Entrepreneurs thrive on a DIY mentality: Do It Yourself, and don’t pay for anything new until you absolutely have to. It’s especially difficult to justify hiring financial help like a bookkeeper.
With user-friendly software such as QuickBooks available, many business owners feel they should be able to do keep their records on their own, even as they wrestle with finding the time and wonder if they’re doing things correctly.
Should you keep your own books? This is a similar question to the question often posed at tax time, whether small business owners should prepare their own tax return?
My answer is yes—if you know what you’re doing, you’re comfortable doing it, and you have time to do it.
Considerations: Startup
If your business is a small startup, or a side business, you should keep your own books. You likely don’t have the money to outsource bookkeeping to someone else and frankly, you wouldn’t get much value out of having someone else do it.
Considerations: Growing Businesses and Beyond
Websites for DIY bookkeeping software such as QuickBooks and Xero show faces of smiling business owners happily keeping their own books. It all looks so easy!
But the reality is, your business will grow to a point where you’ll either:
a) Start getting into things you don’t understand how to account for, or
b) You’ll run out of time to keep up with the bookkeeping
Of course, this isn’t true of all small businesses that grow. A consultant who works with a small number of large clients during the course of the year and who has few expenses beyond supplies and office expense can probably keep his or her own books in a simple spreadsheet indefinitely with no problems.
But for many small businesses, the growth of their business is going to put time constraints on the owner. There will be other priorities, and keeping the books will likely not be one of those priorities. That’s the point when the owner should look at outsourcing the bookkeeping to someone else.
Knowledge is power, even when it comes to the small details. If you don’t have a bookkeeper, you’re probably not being as strategic as you could be in how you spend your money.
When to Hire a Staff Accountant
Many small entrepreneurs can probably stick to outsourcing accounting or bookkeeping services for quite some time. The typical service business can often outsource its chief financial officer tasks and bookkeeping until its revenues rises well above the $1 million mark—or until it has about 30 employees. Until then, most businesses usually don’t have enough work to keep a full-timer busy every day.
Rita Bhayani is a Certified Public Accountant and a Certified Management Accountant practicing at Pleasanton, CA and she protects the clients from the IRS. The above article was compiled with the help of information from various sources. For more information, log on to www.ritacpa.net.