You wear many hats as a small business owner—that’s for sure. Knowing how to perform many different functions of your business can be a huge boon to your productivity and efficiency, and help your bottom line, too.
But it can also spread you extremely thin. On top of that, if you’re not a professional in an area that you need 100% accuracy—like, say, your accounting—then you could make mistakes.
So, what should you do about hiring a bookkeeper or doing your books yourself? Is there a universal rule of thumb as to when you should bring in the pros? Not exactly. But you can heed these tips to help you weigh the pros and cons, and make a decision you feel good about.
Doing Your Own Bookkeeping
The Pros
It’s free. The most obvious one: If you do your own finances, you won’t have to pay a fee for a professional to help out or take over.
If you’re early stage, you may not need a pro yet. Some businesses actually have very simple finances, and aren’t yet at a point at which they need professional bookkeeping services. In that case, you wouldn’t have to devote time and money to a pro.
The Cons
You could make easy mistakes. If you’re rushing through your bookkeeping just to get it done so you can move on to the next task, you may make easy mistakes. Those include missing payments or not identifying overdue invoices, both of which can cost you.
You could be leaving money on the table. Your bookkeeper may be able to find cost inefficiencies, redundancies, and other places where you’re leaving money on the table. You may not be trained—or have enough distance from the business—to spot these.
You might not understand your money. Bookkeeping isn’t just about cash in, cash out. Your financial statements all tell a story about your business’s health and whether you’re making the right decisions to set yourself up to succeed both now and in the future. The objective, trained eye of a bookkeeper can help you spot and correct these—without any conflict of interest.
You lose time you could spend doing other tasks. Although you may not have professional expertise in business finances, you likely have a lot of expertise in other areas related to your small business. When you need to devote time to doing your own bookkeeping, however, you’re not able to tend to those other duties.
Hiring a Bookkeeper
The Pros
Bookkeepers will be precise. There’s no way to 100% ensure a bookkeeper will never make a mistake. But, with their training, they’re much less likely to make a careless error or misinterpret something. After all, doing the books is their job—they know common mistakes that occur in small business finance. And they also know how to rectify them.
Bookkeepers can focus on your finances. Have you ever had to pay a late fee on a business credit card bill or business loan, just because you weren’t paying attention or keeping track of when your bills were due? Don’t worry—it happens to many. For a bookkeeper, however, making sure they’re on top of things including late fees is their remit, and they’ll make certain that vendors and bills that need to be paid do so on time.
They can save you money. Beyond making sure that you don’t incur late fees, bookkeepers can make sure you don’t make costly mistakes in your financial record keeping. They’ll keep track of your cash flow, and make sure you don’t overdraft your business bank account balance. They’ll also make sure that you have enough money to make payroll every month. Because if one of your employees leaves, that’s a very costly mistake.
They can teach you something. With their high level of financial expertise, you’ll likely learn something from having a bookkeeper around. Maybe that’s a better way to keep track of things, or a better system to implement for cash management. And the best part is that you don’t have to sit down with them to get schooled.
Your time gets freer. You don’t have to do your own bookkeeping? Great! You can go run your business now.
The Cons
Onboarding takes time. Finding the right bookkeeper is sometimes like business dating. Since trust is such a massive component of a relationship with your bookkeeper, you want to make sure you put in the time to find someone whom you gel with. You can cut this time by getting referrals from peers you trust, however. And then you might have to show your new bookkeeper the ropes, which requires some devoted time, too.
Their services cost money. Surprise! Bookkeepers aren’t free. They’re professionals that need to be paid for their time. Services vary, and you should be able to find someone you trust who fits into your budget. But you’ll need to do that budgeting for it.
You may need new software. If you haven’t been using the right bookkeeping and business accounting software, your bookkeeper may ask you to purchase the software that’s right for your business. Unfortunately, most free accounting programs don’t do the job that most professionals require. It’s not a big investment, usually, but it does have a price tag.
What’s the Verdict?
Although there’s no rule that says you need to hire a bookkeeper, a professional bookkeeper is likely worth the investment. And if not now, then down the line. Often, the cost of a bookkeeper is offset by the time you would be spending on your accounting and the money they can help you save.
As a business owner you should be spending time doing the tasks that bring the most value to your company. Ask yourself if you could be doing something with a higher return than doing your own books. If the answer is yes, or probably, then it’s worth starting your search.
