6 Signs That It’s Time for Small Businesses to Hire a Bookkeeper

Introduction

As a small business owner, I know all too well how isolating it can be to be an entrepreneur. In the early stages of your business, you may not have the budget to hire anyone, so you learn to do everything yourself. This means you provide exceptional customer service, market your business, and keep track of your bookkeeping.

Your hard work will eventually lead to business growth, which may mean you no longer have sufficient time to manage everything yourself. At this point, you may begin to wonder if it’s time to outsource bookkeeping and hire an agency to help with your business’s finances.

Here are six signs that it may be time to outsource your company’s bookkeeping:

1. You Have a Fast-Growing Business

When your business is small, it may be manageable to handle all day-to-day tasks on your own. However, as your company grows, so does the complexity of your bookkeeping. For example, if you start hiring employees, experience an uptick in sales, or have several outstanding accounts receivable invoices, you’ll likely spend more time managing your finances.

Signs that your business is growing and may benefit from a bookkeeper include:

• An increased number of sales each month

• Multiple revenue streams (e.g., selling physical goods and providing services)

• A large inventory that requires tracking

• Numerous outstanding accounts receivable invoices that need follow-up

  
  

2. You Are Spending Too Much Time on Bookkeeping

When my friends started their fashion line, they were excited about designing clothes and working with models. They quickly learned, however, that they often felt tied to their desks categorizing transactions, taking inventory, and paying invoices each week. The business they were so excited to start began to feel like a giant chore.

There are only so many hours in a day, and your time should be spent doing what you do best. If you find yourself spending too much time on bookkeeping and not enough on other aspects of your business, it may be time to hire a bookkeeping agency.

3. You Do Not Feel Comfortable with QuickBooks

QuickBooks is an accounting software that has helped many businesses with bookkeeping. While designed to be user-friendly, the software is constantly evolving to meet customer needs. For instance, artificial intelligence is changing how QuickBooks looks and functions. Even with these updates, it can still be challenging if you lack basic accounting knowledge. If you delay bookkeeping tasks because you’re uncomfortable using the software, it may be time to outsource to a professional bookkeeper.

4. You Are Not Meeting Financial Deadlines

One thing small businesses can’t avoid is filing taxes. Tax filings come with crucial deadlines that must be met. Failing to file and pay taxes on time can result in costly penalties, interest, and added stress.

You may need to hire a bookkeeping agency if:

• You’ve requested a tax extension

• You’ve missed tax filing deadlines

• You lack clear, accurate financial records to submit to your accountant

  
  

Bookkeepers are well-versed in tax laws and know when taxes need to be filed. They also routinely categorize transactions and organize paperwork, ensuring that your documentation is ready when it’s time to submit it to your accountant. This leads to greater peace of mind.

5. Your QuickBooks Contains Errors

When I started my first business, I made a significant mistake with my taxes by misclassifying some equipment, which meant I couldn’t deduct these expenses. As a result, I overpaid on taxes that year. This common issue arises when small business owners aren’t organized with their finances.

Conversely, some business owners may misclassify expenses and underpay taxes, which could lead to audits or legal issues. Mistakes in QuickBooks can become more frequent as your business grows.

Signs that it may be time to hire a bookkeeper include:

• You notice errors in your financial records

• You’ve received reprimands from your accountant or tax professional about mistakes

• You aren’t confident that you’re paying the correct amount of taxes

  
  

6. You Need to Better Understand Your Business’s Finances

A friend of mine wanted to expand her cupcake business but wasn’t sure if she could afford the new equipment needed for growth. When I asked if she’d reviewed her financial statements, she admitted she didn’t know how to access them.

A bookkeeper can help you generate essential financial reports. Common reports bookkeepers provide include:

• Profit and Loss Statements

• Balance Sheets

• Cash Flow Statements

  
  

These documents give business owners the information they need to make informed decisions. After reviewing her Profit and Loss Statement, my friend was able to determine that she could afford to finance new equipment while still maintaining profitability.

Hiring a bookkeeper may be beneficial if:

• You’re unsure if your business is profitable

• You don’t know how to generate financial reports

• You want to make better-informed financial decisions for your business

  
  

Concluding Thoughts

Starting a small business is a significant undertaking, and new entrepreneurs often juggle numerous priorities. Although managing everything may work in the short term, business growth often makes it hard to fulfill all the needs of the company.

Outsourcing bookkeeping can help entrepreneurs by categorizing transactions, reconciling accounts, and generating financial reports. This support frees up time for business owners to focus on other critical tasks.

Additionally, a bookkeeper will stay on top of the business’s financial needs, track important tax deadlines, and ensure that all documentation submitted to the accountant is accurate, allowing the company to pay the correct taxes.

Are You Ready to Hire a Bookkeeper?

Our team at Hudson Bookkeeping Co. is ready to assist your small business with its bookkeeping needs. We focus on what we do best so you can focus on what you do best.

Call us today for a free consultation to see how we can help.