.

Outdated books serve as a clear indicator of the right time to engage a bookkeeper to assist in managing your bookkeeping tasks.

3. You have Limited Visibility into Your Cash Flow:

Poor cash flow management can lead to the failure of even a growing business. Inaccurate or incomplete books not only hinder essential cash flow visibility but also undermine your capacity to make informed, data-driven decisions.

To determine if your business can afford to hire assistance or make investments in new equipment, accurate bookkeeping is essential. By collaborating with an experienced bookkeeper, you can ensure that your books are updated on a monthly basis, providing you with the necessary visibility to make informed decisions.

Cash Flow

4. You consistently miss significant tax deadlines.

As your business expands, it is probable that you will need to submit sales-related payments to various tax authorities, particularly if you venture into national or international markets.

In the absence of a well-maintained set of books to monitor your financial obligations:

  • You will lack clarity on the amount, timing, and recipients of your payments.

  • There is a heightened risk of overlooking filing deadlines.

  • You may incur penalties and late fees consequently.

When you find it challenging to meet sales tax deadlines or determine the accurate amount you owe, it serves as a strong indication that you should consider utilizing professional bookkeeping services.

5. Tax season causes you significant stress.

One of the primary sources of stress for business owners during tax season is the condition of their books. Many business leaders neglect their books throughout the year, only to pass them on to their accountant at the end of the year with minimal attention.

Although it is possible for your accountant to handle both tax filing and bookkeeping tasks, the reality is that:

  • During tax season, you may find yourself competing with other clients for your accountant's time and assistance.

  • They may require you to provide answers regarding months' worth of uncategorized income or expenses.

  • Bringing your books up to date could take them numerous hours, especially if your bookkeeping is intricate, incomplete, or disorganized.

Overall, you should anticipate paying an accountant substantially more per hour compared to a competent bookkeeper when it comes to catching up on your books at the end of the year.

On the contrary, if you collaborate with a bookkeeper on a regular basis to maintain the organization of your day-to-day transactions, they can send your financial statements to your accountant and act as a point of contact during tax season, guaranteeing swift filing of your returns.

Engaging the Services of a Bookkeeper.

If you have encountered one or more of the signs we just discussed, it is highly likely that the best course of action regarding the timing of hiring a bookkeeper is "the sooner, the better."

Employing a full-time bookkeeper can be expensive, particularly if your bookkeeping needs only entail a few hours per week. Similarly, hiring a part-time bookkeeper carries its own risks, especially if they are unable to accommodate the growth of your business, particularly if they are managing multiple clients simultaneously.


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