When you’re busy juggling your business’s daily operations, sales, and marketing, it can be tough to find time for yourself — let alone bookkeeping. So how do you know if you need a bookkeeper or if you should handle it yourself?
In this article, we’ll break down the difference between DIY bookkeeping and professional bookkeeping. Plus, we’ll share what a bookkeeper does so you can make the best decision for your business.
In this article:
- Why bookkeeping is crucial for small businesses
- Can I do my own bookkeeping?
- What does a professional bookkeeper do?
- 5 benefits of hiring a bookkeeper for your small business
- How to choose the right bookkeeper for your small business
- Bookkeeping services designed for entrepreneurs
Why bookkeeping is crucial for small businesses
A yearly check-up can help you spot the early signs of a threatening illness and save your life. Similarly, doing your bookkeeping on a regular basis can give you clarity about important business decisions. This clarity will let you know when you need to change course — and before things spiral out of control.
Accurate and consistent bookkeeping gives small business owners a clear picture of their financial health. As a result, they’re able to understand expenses, identify unnecessary costs, optimize their budget, and ensure compliance with tax regulations.
Can I do my own bookkeeping?
You might be wondering if you actually need a bookkeeper — or if you can figure it out yourself.
DIY bookkeeping involves managing your business’s financial records on your own or assigning tasks to an employee (like a virtual assistant) without formal bookkeeping training. If you’re new to business or have a limited number of financial transactions to manage, then this might be the right choice for you.
That said, DIY bookkeeping can present some major challenges:
- Time commitment: If you’re an entrepreneur, you know time = money. As a CEO, your job is to run your business and lead your team, not drown in spreadsheets.
- Learning curve: Bookkeeping requires a deep knowledge of accounting principles, software, and tax regulations — a single YouTube video or a weekend deep-dive won’t be enough to learn this skill.
- Potential errors: Inaccurate or incomplete bookkeeping can lead to financial discrepancies, tax issues, and misinformed decision-making. Not to mention, fixing bookkeeping mistakes can be an extremely costly and time-consuming process.
What does a professional bookkeeper do?
The more your business grows, the more complex bookkeeping can become. For some small businesses, that could mean 20+ hours a month dedicated to handling your books.
A professional bookkeeper will take those hours off your plate and handle a range of tasks, including:
- Record and categorize financial transactions
- Generate business financial statements (income statement, balance sheet, cash flow statement)
- Reconcile bank statements and credit card transactions
- Monitor cash flow and budgeting
- Assist with tax preparation and compliance
- Streamline financial processes and make technology recommendations
The right bookkeeper can also become a trusted partner that grows with your company. You could eventually hand off day-to-day financial management, including payroll, accounts payable, and accounts receivable.
5 benefits of hiring a bookkeeper for your small business
Ultimately, deciding if you need a bookkeeper will come down to how you want to manage your time. Doing it yourself can be cost-effective in the short term. However, outsourcing your bookkeeping ensures that it’s done accurately and that you always have the data you need to make decisions. In the long term, that can save you a lot of money.
Here are five more reasons to work with a small business bookkeeper:
1. Understand your cash flow
Bookkeepers make sure your business’s cash inflows and outflows are properly accounted for. As a result, you’ll be able to spot trends, look at the big picture, and gain actionable insights — instead of spending hours trying to understand your accounting software.
2. Grow your business faster
Your bookkeeper can help you unlock the door to new, undiscovered business growth. Armed with insightful financial reports, you can identify profitable opportunities and wasteful spending patterns. The result? You’ll find your business expanding in ways you never expected, finally overcoming that revenue plateau.
3. No more tax season stress
If you’re not clear on what you’re earning, spending, and saving in your business, you could find yourself stuck with a surprise tax bill come April. However, if your bookkeeping is consistently completed — and accurate — you’ll be able to pay your quarterly estimated tax payments with confidence. Plus, tax preparation will be a breeze: no more last-minute searches for all your business expenses.
4. Plan for the future
Wondering when you’ll be able to make your next hire or finally invest in that coaching program? A bookkeeper will make sure your financial data is up-to-date and accurate, giving you everything you need to create a strategic, data-backed plan for future spending and saving.
You’ll also be able to understand your business’s financial trends over time and prepare better for historically slow (or super-busy) seasons. Instead of constantly worrying about cash flow, you’ll be able to trust what your financial reports say and move forward accordingly.
5. Streamline processes and simplify scaling
If you’ve ever experienced rapid business growth, you know how tough it can be to scale disorganized processes. A bookkeeper can help you streamline financial operations like data entry, expense tracking and categorization, and bank reconciliation. Then, when growth happens, you’ll be able to stay on top of cash flow with ease — instead of constantly wondering where your money is going.
How to choose the right bookkeeper for your small business
If you’ve realized you do need a bookkeeper for your small business, it’s time to find the right teammate. Finding someone you can trust with your business’s financial information is essential, so it’s okay to take your time in this process.
Stellar communication skills, great references or testimonials, and a collaborative attitude are all important traits to look for in a bookkeeper. You may also want to work with someone that has experience with clients in your industry — especially if you own an online business.
Bookkeeping services designed for entrepreneurs
Here at Prosperity First, we specialize in Profit First bookkeeping services for coaches, online marketing agencies, PR firms, and other self-employed service providers.
So if you’ve decided “YES,” you need a bookkeeper for your small business — hooray! Let me introduce myself: I’m Shaneh Woods, and I’m the CEO of Prosperity First.
If you’re tired of traditional accountants and bookkeepers who only see the numbers and not the soul behind them, then you’re in the right place. I want to help you take your business to the next level and make it f*cking FUN every step of the way. To get started, you can book a FREE clarity call with me here. I can’t wait to meet you!