Hiring a Bookkeeper: Basics for Small Businesses

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Why You Should Hire a Bookkeeper: Bookkeeping Basics for Small Businesses

Do you really need to hire a bookkeeper? If you're a small business owner, the short answer is usually "yes." Access to accurate, up-to-date financial information is the only way to make informed business decisions. Whether you are exploring bookkeeping options for the first time or rethinking your current setup, this guide covers what you need.

Newer business owners sometimes keep their own books, usually to save money. But many of these entrepreneurs drop the ball on their bookkeeping when:

Their business begins to grow
Their focus shifts to other priorities

To dig into why you should hire a bookkeeper, we need to look at what they do. We also need to see how outsourcing your bookkeeping can save time. It can help you stay on top of your finances. It can also reduce stress about the numbers.

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What does a bookkeeper do?

A bookkeeper is responsible for accurately recording, reconciling, and reporting your company's day-to-day business transactions. Good bookkeepers pay close attention to each transaction they handle. Small recordkeeping errors can cause big problems at tax time. Every business needs a bookkeeper. Keeping accurate books shows the financial health of your business. It also helps you stay compliant with tax authorities.

What are a bookkeeper's core tasks?

Their tasks typically include:

Recording your daily sales and expense activities
Performing monthly credit card and bank reconciliations
Generating monthly and annual financial statements like balance sheets, income statements, and statements of cash flow
Ensures your financial records are managed properly
Keeps you apprised of your cash flow situation
Helps you feel confident making decisions involving your business finances

Professional bookkeepers know how to use accounting software and proper accounting methods to organize and track your financial data. Because they use a data entry system to manage financial transactions, a bookkeeper’s core tasks typically include:

Recording daily sales and expense activities
Reconciling credit card and bank accounts
Generating monthly financial statements like balance sheets, income statements, and cash flow statements

What additional duties can a bookkeeper handle?

Depending on your business needs and who you hire, your bookkeeper may also handle payables, receivables, or payroll. In this case, their duties would include:

Recording purchase invoices and making payments to vendors
Sending out client invoices, following up on outstanding amounts, and reconciling payments received
Calculating employee pay and deductions

An experienced bookkeeper can help set up accounting software, file sales tax forms, and prepare end-of-year reports. They can also work with your accountant.

Every business needs a bookkeeper. Keeping accurate books shows your business’s financial health. It also helps you comply with tax authorities. While some small business owners do their own bookkeeping, most soon see the benefits of hiring a professional.

Appreciating what a bookkeeper can do for your business helps you focus on other priorities. These include managing your inventory, your team, and your company’s growth.

Difference between bookkeepers and accountants

Although people often use the terms bookkeeping and accounting interchangeably, each role is quite different.

Bookkeepers manage the data that shows where your business stands financially at any point in time. Accountants can interpret and use that information. Accountants also prepare tax returns and give financial advice. Bookkeepers keep your daily records accurate and up to date.

In addition to reviewing your books, for example, an accountant can see where your business is headed growth and profit-wise, allowing them to advise you in areas like:

Forecasting
Budgeting
Tax preparation and planning

However, you’ll pay a significantly higher price per hour to have an accountant handle your bookkeeping every month than you would a professional bookkeeper.

That’s why most businesses stay on top of their financial data throughout the year by partnering with an experienced bookkeeping organization—and reserve working with an accountant when they need specific financial advice (like during tax season, for example).

Why hire a bookkeeper—instead of just doing it yourself?

There are several excellent reasons why hiring a professional to manage your books will benefit your business.

Bookkeeping takes up valuable time

Unless you’re a bookkeeping consultant, there’s a good chance bookkeeping isn’t your main responsibility—and an equally good reason why it shouldn’t be.

All the valuable time you spend:

Doing data entry in your accounting system
Verifying your cheques have been cashed, or
Splitting out and filing taxes for your accounts receivable and accounts payable transactions

… is time that could be better spent running your business!

If you spend more time than you’d like doing bookkeeping, it’s probably time to bite the bullet and hire a good bookkeeper. By outsourcing your accounting tasks, you can free up more time to market your business, improve operations, or better manage your work-life balance.

Keeping your books up to date can be challenging

Staying on top of your financial activities can be tough, with many priorities vying for your attention as a business owner.

Without proper and timely bookkeeping, however, transactions can pile up and go unrecorded until the end of a financial period. Not only can this lead to mistakes, but key details can also be lost or forgotten.

