An important part of running a small business is tracking and making sense of your finances.
You need to ensure that everything adds up – every expense and profit should be counted to the tee.
These are essential considerations that require proper attention to detail. Bookkeeping is extremely time-consuming. So, you might want to delegate this responsibility to someone reliable.
This way, you continue focusing on your core business activities without neglecting your finances.
Hiring a bookkeeper should be easy for a small business. Just make sure you stay within a budget and hire as per your unique business needs.
Let’s explore five practical methods for hiring an affordable bookkeeper.
Key Takeaways
- 14% of businesses outsource their bookkeeping.
- A bookkeeper is responsible for handling your accounts and tracking all transactions.
- Evaluate the experience of the bookkeeper before you hire them.
- If you’re constantly overwhelmed and finding too many inconsistencies in your financial data, it’s time for you to outsource your bookkeeping.
What exactly does a bookkeeper do?
- 64% of business owners handle their own bookkeeping.
- 20% of small businesses outsource their finance management to an accountant or bookkeeper.
- 17% of small businesses don’t have the budget for a software solution.
- 14% of businesses outsource their bookkeeping.
While most small businesses prefer doing their own bookkeeping, the value a professional bookkeeper can add to your business cannot be undermined.
For example, when handling so many things simultaneously, you can easily lose control and take action on guesswork.
When you have a dedicated bookkeeper, you have precise answers.
Your immediate response to a query isn’t “Let me look into it and get back to you”.
By getting a professional bookkeeper on board, you establish financial accuracy and implement cost-saving solutions.
Not only do you save more time but you also save money by using it well.
Your finances are more transparent due to accurate financial reporting and data consistency.
This empowers you to make informed and profitable decisions.
Here’s a quick overview to help you understand the exact role of a bookkeeper.
1. Track transactions
So, a large part of their job is to track all business transactions.
A bookkeeper will monitor your cash inflows and outflows.
This includes all your sales, payments, employee salaries, cost of goods sold, etc.
Even if you use money to buy an office gadget or pay for lunch, it will be mentioned in the official register.
Whatever money is being withdrawn from your credit card or bank account will be documented.
And this is a daily job. So, you can imagine how attentive a bookkeeper has to be.
2. Handle accounts
Bank reconciliation is a major part of a bookkeeper’s job description.
This means they must ensure that all statements match and align with your bank records.
The purpose is to maintain consistency and accuracy of financial statements.
3. Evaluate expenses
I previously mentioned that a bookkeeper has to know where your money is going because everything has to add up.
This is what it means: categorizing every expense and ensuring proper organization. When your expenses are monitored and correctly categorized, they reflect your financial health.
Common categories include rent, office supplies, utilities, employee salaries, manufacturing costs, shipment, etc.
4. Generate invoices and manage payments
Bookkeepers are responsible for generating invoices.
Invoices are basically the bills for all your products and services.
At the same time, they keep track of all the account receivables.
This is all the money customers pay for the services or products they buy.
The reason is to ensure that every invoice generated and payment is received on time.
5. Prepare financial statements and reports
Financial reports are crucial as they give a visual of how well or poorly your business is doing.
Important financial statements are as follows:
Creating real-time financial statements becomes easy when you’re tracking your finances daily.
Also, the process becomes quicker and smoother with a software solution.
Financial reporting is important because it helps you analyze your business finances.
You can use that information to increase business efficiency and improve the bottom line.
5 steps to hiring an affordable bookkeeping for your small business
SB owners are often under the impression that a bookkeeper is expensive. But this is exactly the perception that needs to be challenged.
Instead of looking at a bookkeeper as another cost, look at it as an investment in your business.
The role of a bookkeeper and the value they add to your business is much greater than the initial cost.
For instance, a bookkeeper can give you financial clarity so that you don’t make poor financial decisions.
Let’s look at five practical methods for hiring an affordable bookkeeper.
1. Assessing business needs
Hiring a bookkeeper is easy but you should know why you want to hire them.
Analyze your situation and see where they can help you.
For example, do you need help with tax preparation or you’re dealing with late payments?
Make sure you write down what you expect from a bookkeeper.
This will work as per their job description.
And, if you are still unsure, read the job description again to see if it matches your current business needs.
