Why hire a bookkeeper?
Financial analysis, based on your business records, is a key factor in determining your success. Scanning problematic areas from various detailed spreadsheets can help answer vital questions for your future.
- Am I making money or losing it?
- How much is my profit or loss?
- Am I on financial ground or heading for a downfall?
A solid, well maintained bookkeeping system is the answer to your questions.
Most business owners or independent contractors hire outside accountants to handle their financial situation. Having a CPA is necessary; however it can be costly on your part to pay a CPA to handle routine bookkeeping for your finances.
For most businesses, selling a product or service is time consuming because that’s where the money is generated. Yet, so many business owners lose potential money because they spend valuable time handling the books themselves.
Matthew is an attorney who charges his clients $250 per hour. However, every week he spends 4 hours working on the firms’ bookkeeping making sure clients are charged back for every expense incurred. At the end of the 4 hours, Matthew already lost $1,000 of billable time. If Matthew hired a bookkeeper at $30 per hour to complete the work, he would have only had an expense of $120.
If you sell a product or service, your time should be spent doing just that, to ensure your sales volume. Hiring an outside bookkeeper is very cost efficient not having to pay payroll taxes, an annual salary, FICA, Medicare, etc. The best part is…you only pay for hours worked.
The Importance of Good Financial Recordkeeping
Unless you are in the financial industry, keeping good financial records is probably not your best suit. Fact is, in order to run a successful business selling a product or service, you need all the possible time to service your business. Listed below is a few ways in which a bookkeeper can allow you freedom to spend more time on your business while maintaining accurate and timely financial recordkeeping.
Monitoring your Success/Failure: A bookkeeper can provide reports with accurate or projected figures for your business to determine if you’re going in the right direction. These reports will determine if you’re making money, increasing sales, over-extending on expenses, determining which expenses in particular need to be re-examined, should you hire another person, can you afford it and regaining control.
Bank Financing: If you apply for a loan, bankers will usually request financial statements (balance sheet, income statement, cash flow budget, etc) allowing them to make a decision on your loan request. They may even request to see bookkeeping procedures to ensure your records are accurate and professional.
Other Capital Resources: Outside of a bank loan, you may need investors or partners who will request financial information before funding your business. They require detailed extensive financial reporting which usually comes from your CPA but starts with your day to day bookkeeping to produce such reports.
Budgeting: Every business needs a budgeting plan in place. Having a budget allows you to forecast with self control. Investors and potential partners usually request a budgeting forecast to ensure they will not be headed into a pit fall.
In summary a bookkeeper will complete all these tasks, allowing you freedom to enhance your business and make it more profitable.