Recognizing the opportune moment to enlist a bookkeeper for your business can distinguish between lagging behind crucial accounting duties and commitments, and effectively managing them.
Numerous entrepreneurs initially manage their own bookkeeping to cut costs. Nonetheless, as a business expands, the intricacy of its financial management also increases. At such junctures, even intuitive accounting software such as QuickBooks may not shield you from constantly feeling rushed or unsure about your record-keeping mandates.
Below are some unmistakable indicators that it's high time to seek assistance in maintaining the accuracy and currency of your financial records.
1. Bookkeeping is consuming an excessive amount of your time
Even prior to the pandemic extending the typical workday, over 40% of Canadian small business proprietors were logging 50+ hours per week. Curious if a substantial portion of those hours is being devoted to grappling with your bookkeeping?
Give this a try:
Monitor the hours you dedicate to bookkeeping every week
Multiply that figure by the hourly rate that reflects the value of your time
Measure this outcome against the prevailing rate for hiring an external bookkeeper
Considering bookkeeping as a legitimate business expense will assist you in determining if it's the most efficient utilization of your time.
2. Your bookkeeping tasks are consistently lagging behind
Due to the tendency of business owners to prioritize more urgent or profitable responsibilities over bookkeeping, it's frequent for their records to become disorganized and outdated.
At such times:
Your financial records no longer accurately depict the current state of your business finances
Comprehending your company's financial data and overall well-being becomes increasingly challenging
You're increasingly prone to navigating your organization without clear insight or direction
For instance, suppose your revenue has been increasing, and you aim to ascertain the quarterly profit your business has generated. Without updated COGS (cost of goods sold) and expenses, you lack the necessary figures to deduct them from your revenue on a profit and loss (income) statement to calculate your quarterly profit.
Obsolete financial records provide a distinct indication of when it's time to enlist a bookkeeper to assist in managing your bookkeeping duties.
3. Your understanding of your cash flow is limited
Even a thriving business can falter as a result of inadequate cash flow management. Inaccurate or incomplete financial records not only hinder essential cash flow visibility but also undermine your capacity to make informed, data-driven decisions.
The sole method to ascertain whether your business can afford to hire assistance or invest in new equipment, for instance, is by depending on precise bookkeeping. Collaborating with a seasoned bookkeeper guarantees monthly updates to your records, providing the necessary visibility.
4. You're failing to meet crucial tax deadlines
As your business expands, you'll probably find yourself obligated to remit sales-related funds to various tax authorities, particularly if you broaden your operations nationally or internationally.
In the absence of organized financial records to monitor your fiscal responsibilities:
You'll lack clarity on the amounts due, their deadlines, and the recipients
You face the possibility of overlooking filing deadlines
You might end up facing penalties and late fees
If you find it challenging to keep abreast of sales tax deadlines, or if understanding your owed amounts proves difficult, it's a clear indicator that you should consider leveraging professional bookkeeping services.
5. Tax season brings about feelings of stress
One of the primary stress factors for business owners during tax season is the condition of their financial records. Many company leaders neglect their books for the majority of the year, only to pass them on to their accountant at the end of the year.
While it's accurate that your accountant can handle both tax filing and bookkeeping tasks, the truth is:
You might find yourself vying with other clients for your accountant's time and assistance during tax season
They might require you to respond to inquiries regarding months' worth of unclassified income or expenses
It might require numerous hours for them to update your financial records, particularly if your bookkeeping is intricate, incomplete, or chaotic.
Overall, you should anticipate paying an accountant significantly more per hour than you would a proficient bookkeeper to reconcile your books at year-end.
Conversely, if you engage with a bookkeeper consistently to maintain the organization of your daily transactions, they can forward your financial statements to your accountant and coordinate with them during tax season, ensuring prompt filing of your returns.
Engaging a Bookkeeper
If you've encountered one or more of the five signs we've just discussed, it's likely that the best answer to your question of when to hire a bookkeeper is "the sooner, the better."
Employing a full-time bookkeeper can incur significant costs, particularly if your needs only demand a few hours per week. On the other hand, hiring a part-time bookkeeper may pose risks if they cannot adapt to your business's expansion, particularly if they are juggling multiple clients.
In numerous instances, the optimal solution is to delegate your bookkeeping tasks to a reputable professional firm such as Bluemount until it becomes viable to hire an in-house bookkeeper for your organization.
Bluemount collaborates with businesses in Vancouver, Kelowna, and Toronto, and various other cities across Canada. Reach out to us to explore further our bookkeeping services.
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