You can't do it all: Why a Bookkeeper is Critical to Your Success¹
|Rich Best has spent 28 years in the financial services industry, as an advisor, a managing partner, directors of training and marketing, and now as a consultant to the industry. Rich has written extensively on a broad range of personal finance topics and is published on several top financial sites. Recent books include The American Family Survival Bible and Annuity Facts Revealed: What You MUST Know Before You Invest.|
It’s not uncommon for business owners to wait until there is surge in their business before considering the need for a bookkeeper. The result is a lot like waiting until you actually hear the roar of a cougar before you react – it’s probably too late. It’s not unusual for a business that is seemingly making great strides forward to be stopped in its tracks when the books fall apart. As a business owner, it’s important to recognize early on that you can’t do it all and to realize quickly why a bookkeeper is critical to your success.
Smaller businesses stand the most to lose as their survival prospects are tied very closely to their cash flow situation. In addition to managing the payables – meeting payroll and paying the bills, they must be able to manage receivables which can be more difficult especially if they come from multiple sources. All it takes is for one cash flow crunch to bring the business to a screeching halt.
Many business owners attempt to do the bookkeeping on their own, largely because, it’s fairly simple in the beginning. They also like to do it because it gives them a handle on the finances of the business. But, as the other marketing, sales and operation needs place greater demands on the time of business owners, it is typically the accounting function that suffers, largely because it is fairly boring. In a growing business, if too much time is allowed to pass between keeping the books, and that may be just a matter of a couple of days, cash flow problems could be imminent.
Most business owners can’t afford to go a day without being able to look at their cash flow ledgers, checking receivables, and knowing their cash on hand, which is the critical reason why a bookkeeper is essential. It is a bookkeeper’s job to do the daily ledgers and prepare reports that can, at a glance, provide the business owner with a snapshot of the business. The daily reporting enables the business owner to anticipate cash flow issues, respond quickly and stay focused on growing the business.
Hiring a bookkeeper does not have to break the bank. In fact, most small businesses contract with bookkeeping or accounting services that are paid in proportion to the amount of work they complete for the business. Virtual bookkeeping is becoming a very popular source for contracted services. These are people with bookkeeping or accounting backgrounds that work out their homes and charge an hourly fee. Whatever the cost, it is a much better investment than the many hours a business owner would spend producing inferior results.
Most accounting firms or virtual bookkeepers come fully qualified and prepared. At a minimum they should be able to help the business owner with the following services:
At some point in the process, usually around tax filing time or when financing is needed, the services of a CPA are necessary to ensure your business finances meet the rigid standards of the IRS and bank lenders. Bookkeepers can save the business a lot of money by ensuring that all ledgers and statements are current and accurate before a CPA gets involved.
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