Is bookkeeping dominating your time, giving you inaccurate data to work with, and potentially costing your business thousands of dollars?
If you’re managing your own books, I already know the answer—yes.
As both a business owner and certified public accountant (CPA), I understand the challenge of maintaining your books year after year. On one hand, a hired bookkeeper can devote more time to your accounting records, prevent trouble with the IRS, and even help you save on taxes. On the other hand, you know your business best, right?
But today, I’m going to share why it’s almost always a bad idea to do your own bookkeeping. There is one exception to this rule, of course, and I’ll get to that shortly.
Here’s the thing. Bookkeeping is a blind spot for most business owners, and if you’re not on top of everything, it’s very easy to lose track of receivables, overpay vendors, and pay way too much money in taxes.
Worse yet, if your books aren’t in order, you won’t have the data you need to react to changing circumstances in your business and your market. One way or another, bad accounting records will cost you money.
So, what’s the solution? Should you spend more time scrutinizing your books and tracking every last dollar that goes in and out of your business?
No! Business owners have one job, and it’s to get customers, keep them, and make as much profit as possible. You’re not going to achieve this if you’re committing several hours to bookkeeping each week.
You need to outsource your bookkeeping, and here are five crucial reasons why:
1. Outsourcing Is Efficient
First, consider how much your time is worth. As a business owner, you might be able to manage your books in a few or so each week but think about how much money your business would save and how you could improve it by buying back this valuable time.
Outsourcing allows you to focus on what your business needs you to do—improve your business, increase sales, and make a bigger profit!
2. Outsourcing Is Cost-Effective
Bookkeeping is an important job, but, depending on the size and complexity of your business, it’s often a part-time job.
The role may not be large enough for a W2 employee, who would likely require more hours, money, and benefits. Save $20,000, $30,000, or more by outsourcing the role to an independent contractor or bookkeeping firm instead!
3. Outscoring Is Often Safer
Surprisingly, outsourcing is an even safer solution than leaving your books with one of your employees. This is because professional bookkeepers are trained to detect errors, fraud, and theft. They manage accounting records for a living, so they likely have more bookkeeping experience than both you and your employees combined!
4. Outsourcing Is Paperless
It may be convenient for you to send important accounting documents to your office printer and hand your bookkeeper a stack of papers to sort through, but this creates waste, clutter, and confusion. This problem is eliminated when you outsource bookkeeping, as you and your bookkeeper will transmit information electronically instead.
5. Outsourcing Is Convenient
Today, most bookkeeping companies use cloud-based systems, which is another benefit to you, the business owner. Rather than having to scour your business’s files or rummage through stacks of papers, you’ll be able to log on to your bookkeeper’s system from anywhere in the world and access your data at any time.
The One Time You Can Do Your Own Bookkeeping
Now for the caveat I alluded to earlier. If you own a small business and your books are relatively straightforward, you may be able to get away with managing your books in-house.
With QuickBooks Online, Xero, FreshBooks, and the countless online accounting tools that are available today, it has become a little easier for smaller firms to manage their books without leaning on outside help.
Just be prepared to outsource as you continue to grow. Even if you or one of your staff handles your business’s books, you should bring someone in monthly or quarterly to review everything. Having these checks and balances in place will not only ensure you’re working with accurate data but also eliminate the potential for fraud!