Entrepreneurs are independent, strong, creative, and stubborn. We take it all on because our small business is our baby. It doesn’t matter what the task is, from creating new products to taking out the trash, the entrepreneur does it. Why? Because no one else has the passion they have, and no one else knows the business like they do. That entrepreneurial drive is how businesses flourish. But, no one person, no matter how amazing or passionate they are, can do it all forever. Eventually, tasks must be outsourced, or staff hired.
So, when should a small business seek financial assistance? Situations vary, but the answer is usually that you need bookkeeping assistance sooner than you think. Because bookkeeping is not a core part of the mission, it usually gets little attention. Because of this, it is often one of the last tasks thought of when entrepreneurs start looking to outsource. Small business owners are frequently surprised by the benefits of outsourcing financial record keeping sooner than later.
Here are a few key indicators your small business is ready for bookkeeping:
1. All your time is going in to your business.
Growing a business from just an idea take a lot of time and energy. Many small business owners report spending over 60 hours a week on their business, according to a Gallup poll. Especially during the early life of a business, entrepreneurs are pouring their blood, sweat, and tears into making their business a viable one. Your focus during this critical time should be on the core product or service and marketing. Bookkeeping takes valuable time away from growing the business and pursuing your passion.
You make your business happen, and your time is valuable. If you look at the time you spend on record keeping as the cost of income lost, you soon realize the cost of hiring a professional bookkeeper is far less than what you could be earning in that time.
2. Your financial expertise is limited.
Whether it is a coffee shop, online store, or construction company, your business is your passion. Bookkeeping is not. Your attention is on how to sell more widgets or build a better software, not on how to categorize the receipt for this morning’s coffee. When your focus is not on the ins and outs of bookkeeping, there is a greater risk for mistakes. Whether it is the time it takes to correct them, or missed tax deductions, mistakes can be costly.
It is a professional bookkeeper’s job to make sure your transactions are categorized correctly the first time, every time. Professional bookkeepers often work with other clients in the same or similar industries as well, giving them the experience of handling situations beyond those your business has encountered. This means that a quality bookkeeper not only records transactions, but can also advise your business at critical times and provide valuable insights.
3. Late fees are piling up.
As your business grows, time management becomes essential. Inevitably, something will fall through the cracks as you get busier. Unfortunately, one of the things most frequently set aside or forgotten is paying bills. Did you know bookkeepers often provide accounts payable services as well? They do! Accounts payable is typically an add-on service in which a professional bookkeeper handles paying all your monthly bills on time. Not spending time on sending money out means more time (and less stress) for bringing money in.
4. Burnout is setting in.
Being an entrepreneur is a little of everything: you are a business owner, manager, product creator, service provider, bookkeeper, and errand runner. Paying bills and running errands isn’t why you started your business, though, is it? At some point, all these auxiliary tasks can wear a person down. We start our small businesses because of our passion for the product or service we provide, not the books we keep (unless, of course, your business is to keep books). If the tasks that take you away from the main purpose of your business are starting to burn out your fire, it is time to consider outsourcing those tasks that make you less than happy.
5. You use the Shoe box Approach to bookkeeping.
Entrepreneurship is all about self learning. Everybody takes a different approach to educating themselves about bookkeeping for their business. Some go all-in and research or take classes, some buy software and fly by the seat of their pants, and others use the Shoe box Approach. What is that? It is collecting everything together and handing it off to an accountant at tax time. The Shoe box Approach is named such because individuals often gather all their statements and receipts in a shoe box throughout the year and set the box on their accountant’s desk to sort through. Parsing through an entire year’s worth of information all at once requires a lot of time and effort on the CPA’s part. Plus, they can charge a pretty heft hourly rate. Professional bookkeepers typically charge a lower rate than a CPA, saving you money, and keeping your books up monthly, rather than yearly.
6. You’re a new start-up
The start-up phase is one of the most exciting times for any new business. You are putting your entrepreneurial idea in motion, making new contacts, coming to life on social media, and in constant movement. The last thing on your mind is sitting down to think through setting up accounting software or recording all these startup costs. The truth is, there is no better time than the very beginning to consider a bookkeeper. Fixing neglected financials after the fact can be costly, so why not ease your mind knowing it is all done right from the very beginning? Plus, bookkeepers enjoy being a part of a new and growing venture, and you can have a financial advisor by your side from day one.
Bookkeeping is an essential service for any business. Whether it is updated financials, analysis and advice, or just freeing up more of your time, a bookkeeper provides numerous benefits to a small business. Is your business showing any of these signs? At Henggeler Bookkeeping & Consulting, we offer basic bookkeeping services, accounts payable, rescue neglected books, and more, so contact us to see what we can do to help you.