Entrepreneurs thrive on a DIY mentality: Do everything you can yourself and don’t pay for anything new until you have absolutely have to. It’s especially difficult to justify hiring financial help like a bookkeeper.
With user-friendly software available, many business owners feel they should be able to do keep their records on their own, even as they wrestle with finding the time and wonder if they’re doing things correctly.
Entrepreneurs who hire accounting help usually discover they weren’t doing nearly as well on their own as they thought they were.
So what are a small-business owner’s options for professional help with financial tasks? Here is a primer:
Do I Need a Bookkeeper or an Accountant?
Actually it’s a trick question. You may need both.
An accountant can analyze the big picture of your financial situation and offer strategic advice. He or she produces key financial documents, such as a profit-and-loss statement, if needed, and files a company’s taxes.
After tax season is over, an accountant can also act as an outsourced chief financial officer, advising an entrepreneur on financial strategies, such as whether to secure a line of credit against receivables when introducing new products.
In contrast, a bookkeeper does the day-to-day hands-on tasks: making sure new employees file all the right paperwork for the company’s payroll, submitting invoices (promptly) and following up on them, and paying the bills. The bookkeeper also tracks company expenses and can assure that every cost has been entered — and recorded correctly — into software like Xero or Sage so that the business is ready for tax time along with filing any other reporting to, say, creditors or investors.
When to Bring in a Bookkeeper
The rates for hiring a bookkeeper on a part-time basis in the U.K are a small price to pay for accuracy, depending on location, the workload and whether work is done at the company’s office or from home.
Most small businesses typically sees his accountant once a year, at tax time. But business owners requiring capital or frequently negotiating credit with a bank are likely to contact their accountants more often.