Many entrepreneurs tend to develop a DIY mentality when it comes to starting and maintaining a business. They avoid paying for things that aren’t essential or that they can do by themselves.
Initially, with low workload, handling financial records may be manageable and at the same time – teaches you vital skills as an entrepreneur. The problems arise when this workload increases and the financial situation becomes more complex. At a certain point, it is simply more cost effective to employ a professional or to outsource the bookkeeping to a specialised firm.
Here are some of the main reasons you should consider hiring a bookkeeper for your business:
Time Management
Time is the single, most valuable resource on the planet. If, as a business owner, you take care of your own books – hours of time are likely being invested every week. This is time that could be spent focusing on other areas of the business such as growth, creation and marketing. Additionally, after crunching numbers for hours, your brain is probably not in its most creative state.
An hour of time may be just what you need to come up with the idea for a game changing growth strategy.
As a business owner, you want to be focused on decision making and coming up with the ideas behind the operation. Outsourcing the bookkeeping elsewhere will save you both time and stress, leading to a more productive state of mind.
Expertise
A lot of new business owners don’t have backgrounds in finance or even understand bookkeeping basics such as accounts receivable, accounts payable and the numerous types of taxes. We wrote another article about 5 common bookkeeping mistakes that we often see new business owners making.
More importantly – many do not have the level of interest in the field in order to effectively learn these concepts.
This is why it is important to hire people who have studied the subject and have the required expertise.
People who have studied bookkeeping are also more likely to possess an interest in the subject. This is beneficial as it means they will keep on top of new software, trends and tricks of the trade. Generally, interest results in a higher quality of work.
Expense
For the most part, not hiring a bookkeeper is a way in which new businesses attempt to save money. Sure, it can be a viable strategy to begin with.
When there is yet to be significant financial activity, the time and expertise needed to organise the books, is minimal. This means it may be a cost-efficient decision for a certain amount of time.
With growth, a business will take on more obligations. With this, comes increased financial activity. This means more time invested to bookkeeping and… you get the picture.
Eventually, organising the financial records of a business may be costing you more money than you are saving.
As an entrepreneur starting out, you must consider how much your time is worth to your business. How much time does bookkeeping take away from your core business needs? How much time is wasted due to inexperience?
With more financial records to deal with – there is a greater chance of making costly mistakes that come with lack of experience or expertise. Mistakes such as missing bills, tax calculation errors or late payments will become more frequent and expensive.
When considering all these factors, it is easy to understand why once your business reaches a certain size – hiring a professional bookkeeper is a more affordable option than doing it yourself.
Employee or independent contractor bookkeepers?
So, your business is growing – and you’ve decided you want to use a professional to help with the bookkeeping. The dilemma you have now is whether to hire a full-time employee or to outsource the work to a bookkeeping company.
Generally, for most new entrepreneurs, hiring full time employees to handle the bookkeeping is too limiting of a process.
Many small businesses simply cannot afford to make the wrong choice in a hire. Furthermore, they may not currently have the resources to pay employee benefits or a HR team to manage the hiring process.
Another issue is that with seasonal up and downs, an employee will have periods of time where they have little to do. They will still have to be paid for their time whereas with independent contractors – you are paying for the time taken to complete specific work.
Especially with the trajectory of the global economy, amid the Corona Virus pandemic – hiring an independent contractor rather than an employee is recommended.
Conclusion
Ultimately, your time as entrepreneur is best spent doing what you do best. Why did you initially start up your business? What qualities do you have that make you a good entrepreneur? The answers to these questions are likely not to do with your bookkeeping skills. These qualities are what you should focus on as a business owner.
The same principle applies for a bookkeeper. They focus on what they do best – which is handling the financial records and responsibilities of a business.
They enjoy what they do, and you should enjoy what you do too. Lead your company to future success and hire a bookkeeper to record that success.
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