One of the most important parts of a bookkeeper’s job includes:

Setting up and managing an organized document storage system
Categorizing and recording receipts and invoices based on expense type
Ensuring access to source (supporting) documents for all your transactions should the CRA ask to see them

Hiring a bookkeeper will keep your business audit-ready, and you won’t have to worry about unpaid bills, late fees, or damaged vendor relationships.

By ensuring all your incoming and outgoing transactions are kept up to date, a bookkeeper can also help you build up your business credit, making it easier to secure a loan when you need one.

You are not a numbers person

It isn’t unusual for a business owner to be a jack-or-jill of all trades—or for the complexity of their bookkeeping to grow alongside their business. What is unusual is for a small business owner to also be a trained bookkeeper or “numbers person.”

Taking on the role of DIY bookkeeper typically means having to track and understand:

Debits and credits
Inventory costs and business expenses
Invoices, payroll, tax returns, budgets—and how to do double-entry bookkeeping

The knowledge and commitment required to manage tasks like these can overwhelm even the most enthusiastic entrepreneur!

On the other hand, professional bookkeepers are trained or educated to handle all your high-level financial details, from setting up and customizing your business’s chart of accounts to calculating your sales tax liabilities. Good bookkeepers can even help you interpret your numbers.

You might not need to hire a bookkeeper full-time. However, investing in a part-time bookkeeper—or outsourcing to a professional bookkeeping firm—will help you avoid costly bookkeeping errors while making it easy to stay on top of your financials.

Benefits of hiring a bookkeeper

There are plenty of good reasons to hire a bookkeeper or outsource your accounts to a professional bookkeeping service.

As we’ve discussed, the most important of these is to ensure you always have a complete, up-to-date set of books you can use to generate accurate financial reports, and make more informed business decisions.

Here are two other important benefits of hiring a bookkeeper.

Spotting (and avoiding) potential financial problems.

Because a bookkeeper regularly keeps tabs on the transactions surrounding your company’s expenses and income, they usually have a pretty good idea of what’s going on with your:

Cash inflow and outflow
Spending habits
Sales tax-related activities

This makes them indispensable for keeping you informed about financial issues that may be looming on the horizon—and giving you time to take corrective measures (like reducing or delaying non-essential expenditures, for example).

Equally important, a good bookkeeper can save you from costly record-keeping and tax-filing oversights and mistakes.

Keeping your books organized for year-end

By making sure your books are correct and complete at the end of the year—and that your financial information is ready to share with your accountant—a good bookkeeper also ensures:

You’ll experience less stress come tax time
Your financial data reaches your accountant in plenty of time to both take advantage of any relevant tax deductions and get your returns filed before the deadline
Your business remains audit-ready

How Cloud Technology is changing the role of Bookkeepers

Accounting is steeped in tradition and can sometimes seem resistant to change, particularly when it comes to new technologies. In fact, the impact of new technologies and the ability to adapt to a rapid pace of change are the two biggest challenges facing accounting professionals today, according to a recent Accounting Today survey. However, technological transformation in accounting is nothing new.

Bookkeeping practices have undergone many transformations over the centuries, driven predominantly by technological advancements like adding machines and personal computers.

Desktop accounting software introduced a new way of keeping financial records and running reports. Instead of having to painstakingly transfer information into physical ledgers, businesses could input all their data into a computer and let the software do the heavy lifting in balancing the numbers.

With the proliferation of cloud technology, the bar has been raised even higher. Are traditional bookkeepers at risk of being left behind once and for all?

Cloud Technology Has Already Transformed Bookkeeping

Unlike desktop accounting software, cloud-based software is hosted on remote servers. Instead of having all your data on-site in a local server maintained by the business itself or siloed on a single computer, the data is accessed through the internet using web-based cloud computing accounting software and housed in shared data centres. There are plenty of benefits when accounting data and applications are hosted in the cloud.

Collaboration with team

Collaboration becomes easier as the business, the bookkeeper and other accounting team members can access records and reports in real time from any location, even through mobile devices. Remote access also makes it easier for businesses to outsource their bookkeeping, as the entire accounting process can be shifted online, including all document processing and internal communications.

Improved Security & Back-ups

With greater access also comes better security and control, which is an important consideration for compliance. Typically, cloud accounting applications use encrypted connections, ensuring data is secure as it travels between a business' devices and the cloud data servers.

Similarly, software updates for cloud applications are rolled out faster than updates for desktop applications, which can sometimes take years between updates, so bug and security fixes can also be deployed quickly in the cloud. Not only do you always have the most up-to-date version of any given cloud application, but you also have the most secure version.

