April 14, 2011
If you’re scrambling around today trying to finish up your personal taxes and get them to the mailbox before the stroke of midnight tomorrow then the last thing you may want to deal with is also filing business taxes and keeping your business accounting books up-to-date.¬†¬† Even if your taxes have been finished for months, doing your own business bookkeeping may not be one of those responsibilities that you love or have time for when it comes to owning your own small business.¬†¬†
Today, I have a guest post by Jessica Reagan Salzman of Heart Based Bookkeeping that provides some guidance to small business owners as to when they know they’re ready to hire a bookkeeper.¬†¬† In addition to this article, Jessica’s site is a wealth of bookkeeping resources to any small business with numerous informative articles on the topic and well worth your time to check out.¬†¬† Jessica also has a monthly e-zine, Problems Into Profits,¬†that you can subscribe to with even more helpful bookkeeping tips.
How Do I Know When It’s Time To Hire a Bookkeeper?
A friend recently asked me a question that you might have pondered from time to time as well.
“How do I know when it’s time to hire a bookkeeper?”
There are lots of things to consider when making this decision, but I think there are three initial (and simple!) questions you must answer as you evaluate whether or not it’s time for your business to work with a bookkeeper.
1. Do you enjoy doing the bookkeeping?
If you enjoy doing the bookkeeping, that’s great! One of the perks of owning your own business is that you’re the boss and you get to decide what you do or don’t work on from day to day within your business. So if you’re enjoying the tasks associated with keeping the books for your business, that’s great!
You might benefit from working with bookkeeper to obtain training or get some of those pesky bookkeeping questions answered. I find that most small business owners who enjoy doing the bookkeeping themselves still find that they have a few questions each month they can’t quite figure out on their own. A partnership with a bookkeeper can come in handy in this situation. Also, training can often help you to speed up the time it takes to do the bookkeeping. So you can keep enjoying the work, and you can enjoy spending less time on it too!
Years ago I began working with a solopreneur, a chimney sweep, who really enjoyed keeping the books by hand on a monthly basis. However, he was finding that his manual system was simply taking far too much time each month and he was starting to spend less and less time on marketing because he preferred the satisfaction he felt when he finished creating his monthly reports (again, by hand!) each month.
So we swept in and trained him on QuickBooks. After a few short sessions, he’s reported that not only is he able to process his books faster, he’s finding that he enjoys it even more now that everything is computerized, because with a few clicks of the mouse button, he can generate all sorts of reports that he never had before! And he can actually see the results of his marketing efforts in concrete ways, which is leading to more satisfaction with his marketing efforts as well!
2. Is the bookkeeping up-to-date?
Another important matter to consider when keeping your own books is how often are you keeping them. When owning a small business, there is never a shortage of things to be done. Certain things consistently take top priority – working with paying clients, marketing to ensure you will continue to have a steady stream of paying clients, and other critical tasks that simply have to happen regularly in your business like returning phone calls and reading/replying to e-mails. Unfortunately, for most small business owners, bookkeeping ends up being one of those tasks that you’ll “do tomorrow” and that tomorrow just never seems to come!
If you’ve found that by doing the books yourself, the books just aren’t getting done, it’s definitely time to investigate what it might mean for your business to work with a bookkeeper. Contrary to popular opinion, there are many different ways to work with a bookkeeper and a professional bookkeeping service will never try to “sell” you something that’s more extensive than you really need. Perhaps you just need a little assistance getting caught up again. Perhaps you want to have your books handled quarterly. Or maybe you are ready to let go of this task that never seems to leave your perpetual to do list! Whatever the case might be, falling behind with the books is always a good sign that it’s time to consider another approach!
I just recently completed a large back-work project for a new client, a professional photographer, who had become so busy in business that her books hadn’t been attended to in over a year! One nice thing about success in business is that you often get to focus on doing the thing you love, almost exclusively! That was the case in this small business. The owner was now able to spend almost all of her time focused on billable work, staying out in the field for weeks on end, to the extent that her office suite mates mentioned that they might not recognize her if she were to walk into their shared office space!
It’s a great thing to be super busy in business, working on the things you love to work on. But as this photographer realized, the key is to outsource the tasks that you don’t have time to do yourself, that way everything is getting done, regardless of whether or not you’re the one doing it all! Plus we immediately uncovered a lot of hidden gems in her year’s worth of books and made suggestions for improvement that she’s been able to effortlessly implement, which has led to quickly realizing some great gains in her business.
3. Is the bookkeeping helping you grow or improve your business?
One of the most overlooked aspects of bookkeeping within small business is the benefit of keeping the books. If your bookkeeping system is not helping you grow or improve your business, it’s time to take a magnifying glass to the situation and see what we can sleuth out of it! An accounting detective can help you sort out what is and isn’t working within your current approach to keeping the books. Perhaps you would like to learn about creating and reviewing financial reports so you can better understand the story of your business’s numbers. Perhaps you’d like some professional feedback about how your business is (or isn’t) doing each month.
Regardless, the key to getting the most out of your business is knowing what’s happening so you can keep on doing the things that are working and quickly work to change the things that are dragging your business down. So if you’ve been diligently entering the data each month and still don’t know what’s up within your business’s finances, partnering with a good bookkeeper can make a world of difference in your business! It just might be the missing piece of the puzzle that you can easily pop into place and complete the bigger picture!
I’ve witnessed this problem in small and micro businesses far too frequently. Just last week I spoke with a woman who was spending hours upon hours each month, handling her business’s books, oftentimes at night, after her children had gone to bed, when all she really wanted to do was curl up on the couch and spend some time with her spouse. But she knew that it was important to keep on top of this task, so she was diligent and focused and got the work done. When I asked her what she had to show for her hard work, she paused and there was an extended silence on the line. After almost a minute, she replied, “You know what? I don’t know! I don’t think there’s much to show for my efforts! I mean it’ll be easy to do my taxes, but that’s about it!”
So I requested the opportunity to review her books and provide some feedback, both based on my own analysis and by providing her with our Story Behind the Numbers Report. After a brief review of the books she had so diligently prepared, I was able to uncover hidden gems within the numbers.
Based on our feedback, she quickly took steps to cut over $300/month from her business expenses. This information was always available to her, she just hadn’t known where to look! So a simple shift in how she was approaching this aspect of her business is now saving her a bundle! That’s money she can now invest in a monthly bookkeeping service (which her spouse will really appreciate, since he’s been craving some couch cuddle time)… All in all, a win for her, a win for her business, and a win for her family!
So take a moment today and answer these three questions for yourself and your business:
Do I enjoy doing the bookkeeping?
Is my business’s bookkeeping up-to-date?
Is the bookkeeping helping me grow or improve my business?
And you’ll be that much closer to answering the question of “how do I know when it’s time to hire a bookkeeper?” within your own small business!
Reprinted with premission from Jessica Reagan Salzman.¬†¬† Click here for more information about Heart Based Bookkeeping or to contact Jessica and her team.