Currently set to Index
Currently set to Follow

You finally did it. 

You started your own business!

Which is amazing…

But now you’re wondering what the heck to do about bookkeeping for your startup company.

Should you hire a full time bookkeeper right away?

Or maybe just bring in an accountant at the end of the year to take care of it all?

But then again, maybe it would be best if you were your own bookkeeper for the time being?

Getting the behind the scenes financial details of bookkeeping for entrepreneurs straight can be confusing and overwhelming.

Which is why I’ve broken down the twelve things you should consider when deciding if you should hire a bookkeeping service for your startup.

Let's get into it!

12 Things You Should Know About Hiring a Bookkeeper

1. Bookkeeping vs. Accounting

Before we plunge headfirst into the complex world of business bookkeeping and startup finance management…

Let’s get one thing straight.

Bookkeeping and account and very different beasts.

Unfortunately, the terms have consistently been used interchangeably…

Which has only led to further confusion on their differences.

Having a designated bookkeeper and a designated accountant for your growing business will be very important.

Knowing the key differences between their two positions will be equally as important.

There is naturally some cross over in their responsibilities, since the nature of all of it is managing your business’s financial data...

And both focus on maintaining tax compliance.

Although you can complicate the explanation of an accountant versus a bookkeeper…

Here is a simple explanation:

Your bookkeeper is responsible for laying the foundation for the work your accountant will do come tax season.

But your bookkeeper will be responsible for keeping up with:

  • Recording and organizing all your financial transactions throughout the year
  • Maintaining and reconciling your general ledger with your bank account
  • Tracking your income and business expenses for tax time

And your accountant will be responsible for keeping up with:

  • Analyzing and offering advice based on the financial data from your bookkeeper
  • Personally filing your business tax returns
  • Using your ledger to prepare financial statements and tax documents

Another key thing to note is that accountants and bookkeepers are required to have very different levels of education.

The process of becoming an accountant is much more stringent than that of a bookkeeper, and requires a minimum of a four year bachelor’s degree.

2. Your Accountant Can't Be Both

At this point you might be wondering why your accountant can’t just handle the role of being your bookkeeper as well.

Especially since they have so much more training, experience, and probably additional certifications, right?

Wrong.

Your accountant really should not double as your bookkeeper for several reasons.

Having your accountant work double duty as your bookkeeper will leave you short changed in a variety of areas.

Your accountant’s primary job is to help you successfully file your taxes at the end of the year.

Which means that if you choose to leave your books and bank transcripts relatively untouched throughout the year…

Your accountant will be forced to do all of the work retroactively.

While you can certainly get the job done this way…

It’s going to be a pain in the ass.

Plus, you’re going to miss out on things like:

  • Detailed month-to-month financial records that are necessary for applying for small business loans or even selling your business one day
  • Using your books and quarterly statements to guide your business decision throughout the year

On top of this, accountants are expensive!

Dumping them with all of your receipts, expenses, and bank transcripts for an entire year is going to cost you the proverbial arm and a leg.

Biting the bullet and hiring a bookkeeper in addition to an accountant at the end of the year will actually end up helping you to save money!

3. Why not DIY?

I know, I know.

You’re just starting out, and the thought of paying a personal bookkeeper or investing in an online bookkeeping service is making you cringe.

I get it.

But there are a lot of options out there that you might want to at least check out first... here's just one popular option (Bench.co)

The temptation to be your business’s bookkeeper is very real.

How hard can it really be?

And honestly, a lot of people start out this way.

But for good reason…

Very few last long in this position.

Being your own DIY business bookkeeper has a number of disadvantages.

Even if you haven’t been walking on the steep and rocky path of the entrepreneur for very long…

You’ve probably already noticed that being the owner of a small business startup requires you to wear many different hats.

In one fell swoop you became a CEO, COO, and CFO.

Not to mention taking on the roles of sales and marketing!

The last thing you need is to add “bookkeeper” to your growing startup company hat rack.

Even if you are naive enough to believe that adding one more skillset to your list is doable…

You may find that bookkeeping is not an easy skill to master.

The important thing is being able to recognize when you’re about to go from treading water to drowning in your DIY bookkeeping duties.

Hire yourself a bookkeeper before you hit the drowning phase!

But whether you decide to hire a bookkeeper or go it alone...

Please invest in bookkeeping software for startups ASAP.

Here are a few great ones to start with:

  • Quickbooks
  • Freshbooks
  • Xero

4. Power of Bookkeeping

When you’re the proud parent of a small business startup, bookkeeping might actually be the last thing on your mind.

Which is understandable.

There is so much happening, and you're stretched thin trying to master the learning curve of going from an employee mindset to that of a business owner and entrepreneur.