Digital Storage

Cloud-based document storage has also created efficiencies for bookkeepers. Instead of having to hang on to countless files filled with paper receipts, invoices and expense forms, documents can be stored securely in purpose-built apps online.

Not only does this free up physical storage space in the office, which is almost always in demand, but searching for those documents is streamlined. Bookkeepers can save hours that would otherwise be spent shuffling papers on higher-level tasks.

Integration with Third-Party Apps

Customization is another key factor, as business-line applications, all working in the cloud, can integrate with other apps and sync seamlessly with data sources like banks. The right mix of integrated apps can create a powerful workflow, shifting the bookkeeper's role from data entry to quality control.

With these integrations, businesses can automate certain bookkeeping tasks like recording expenses, reconciling payments, and collecting timesheets. Cloud-based bookkeeping technologies reduce, and sometimes eliminate entirely, the need for manual data entry. Instead, these applications will allow businesses to sync bank and credit card accounts so that financial transaction data is automatically downloaded.

Bookkeepers Adapting to New Processes

Even though cloud technologies can help bookkeepers, they also make routine accounting tasks faster. Some traditional bookkeepers may be left behind. We’re already seeing cloud technology change how many businesses run their back offices. Many now expect financial data to stay current, easy to access, and accurate.

Gone are the days when small and mid-sized businesses could rely on a mad scramble at tax time to bring their financial records up to date. Now, smart businesses want financial data to be available on demand for forecasting and strategic planning. Bookkeepers need to be aware of these expectations and able to adapt.

We’ve seen how, in many industries, new technologies can replace human jobs with automation, but machines can’t replace the analytical human mind. Instead, new technologies can make life easier for accounting professionals. They reduce repetitive tasks like data entry, manual filing, and routine calculations. This allows them to take on more complex and strategic roles within the business.

By learning to use technology like cloud accounting tools, traditional bookkeepers can keep up as the profession changes.

Whether you’re considering hiring in-house or leveraging external bookkeeping services, you should view the value a bookkeeper provides as a long-term investment: an upfront expense that ultimately saves time and money. Just make sure the person you choose to work with is someone you can rely on. Entrusting the financial details of your business to anyone is a big step. So do your research carefully before you hire a bookkeeper—and remember that Enkel can help.

How to Hire the Right Bookkeeper

Sooner or later, your business will likely need a bookkeeper to help manage your accounting data and tasks. Some business owners do their best to keep their own books as a cost-saving measure (34%—say they manage their bookkeeping personally).

Too often, however, these entrepreneurs do poorly at keeping their records or neglect their books and bank reconciliations in favour of bigger priorities. Either way, they stand to lose time and money when their books fall into disarray and they’re forced to play catch-up.

Hiring a bookkeeper to record and categorize your transactions on a day-to-day basis is the best way to keep your financial information organized and up-to-date so you can:

Manage your cash better
Make realistic plans for the future
Stay focused on running your business

While finding the right professional for your needs can take time, these five pointers on hiring a good bookkeeper will make your job easier.

1. Hire the right type of bookkeeper

Is your small business still in its growth phase? If so, now might not be the best time (expense-wise) to invest in a full-time bookkeeper. Instead, consider a more reasonably priced option, like hiring an in-house bookkeeper part-time or outsourcing your accounting to a third-party firm.

Part-time (or freelance) bookkeepers

Hiring locally for your bookkeeping job can be an affordable way to have a qualified professional:

Come into your office part-time
Manage your physical paperwork
Keep your accounts up to date

There are a few potential drawbacks to this arrangement, however.

If your bookkeeper falls sick or goes on vacation, there'll be no one to cover their work. Worse, figuring out where your accounts are and transitioning to a new bookkeeper will be painful and time-consuming if they suddenly quit or disappear.

There’s also the risk that your business grows too big or too quickly, and your part-time bookkeeper will have trouble scaling with you—especially if they’re juggling multiple clients.

Third-party bookkeepers

Hiring a third-party or virtual firm is another affordable bookkeeping option. While these firms are usually remote (meaning they won’t come to your office), they’re also digitally savvy. That means they can digitize your receipt collection and invoicing processes to make them more efficient.

Another big advantage of working with an outside bookkeeping service is that someone will always be available to manage your books because they typically operate as a team.

Better still, most third-party firms offer additional services—like dedicated payroll, accounts payable, and accounts receivable management, for example—that allow them to meet your changing bookkeeping requirements as your business grows.

