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 own books as a way to save money. As a business grows, however, so too 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 it’s time to get help keeping your books accurate and up-to-date.
1. 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. Wondering if you’re spending too many of those hours struggling with your bookkeeping?
- 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 an actual 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.”
2. You’re always behind on your bookkeeping.
Because business owners often neglect their bookkeeping in favor of more pressing or lucrative tasks, it’s not uncommon for their books to become disorganized and out of date.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 up to date, you can’t subtract them from your revenue on a profit and loss (income) statement to determine your quarterly profit.
Outdated books make a pretty clear statement about when to hire a bookkeeper to help manage your bookkeeping tasks.
3. You lack visibility into your cash flow.
Even a business that’s growing can fail due to poor cash flow management. Inaccurate or incomplete books not only prevent crucial cash flow visibility, but they also 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.
4. You’re missing important tax deadlines.
As your business grows, you’ll likely need to remit sales-related amounts to a variety of 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.
5. 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 tax 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 5 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, however—especially if your tasks only require a few hours each week. Hiring a part-time bookkeeper can also be risky if they are unable to scale alongside your business' growth – especially if they're managing multiple clients.
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.