How many hours do you spend on your books? Are you feeling overwhelmed? Or simply just do not have time to do it? Did you know that bookkeeping will give you time and money? While employing a bookkeeper may be a difficult decision for a small business owner, the decision may be worth it as it could save your business.
The cost of DIY bookkeeping vs. hired bookkeeper
Do you have lots and lots of paperwork that you cannot properly organize? Maybe you have it all figured out, but are still spending too much time every day putting in ledger books or QuickBooks how much you are spending? We can always make more money, but the one thing we will never get back is our time. You’ve probably heard the saying, “time is money.”
As a business owner, your time is also worth money. How much? Well, the answer may depend on many factors. Let’s assume that you are making $50 an hour. Even if you spend 5 hours a month on bookkeeping, you will be paying yourself $50 x 5 hours = $250 a month. If you compare this to hiring a bookkeeper, which will cost you about $195 a month (for BooksTime), you will actually be spending an extra $50 a month by not hiring a bookkeeper.
This cost can dramatically increase if you are not an experienced bookkeeper and not doing your books properly or spending more time to figure out the ins and outs of bookkeeping. You can make a more accurate calculation by recording the time you spend on bookkeeping. Keep in mind that there are indirect costs that are related to you spending time on bookkeeping. Even if you are doing your books accurately, you might not realize that this time could be utilized on:
- Making more money and
- Paying attention to core business operations.
Ways a bookkeeper can save you money
- Manage your growth
As crazy as it might sound, you can make a million and still be at a loss. This can come in as a surprise if you do not do all your paperwork on time and properly. As you might already know, the money you can take home is actually your income minus expenses, which can quickly add up. If you do not organize all your receipts and bank transactions each month and have monthly financial reports prepared, you will not know where you need to make adjustments, e.g., cut spendings (or just pay your bills on time to avoid late payment fees) and where you have good returns and can make even more money.
- Save on taxes
We would all like to avoid taxes, but they are a necessary part of every business. If you do not have all your expenses properly recorded, then during the tax time, you can end up with an over or underestimated income, which will mean that you might be paying more in taxes than you have to. You will also not be able to take advantage of deductions and other write-offs.
Moreover, if there is an audit, you will need to show proper records of everything to avoid penalties and other issues. As a bonus, you will not experience stress associated with taxes and will have to pay your accountant less to do your taxes because all the records will be well organized and correct.
- Reduce payroll tax and other errors
By hiring a bookkeeper, you reduce the probability of making an error with payroll taxes. Payroll is no easy task – remembering to do it on time is one thing, but when you add in the complexity of payroll taxes and associated filings, you quickly realize that a tiny mistake could cause lots of headaches and potential trouble with the IRS. A bookkeeper can easily prevent these and any other possible mistakes and save you money.
- Prevent money theft and fraud
We would all like to believe that our employees and partners are trustworthy. However, years of experience show us that money theft and fraud happen time and time again. Having a bookkeeper to prepare and look over your financials, the likelihood of catching unscrupulous activity goes up substantially.
- Manage accounts receivable
A good bookkeeper will help you to create and send invoices online. This will not only save you on paper and postage but will also make your business look more professional. The most important part is that your bookkeeper will track all the invoices and send reminders to your customers if they do not pay in a timely manner. In the end, your business will have more cash available to run your business instead of it being stuck in your liabilities account.
- Minimize stress
A stressed and burned out business owner will never be able to make the right decisions and make them quickly. Having bookkeeping taken off of your plate will mean that you will have more time to rest, and you will not spread yourself thin on all the other business activities.
When your business really can’t afford a bookkeeper
Today, every business owner understands the importance of keeping their books accurate and up-to-date at all times. Unfortunately, there are times when a business cannot afford a bookkeeper considering their current financial situation.
If you are just starting out and initially have a minimal amount of money, or if you’re in a month-to-month cash crisis, then the best route to go now is to do your best to keep your books as organized and accurate as possible. When you can afford it, have a bookkeeper check your books and, if possible, continue to do your bookkeeping for you.
