DIY or hire a bookkeeper, which path should your business take?
When you are running a small business there are a lot of behind-the-scenes paperwork and record-keeping that needs to be done. This can take a lot of time and effort for business owners. While the option exists to take this away from business owners, many have limited financial resources. This ultimately leads to a tricky choice for business owners, whether to DIY their bookkeeping or to outsource it.
To help you out, here is a comparison of the two to help you decide which path your business should take.
Benefits of DIY bookkeeping
The major benefit of DIY bookkeeping is cost savings. With this method, you don’t have to worry about hiring a bookkeeper or outsourcing your bookkeeper. Often the cost is time, however, if you are just starting out, or have a very small business it may not take you long to complete your books. This is why this method is best suited for freelancers or other micro-business operations. The books are simpler, there is less to fill out, so it takes less time. As well as this, these businesses are often the most financially constrained, and so investing time over money is worthwhile for them.
Benefits of hiring a bookkeeper
The main thing to consider when it comes to the comparison between DIY bookkeeping, or hiring a bookkeeper, is whether you want to invest time or money into your bookkeeping. It is important to note that the larger your business is the greater the investment of either will be. However, investing money will save you a lot on time, but investing time may not save you money, time is money, after all.
So, let’s get the big one out of the way. Saving time. Maintaining your books can take a lot of time, many hours per month. Often, Bookkeeping will be a task down the bottom of your list, because there are many other jobs that you already do in your business which, let’s face it, you enjoy a lot more. So, when you do have to focus on the bookkeeping it will be at the expense of time spent on other parts of your business which you enjoy more. Or it could also come at the expense of personal time, which is some of our most valuable time. In hiring an experienced bookkeeper to take on the bookkeeping, you get back all of that time, while you get a professional to do it for you.
Don’t skip unpaid invoices
There are a lot of benefits to having professionals take care of your bookkeeping. We will touch on a lot of those soon. But one important place to start is your invoicing. Late invoices and payments can wreak havoc on your cash flow. Fortunately, bookkeepers are able to utilise bookkeeping software to help you keep track of invoices. This will include automatic reminders for clients when payment is due, and when it is overdue.
Address cash flow issues
As your bookkeeper is recording your daily invoices, receipts, and other financial transactions, they get a unique overview of your business’ financials. This allows them to see how your business is performing financially, and so can allow them to raise red flags should your cash flow be negative. With this information, they can then assist you in building cash flow strategies that will improve your cash flow and put you back in the positives.
Focus on your business
With your time freed, you can spend it all on whatever you like. Generally, this extra time is spent on the business. You can use the time to help guide your business towards accomplishing your business goals or smashing them. With more hands-on time you can achieve more, assist your team more, and focus on taking your business to the next level.
Smoothen your tax season
Your bookkeeper can work hand in hand with your accountant to ensure your tax season is smooth. They will provide a clear picture of your business’ financial situation so that you can make informed business decisions. As well as this, they will ensure that all your tax obligations will be completed on time in order to help you avoid any penalties from the ATO.
The decision to hire a bookkeeper or not comes down to whether you want to invest time or money. Of course, if you are a micro-business or freelancer, doing your own bookkeeping could make sense. Alternatively, if you are a small business that deals with a lot of clients and has staff, it may be time to get a bookkeeper. Ultimately, it comes down to you, fortunately, you can also change your mind should you wish to.
If you want a professional bookkeeper, reach out to Link Books.