It makes the hiring process simpler as you’ll know exactly what skills you’re looking for in a bookkeeper.
2. Choosing between in-house and outsourcing
When writing down the job description of a bookkeeper, don’t forget to include whether or not you’re interested in an in-house bookkeeper.
If you look for an in-house bookkeeper, be sure that it will be comparatively more expensive.
On the other hand, if you choose to outsource your bookkeeping, rest assured that it will be a more cost-effective solution
| Criteria | In-house bookkeeper | Outsourced bookkeeper |
|---|---|---|
| Cost | Salary, benefits, training, and overhead. | Pay-per-service or hourly rate, often cheaper |
| Control | Direct control over daily tasks. | Limited control, tasks are delegated remotely |
| Expertise | May need additional training | Access to specialized expertise |
| Scalability | Harder to scale quickly | Easier to scale based on needs |
| Data Security | On-site, potentially more secure | Relies on third-party security measures |
| Availability | Full-time or part-time, fixed hours | Flexible availability based on agreement |
3. Evaluate experience and credentials
When writing down the job description of a bookkeeper, don’t forget to include whether or not you’re interested in an in-house bookkeeper.
If you look for an in-house bookkeeper, be sure that it will be comparatively more expensive.
On the other hand, if you choose to outsource your bookkeeping, rest assured that it will be a more cost-effective solution.
4. Conduct tests and skills
Ask the following questions:
- What software do they prefer to use?
- Are they familiar with tax regulations?
- Do they understand specific accounting principles?
By conducting a thorough interview, you get an understanding of their skills. You find out if they fit your company culture and whether or not they are reliable.
Don’t forget to ask technical questions because that’s the most crucial reason behind this hiring process.
You can provide them with scenarios to evaluate their problem-solving abilities.
5. Negotiate terms and conditions
The last step is to discuss their preferred mode of communication and its frequency.
You want someone with the same values and working regime as yours.
They should regularly update without you having to do follow-ups.
Clearly lay out your expectations, like the working hours, pay rate, and job description.
4 signs that you need a bookkeeper
Knowing when to hire a bookkeeper is as important a decision as hiring one.
For example, it may not be wise to hire a bookkeeper right off the bat.
But with time, and especially if you’re spending way more time bookkeeping than strategizing and overlooking core business operations, you should consider hiring a bookkeeper.
Let’s look at the top red flags or key indicators for when you must hire a bookkeeper.
1. You are overwhelmed with financial responsibilities
Are you constantly buried under piles of financial paperwork?
Do you constantly wonder where a specific receipt is from and whether or not you’ve generated invoices for payments?
If yes, it is a clear indication that it’s time to outsource your bookkeeping.
A professional bookkeeper can organize and categorize your financial data accordingly.
This decision will give you the time and space you need to maintain clarity of thought. It will help you focus on how you can grow your business.
2. You’re finding too many blunders
The most alarming sign that you need a bookkeeper is when you constantly find errors in your data.
If there’s inconsistency or inaccuracy, you must act fast or you will end up with major losses.
The first thing that a bookkeeper would do is conduct bank reconciliation.
It will prevent possible damages and give perspective on how to make things right.
3. You are missing out on cost-saving opportunities
A professional bookkeeper has the insight and skills to identify room for opportunities.
For example, they can provide you with cost-saving solutions by leveraging diverse tax deductions.
This is a significant contribution that only a seasoned professional brings to the table.
4. Your business is growing
Your business becomes more and more complex as it grows.
Well, this is a simple way of saying that the volume of your data is too large and requires a tool for automation.
But to ensure your data is processed efficiently without error, you need someone professional to handle it.
The bottom line
A bookkeeper tracks your business finances and helps you make sense of it.
They help you prepare financial statements, evaluate expenses, and generate invoices amongst other tasks.
However it is important to evaluate their experience and determine whether or not they are the right fit before you hire them.
When you know your core business needs, the process of hiring becomes easy.
Do you find yourself overwhelmed with financial responsibilities? Are you constantly against the clock? Have you made a costly mistake?
Well, this is your sign to outsource your bookkeeping to Ledger Labs.
We have 12+ years of experience helping small businesses across industries and sizes.
We have the right tools and expertise to help you manage your transitions and get control over your finances.
Book a consultation appointment today to discuss this in further detail.
