7 Signs Your Small Business Has Outgrown DIY Bookkeeping
When you first own a small business, keeping your own records can be a way to cut down on costs without hiring an accountant. You might have just a couple of customers, limited costs, and a reasonable number of transactions. Yet, as business expansion takes place, the financial aspect of the company typically becomes more complicated.
An increased number of customers will require a greater number of billing slips or invoices to process. A raise in the rate of turnover will result in a higher number of transactions to record. Payroll duties will come up with the addition of staff members. A large number of new accounts, vendor subscriptions and business costs, in general, might gradually make your accounting records more and more difficult to manage.
Definitely at a point, doing the bookkeeping yourself will be the main problem instead of a major gain. Because of this, how can a small business determine whether the right decision would be to start the search for a bookkeeper?
This article outlines seven indicators to help you decide whether your business has grown too big to manage the books yourselves.
1. Your Books Are Always Behind
You might find yourself continuously neglecting to keep your accounting up and instead letting other things take precedence at hand.
One might intend to update their balance sheet and profit-loss statements each week, but instead do it only once a month - or, even worse, hardly ever!
Neglecting to keep your records current can bring a much poorer understanding of where your business stands financially. For instance, you might not be precisely aware of your income, what you spend, or if your company is generating positive returns.
Bookkeeping services for small businesses are professional support that can assist you in maintaining up-to-date and orderly business records.
2. You Are Spending Too Much Time on Bookkeeping
Your business time is one of the most precious assets that a business has.
We all know that bookkeeping, accounting entries, and reconciliations consume precious hours and that if we do it ourselves, we lose the opportunity to do other things.
Entrepreneurs must be focused most of the time on their customers' sales operations, and growth.Outsourcing bookkeeping will grant you time which you can spend more effectively on your company's operations, marketing, or your personal development.
3. You Do Not Know Your True Profit
Revenue is the amount of money coming in whereas profit is an indication of profitability through financial reports.Your company could be earning a higher turnover than it is spending but still not be profitable due to a high operating expense per unit.
You might not be able to immediately respond when someone asks questions like:
Have I made a profit this month?
Where did I mainly spend my money?
Am I becoming more profitable?
What is the amount of my cash in hand?
Of the sectors I work with/operate in, which ones have yielded more profit?
These are indications your bookkeeping probably isn't providing you with the right information.
To keep track of your business, financial reports and accurate books should be your tools. They will enlighten you on the actual status of your business.
4. Tax Season Becomes a Major Stress
Sometimes, tax season gets complicated only after searching through receipts, matching up with the bank statements, finding what was the exact transaction date, etc. and attempting to recollect months of financial activities from these documents.
Papers well-published are definitely an asset when it is time for tax preparation.
A good bookkeeper can help keep up with the company records while a CPA or another expert can refer back to those records and advise about the tax return.
Come to find out that good bookkeeping is not only about tax time. It is also about making sure that you have sufficient financial information all year round.
5. Your Business Is Growing Quickly
Growth is exciting, still it often makes money matters more complex. It's probably a situation where you hired more staff or brought out a new branch. It could also be that you sold more, found better suppliers, or are now serving different markets.
Much like the growth in business comes hand in hand with more money dealings and record keeping. The system for bookkeeping that you were comfortable with in your early days of business as you had just a few transactions and your bookkeeping software might be sufficient for such a small business.
If you are a growing business that processes hundreds or thousands of transactions monthly, an alternative bookkeeping setup is what you need. This is also the typical moment when you can benefit from hiring an outsourced bookkeeping team who are able to adapt to growing demands while still being cost effective and maintaining excellent service level.
6. You Are Making Business Decisions Without Reliable Numbers
Business decisions come a long way when a company has correct and updated financial information handy.Suppose that you have decided to hire an employee, buy machinery, ramp up the marketing, open a new shop, or something altogether different.
The main point is that, to make good decisions, one must first be aware of one's cash flow, running costs, turnover, and the bottom line (profitability).If your financial records are missing parts or are not up to date, you might be deciding upon critical matters by guessing instead of consulting solid numbers.
By working with an experienced bookkeeper, your financial data should always remain neat and accessible and because of this you will have reliable information whenever you require it.
7. Your Accounting Software Is Becoming Overwhelming
Softwares like QuickBooks can actually save a small business with the daily management of books. Then again, any accounting software will not be more effective than the data entered into it.
If you have doubts about transaction categories, reconciliations, errors corrections, or useful financial report generation, this kind of software can really make your life hell.
One bookkeeper who is well-versed in QuickBooks and other accounting tools will assist in maintaining the software system and your financial records will remain orderly and accessible at all times.
What Happens When You Keep Doing It Yourself?
DIY bookkeeping is not automatically a bad choice.
For a very small business with simple finances, it may work perfectly well.
The problem occurs when your business grows but your bookkeeping process does not grow with it.Falling behind on your books can lead to inaccurate financial information, missed transactions, poor cash-flow visibility, and unnecessary stress.
The longer financial records remain disorganized, the more difficult—and potentially more expensive—it can be to clean them up.
How Can a Bookkeeper Help?
A professional bookkeeper can take many routine financial tasks off your plate.
Depending on your needs, bookkeeping support may include:
Recording and categorizing transactions
Bank and credit card reconciliation
Accounts payable and receivable
Financial reporting
QuickBooks support
Catch-up bookkeeping
Ongoing bookkeeping maintenance
The goal is simple: keep your financial records accurate, organized, and useful.
You remain in control of your business while a bookkeeping professional handles the financial recordkeeping that supports your decisions.
Find the Right Bookkeeper for Your Growing Business
If you recognize several of these signs, it may be time to stop treating bookkeeping as another task on your growing business to-do list.
The challenge is finding someone you can trust with your financial information.
That's where the My CPA On Call Bookkeepers Marketplace can help.
The Marketplace connects businesses with CPA-vetted bookkeepers based on factors such as industry, accounting software, and specific bookkeeping needs. This can make it easier to find bookkeeping support that is aligned with your business rather than spending hours searching through providers on your own.
Be Ready to Move Beyond DIY Bookkeeping
Your business has grown—and your bookkeeping should grow with it.
If your books are falling behind, tax season is stressful, or you are spending too much time managing financial records, professional bookkeeping may be the next step.
Find the right bookkeeping support for your business through the My CPA On Call Bookkeepers Marketplace and spend less time managing the books—and more time growing your business.
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