I want to preface this article by stressing how important it is to have an accountant for your business operations. CPA’s (the ones worth their salt) ensure that you claim all of your tax benefits, keep you operating under GAAP standards, and maintain consistent contact with you concerning the health of your business.
Although my next assertion varies in relevance according to your own business’s situation, I highly recommend adding an accountant to your team before you add a bookkeeper. The reasons to do so are pretty solid. However, this article will not dive much deeper into those reasons. I will just say that CPA’s have a more profound impact with your business in accordance with legal standards. What matters most is the safety of your business, and its survival is of utmost importance.
Anyways. Back to the question at hand. You already have an accountant. So why on earth would you spend money on hiring a bookkeeper?
The answer: you shouldn’t. Now stay with me here. A large population of bookkeepers are qualified for transaction/data entry. But for a large majority of that large population, the qualifications end there. Unfortunately, most people claiming to be bookkeepers are really just those who think the job ends after they put your transactions into your QuickBooks account. STAY AWAY FROM THESE “BOOKKEEPERS”! They will add way more stress than they are worth (which honestly isn’t much anyways.)
Those types of bookkeepers give a terrible name to bookkeepers who are in business for the same reason I am: to help business owners pursue their dreams without worrying about financial insecurity!
That being said. If you spend the time and effort in identifying a proper bookkeeper who gives actual value to your business, you will be making a smart investment by adding them to your team. Below, I’ve outlined several reasons where a *valuable* bookkeeper will contribute to your business even if you already have an accountant.
With every piece of content Palm Branch Bookkeeping puts out into the world, we want to provide 3 lenses for you, the business savant. After all, if you aren’t gaining value from what you are reading, why are you reading to begin with? Refer to this article for more information about these 3 perspectives.
Time & Money
Less Expensive than Having Your Accountant Do It
In some cases, your accountant may include your bookkeeping work in with their pricing. However, in most cases, that is not the case. CPA’s are very good at what they do and prefer to focus on the tasks that you hire them for. More often than not, that work will not include bookkeeping. Keeping books is not considered to be a profitable offering, so accountants might charge their hourly rate in order to take care of them. That comes out to be quite an expensive bookkeeper!
Real-time Communication
Accountants are prominent professionals come tax season. And rightfully so! They complete important work that keeps your business GAAP and tax compliant. But how often do you talk to your accountant when it’s not tax season? If it isn’t at least quarterly, you could be losing valuable guidance!
Having a qualified bookkeeper as a team member gives you the advantage of having said guidance, at a cost well worth the investment. Imagine having someone on your team who looks over your books, reviews financial statements, and ultimately presents your business with avenues that will increase your revenue and potentially decrease your expenses.
Financial Clarity
Consistent Reports and Communication
This one goes hand-in-hand with Real-time Communication. Again, unless you already have your accountant providing you with monthly reports, you are losing the opportunity to have valuable, timely insight into the financial side of your business.
With monthly reports and conversations, you will be more in tune with your business’s financial workings. And the reports can be nearly endless! Benchmarking, year-to-date, identifying sales cycles, figuring out customers who still owe you money, quarterly growth, etc… I could go on and on!
Cash Flow
Cash flow is the lifeblood of your business. Without healthy, reliable cash flow, your business will always be at risk of going under. A competent bookkeeper on your team will help you understand the impact and reasoning when it comes to cash flow.
In its simplest terms, and without getting deep into the weeds, cash flow can be defined as how money moves into and out of your business. And if your business consistently has more money moving out than moving in, your business won’t be in business for very long.
Actionable Intel
How valuable would it be to you knowing your return on investment (ROI) in one of your products struggles to earn back what it costs? Unless you intentionally positioned this product as a loss leader or an entry product, chances are this information would be quite valuable.
And this is just one piece of actionable intel you would have at your fingertips on a real-time, consistent basis. If you feel like you’ve had trouble understanding viable business options and their implications, this intel will serve as street signs to help you navigate your business in the right direction.
Peace of Mind
Decision Making
Combine all of the reasons previously mentioned, and you’ve formed an invaluable tool for your business. This tool allows you to objectively and accurately analyze your business’s finances. Understanding what this information says about your company can make many otherwise hard decisions seem very clear about what you should do.
Is it time to bring on another employee? Should I discontinue this product? Should I be charging more (or less) for this service? Can I afford a new piece of equipment? What type of growth did I have last year? Are my marketing expenses at least breaking even?
All of these questions, and plenty more, can now be addressed, analyzed, and answered with high confidence.
Tax Time
Understandably, tax season is one of the most stressful times year after year for small business owners. It can feel like your accountant is asking a lot from you. In reality, your accountant needs all the information he or she is asking for in order to best situate your business in terms of tax implications and compliance.
Having a bookkeeper on your team drastically reduces your stress during tax time. The information your accountant is requesting is already up-to-date and stored in a central location. Just allow your bookkeeper to work with your accountant, taking away time stressing about money and giving you that time back to spend with family and friends.
In Conclusion
The best thing you can do for the financial health of your business is having a one-two punch combo with a strong CPA and a competent bookkeeper. They will work together in making sure everything is running smoothly on the numbers side of your company so you can devote more time and attention to other aspects of your business. If you have any questions or would like to speak more on this subject matter, feel free to send me an email at dustin@palmbranchbooks.com!
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