2. Verify their industry experience

Because bookkeeping practices differ between industries, the bookkeeper you hire must have verifiable experience with businesses like yours. If they’ve only ever worked with clients in the restaurant industry, for example, they may not know how to keep proper books for a nonprofit organization.

A good bookkeeper should know how to:

Set up your chart of accounts (based on your business type and needs)
Categorize your daily financial transactions
Generate your financial reports

Don’t be afraid to ask where a bookkeeper’s years of experience have been spent—and perhaps even ask them some technical questions.

3. Consider other services they offer

In addition to evaluating their bookkeeping knowledge and skills, learning how to hire a good bookkeeper means weighing the benefits of any add-on services they offer. Hiring someone separately to manage your payroll, for example, can drive up your bookkeeping expenses.

It’s also worth noting that, with bookkeepers and accountants offering different expertise, some firms (like Enkel) also offer specialized services (like fractional controllership) to make your business growth journey easier to navigate.

4. Make sure they’re familiar with accounting technology

Bookkeeping with spreadsheets and Microsoft Excel may work fine when your business is starting out, but relying on manually entered data over time can make accurate financials a challenge.

Good bookkeepers don’t just understand the benefits of using accounting software for keeping books precise and making processes more efficient; they’re also:

Familiar with the desktop software most businesses use
Capable of migrating your books to a cloud-based software like QBO (QuickBooks Online)
Able to recommend apps and technology tools for automating certain data entry tasks

Ask about their familiarity with specific accounting systems and software before hiring an otherwise qualified bookkeeper.

5. Confirm their credibility

Getting a referral from someone you trust can help you judge the credibility of a potential bookkeeping hire. You may also ask if they have any bookkeeping certificates or professional designations. These can show a formal commitment to the field. This might include asking your accountant, banker, other business owners, or local professional association for recommendations.

If you’re considering hiring a bookkeeper you’ve discovered online, it’s especially important to:

Ask for client references and/or case studies showcasing their work
Speak directly with past or existing clients
Use the information you gather to determine their fit and trustworthiness

With 98% of owners agreeing they’d prefer to focus more on business growth than on tasks like bookkeeping, understanding how to hire a good bookkeeper is all about prioritizing your time.

When Should You Hire a Bookkeeper

Knowing when to hire a bookkeeper for your business can mean the difference between falling behind on important accounting tasks and obligations and staying on top of them.

Many business owners start out keeping their books to save money. However, as a business grows, so does the complexity of its bookkeeping. When that happens, even a user-friendly accounting software like QuickBooks can’t save you from feeling perpetually pressed for time—or uncertain about your record-keeping requirements.

Here are a few sure-fire signs that it’s time to get help keeping your books accurate and up-to-date.

Bookkeeping is taking up too much of your time

Even before the pandemic lengthened the average workday, more than 40% of Canadian small business owners worked 50+ hours a week. Are you wondering if you spend too many hours struggling with your bookkeeping?

Try this:

Track the number of hours you allocate to bookkeeping each week
Multiply that number by the hourly rate your time is worth
Compare this result against the going rate for an outsourced bookkeeper

Looking at bookkeeping as a business expense will help you gauge whether it’s the best use of your time.

As Enkel client Lars Kristensen, CEO of NiceJob has noted, “I used to spend my evenings doing the bookkeeping and I would dread the end of every month. But bookkeeping is not an effective use of my time and I am not good at it. My energy is best spent on building the product and growing the business.”

You’re always behind on your bookkeeping

Because business owners often neglect their bookkeeping in favour of more pressing or lucrative tasks, their books often become disorganized and out-of-date. When this happens:

Your books no longer reflect the actual state of your business finances
It gets harder to understand your company’s financial data and overall health
You’re more likely to be “flying blind” when it comes to piloting your organization

Let’s say, for example, that your revenue has been growing, and you want to know how much profit your business earned last quarter. If your COGS (cost of goods sold) and expenses aren’t current, you can’t subtract them from your revenue on a profit and loss (income) statement to determine your quarterly profit.

Outdated books clearly signal that its time to hire a bookkeeper to help manage your bookkeeping tasks.

You lack visibility into your cash flow

Even a growing business can fail due to poor cash flow management. Inaccurate or incomplete books prevent crucial cash flow visibility and compromise your ability to make smart, data-driven decisions.

The only way to know whether your business can afford to hire help or invest in new equipment, for example, is by relying on accurate bookkeeping. Working with an experienced bookkeeper will ensure your books get updated monthly so that you get the visibility you need.

