Do you think it could be time to hire a bookkeeper? You might be surprised to learn that there are objective tests to help you answer this question.
Business owners often seek me out for a consultation when they think it may be time for money management help. When we talk, I always review these five key questions. Answering is easy, and you’ll know right away if now is the right time for bookkeeping support!
Sign 1
Time you need to spend working on the books is taking you away from time you need to spend working on the business. It’s the classic first sign.
Consider this: Measure the cost of your time with the books. First, determine how much your time is worth. Next, track your hours and parse out how your time is spent on each aspect of the business. Now, calculate how many dollars you are spending on bookkeeping. How does that cost compare to what you would pay a professional?
Sign 2
You rarely have the books consistently up-to-date. How much time has passed? Weeks? Months? If you’re not up to date on cash flow, how do you know the true health of your business?
Consider this: We know you know—the longer it’s been the less clear the picture. Try measuring the costs of goods sold. You need that number to subtract from your revenue in order to determine your profit. Is the number good, or was it tough to figure out because it’s been that long since you worked on the books?
Sign 3
Your accountant that helps at tax time is the one doing your bookkeeping. Have the books been relatively untouched until tax season is underway, and then (you hope) your accountant can figure it out retroactively to manage a return?
Consider this: Do you have detailed, month-to-month financial records? If the time comes and you need to secure a loan, bring in partners, or sell the business, you’re going to need them. This is not necessarily something your tax CPA can do for you. And if they do, it can get expensive.
Sign 4
Sales have increased, but not profits.
Consider this: The answer to how to increase profits is most likely found by looking at the books. Up-to-date financial records will help you recognize where to cut costs.
Sign 5
You’re paying quarterly estimated taxes—heavy emphasis on “estimated.”
Consider this: Knowing your average month-to-month income is how you determine quarterly estimated taxes. When the estimate is way off, you end up getting fined for underpayments or practically giving away money with over-payments. If either scenario occurs often, it a sure sign it’s time for more stringent bookkeeping.
If all signs point you in the direction of needing help, Brigade Bookkeeping can be your partner. We’re known as the trustworthy professional bookkeeping and accounting firm that helps alleviate the stress of bookkeeping and accounting so you can concentrate on doing what you do best.
Additional Source:
“Signs You Need to Hire a Bookkeeper” by Bryce Warnes
In the next edition of our blog, we explore another aspect about hiring a bookkeeper: Is an internal hire or outsourced help best for your business?
