If you’re a small business owner and you do not have proper knowledge of the bookkeeping process, the best solution for you is to hire a bookkeeper. But as a small business, you need to know about the pros and cons of hiring a bookkeeper. Bookkeeping is a crucial aspect of any business that helps a company to grow and to stay organized. Bookkeepers provide you with all the financial services on your plate. So consequently, you can have more time to concentrate on other things that are important for your business.
What is a bookkeeper?
A bookkeeper is a professional who is responsible for recording and maintaining an organization’s financial transactions in an accurate and organized manner. This includes tasks such as data entry, reconciling bank statements, preparing financial reports, tracking accounts payable and receivable, and ensuring compliance with financial regulations and tax laws. Bookkeepers play an important role in helping businesses make informed financial decisions by providing accurate and up-to-date financial information.
However, a bookkeeper is not as same as an accountant. Accountants are the ones who are responsible for tax planning and business tasks. In simple words, a bookkeeper often tracks your numbers whereas an accountant is the one who interprets those numbers so that business financial performance can be analyzed.
What does a bookkeeper do?
A bookkeeper is the one who is responsible for all the financial functions of a company initiating from simple day-to-day transactions to major things like financial statements or balance sheet preparations. Bookkeeper also provides financial advisory services to all businesses. From recording daily operations to billing and payroll, all operations are done by bookkeepers. They are also updated about all the latest financial functions that would be a lot more beneficial for any business.
What are the Pros and cons of hiring a bookkeeper?
Although a bookkeeper manages your accounts more competently than you do, putting someone else in charge of them can be risky for your company. The following are some of the benefits and drawbacks of employing a bookkeeper for your company:
Pros of Hiring a Bookkeeper
- Time savings: A bookkeeper can handle time-consuming tasks such as data entry, record keeping, and reconciling bank statements, freeing up valuable time for the business owner to focus on other tasks.
- Increased accuracy: A professional bookkeeper can ensure that all financial records are accurately maintained, reducing the risk of errors and oversights.
- Expertise: Bookkeepers have the training and experience needed to properly manage financial records, and can provide valuable insights and advice to help businesses make informed financial decisions.
- Compliance: Bookkeepers stay up-to-date with tax laws and regulations, ensuring that businesses remain in compliance and avoid costly penalties.
Cons of hiring a bookkeeper
- Cost: Hiring a bookkeeper can be expensive, especially for small businesses, as they may not have the budget to cover the costs of a full-time hire.
- Confidentiality: Sharing sensitive financial information with a bookkeeper can be a concern for some business owners.
- Dependence: Relying too heavily on a bookkeeper can create a sense of dependence, and may lead to a lack of understanding of the financial situation of the business.
- Quality: Hiring an inexperienced or unprofessional bookkeeper can lead to mistakes and errors in financial records, which can be costly to correct.
Do I need a bookkeeper for my small business?
Being a small business owner, you wore many hats. You have to undergo a lot of business operations individually. So, you really don’t have much time to do bookkeeping on your own. So, for a small or growing business, it’s a Yes to hire a bookkeeper to perform all the financial functions of your business. Though you need to have some basic knowledge about bookkeeping so that you won’t get tricked.
Another advantage of hiring bookkeepers is that you don’t need to hire a full-time in-house bookkeeper if you don’t need him. You can have the advantage of hiring an outsourced bookkeeper as you only have to pay them based on their work. Also, if you’re a small business owner and you cannot afford to have a full-time bookkeeper, you can outsource a bookkeeper who is more trained and has more knowledge about all the financial functions and operations so that you can best utilize and save your money.
However, another con that can possibly occur is if some kind of mistakes made by a bookkeeper can have serious consequences for a company, as they can lead to incorrect financial records, misinformed business decisions, and potential legal and financial penalties. Because when a bookkeeper makes a mistake, it can affect the accuracy of a company’s financial statements, including its balance sheet, income statement, and cash flow statements.
This can result in incorrect tax filings, incorrect reports to stakeholders, and even auditing issues. In some cases, the mistakes made by a bookkeeper may not be discovered until much later, leading to costly corrections and a loss of trust in the company’s financial information. As a result, it’s important to hire a qualified and experienced bookkeeper and to regularly review their work to ensure accuracy and avoid these potential consequences.