You’re missing important tax deadlines

As your business grows, you’ll likely need to remit sales-related amounts to various tax authorities—especially if you expand nationally or internationally. Without a clean set of books to keep track of your financial obligations:

You won’t know how much you need to pay, when, or to whom
You risk missing filing deadlines
You could incur penalties and late fees

If you’re struggling to stay on top of sales tax deadlines—or to understand how much you owe—it’s a good sign you should be taking advantage of professional bookkeeping services.

You feel stressed during tax season

One of the biggest stressors for business owners come tax time is the state of their books. Too many company heads leave their books more or less untouched all year—only to hand them off to their accountant at year-end.

While it’s true that your accountant can both file taxes and do your bookkeeping for you, the reality is that:

You may have to compete with other clients for your accountant’s time and support during tax season
They may need you to answer questions about months’ worth of uncategorized income or expenses
It could take them many hours to bring your books up to date (especially if your bookkeeping is complex, incomplete, or disorganized)

All in all, you can expect to pay an accountant significantly more per hour than you would a good bookkeeper to catch up on your books at year-end.

If, on the other hand, you work with a bookkeeper regularly to keep your day-to-day transactions in order, they can send your financial statements to (and liaise with) your accountant come tax time, ensuring your returns are filed quickly.

Hiring a bookkeeper

Have you experienced one or more of these five signs we just described? If so, chances are good that the answer to your question of when to hire a bookkeeper is “the sooner, the better.”

Hiring a full-time bookkeeper can be costly, especially if your tasks only require a few hours each week. Hiring a part-time bookkeeper can be risky. They may not scale with your business as it grows. This is especially true if they manage multiple clients.

The best solution in many cases is to outsource your bookkeeping to a professional bookkeeping firm like Enkel until it makes sense to hire an in-house bookkeeper for your organization.

At Enkel, we work with businesses and nonprofit organizations in Vancouver, Victoria, Calgary, Toronto, and other cities across Canada. Get in touch with us to learn more about our bookkeeping services.

Frequently Asked Questions (FAQ)

Here are answers to common questions small business owners ask about bookkeeping and hiring a bookkeeper.

What is the difference between a bookkeeper and an accountant?

Bookkeepers focus on accurately recording and organizing your day-to-day financial transactions — sales, expenses, payroll, and reconciliations. Accountants use that data to prepare tax returns, provide strategic advice, and help with forecasting and budgeting. Most businesses benefit from working with both a bookkeeper year-round and an accountant at key times, such as tax season.

What bookkeeping certificates should I look for when hiring a bookkeeper?

In Canada, recognized bookkeeping certificates include the Certified Professional Bookkeeper (CPB) designation from the Institute of Professional Bookkeepers of Canada (IPBC). Some bookkeepers also hold accounting diplomas or certifications in specific software like QuickBooks. Asking about credentials is a reasonable and recommended step before hiring.

How does bookkeeping connect to my balance sheet and financial statements?

Your bookkeeper is responsible for accurately recording every transaction that eventually flows into your financial statements — including your balance sheet, income statement, and cash flow statement. As we covered in our balance sheet guide, your balance sheet shows your assets, liabilities, and equity. It shows them at a specific point in time. None of that data is reliable without accurate day-to-day bookkeeping behind it.

What does a bookkeeper do on a day-to-day basis?

A bookkeeper handles the accurate recording of daily sales and expenses, monthly bank and credit card reconciliations, accounts payable and receivable, payroll processing, and generating financial reports like balance sheets and income statements. Their attention to detail ensures your records stay clean, compliant, and ready for your accountant at year-end.

When should a small business hire a bookkeeper?

The right time is usually earlier than most business owners expect. Key signs include spending too many hours on bookkeeping yourself, falling behind on records, missing tax deadlines, or lacking visibility into your cash flow. The longer you wait, the more costly it becomes to catch up — both in time and money.

Can a bookkeeper prepare tax returns?

Bookkeepers keep your records organized and up to date throughout the year, but preparing and filing tax returns typically falls within an accountant's scope. That said, a good bookkeeper will make sure your books are clean and complete so your accountant can prepare tax returns quickly and accurately — saving you money on accounting fees.

What is the difference between in-house and outsourced bookkeeping?

An in-house bookkeeper works directly for your business, either full-time or part-time. An outsourced bookkeeping firm handles your accounts remotely as a team, which means continuous coverage and the ability to scale with your business. For most small businesses, outsourcing bookkeeping offers better value, more flexibility, and access to a broader range of expertise.