  • Making sure that you have a consistent flow of new leads and sales
  • Managing your marketing campaigns
  • Managing your inventory/supplies
  • Hiring and training new employees
  • Hopefully writing yourself a paycheck are the leading concerns

Bookkeeping quickly feels like a chore.

Or even worse:

A waste of time.

It’s easy to let bookkeeping fall to the wayside as you work to scale your new business as quickly as possible.

But without strong bookkeeping practices in place, your business won’t be able to thrive.

Don’t make the mistake of being so concerned with making money that you forget to manage it.

While this is true in both personal and business finances…

It will become glaringly obvious in your small business.

In fact, in a 2014/15 study by Xero, it was discovered that businesses who hired a bookkeeper actually increased their profits by 16%!

Hiring a bookkeeper puts you back in the driver’s seat of your business’s finances.

Rather than being a slave to your company’s books.

A bookkeeper will be able to evaluate key areas of financial waste, and pinpoint problems that you won’t be able to see on your own.

As well as offering an unbiased and necessary financial opinion.

While your emotions and personally bias can often affect how you make decisions for your business…

They will be able to separate themselves from emotion and offer input that is based solely on facts and numbers.

This is invaluable!

Especially in the beginning stages of bookkeeping for your startup company.

5. Look for the Signs

So, if you’ve read this far, you might be wondering how to tell when it’s time to surrender your responsibilities as a DIY bookkeeper for your business to a professional bookkeeper.

That is a judgement call that is unique to each business owner.

Each business will have very different needs, especially in early phases of business ownership.

Some people have maybe 20-30 transactions a month, and maintaining their own business ledgers and financial records is relatively simple.

But other business owners may have much more complex needs starting right out of the gate.

The important thing is that you are regularly checking in with yourself and evaluating what your business needs to thrive.

At the very least, start using on of the basic accounting softwares I’ve listed under point #3 so that if you do need to bring on a bookkeeper…

You already have some level of organization and business records in place.

While you may not need to hire a full time, on staff bookkeeper for a while (or potentially even ever)...

The chances are that you will eventually become overwhelmed with doing your bookkeeping on your own.

Or maybe you aren’t necessarily overwhelmed with the bookkeeping itself, but you have more important things to spend your valuable time doing to advance your startup’s success.

Either way...

It’s important to look for the signs.

Let’s take a look at some of the signs that will point you in the direction of taking the plunge and hiring a bookkeeper.

6. Sign #1: Basic Aptitude?

First and foremost, it’s important to have any honest conversation with yourself in the beginning stages of your business startup.

You need to ask yourself where your skillset truly lies.

Because the areas that you are weakest in will be the first ones you’ll need to hire out.

This isn’t a point of embarrassment or failure!

This is wisdom.

The most successful people are able to recognize and staff their weaknesses with those who are more skilled than they are.

So when it comes to bookkeeping and accounting for your business…

Be honest with yourself.

If you aren’t naturally a detail oriented person who enjoys the menial and tedious tasks associated with maintaining financial records and balancing your bank accounts…

Or if you already struggle to maintain a budget for your personal finances…

Or maybe administrative tasks as a whole give you a headache...

You may not have a great aptitude for being in charge of your business’s bookkeeping.

That’s ok!

What’s important is recognizing this before you’ve created a living nightmare for yourself during tax season.

7. Sign #2: Spending Hours on Your Books?

Another tell tale sign of needing a designated bookkeeper or bookkeeping service is the allocation of your time.

When you’re running your own business, time is precious.

Many times, startup owners are running their company alongside a full time job!

But even if your fledgeling company is already your full time gig…

You’re still clocking in more than 40 hours most weeks.

It’s just the nature of the game.

But when you are knee deep in receipts, bank statements, and ledgers…

And you’ve spent countless hours of your week working on the back end of your business without an end in sight…

It might be time to throw up the white flag and surrender.

The hours you are spending struggling to decipher what can often feel like and encrypted code of impossible numbers…

Could probably be put to much better use in other areas of your business.

Don’t allow the overall management of your startup to suffer because you have your nose buried in the books. 

8. Sign #3: Always Behind?

Do you feel like you are always playing catch-up?

Constantly falling behind on bookkeeping is a dangerous game to play.

When your books aren’t up to date, you won’t be able to see the current state of your business’s finances.

Essentially, you are walking forward blindfolded when you run your business this way. 

You won’t be able to make sense of your cash flow, or understand how to make crucial financial decisions without up to date and accurate bookkeeping records.

As the owner of your business, you need to know where your’e money is coming from and where it’s actually going.

So if the above scenario sounds familiar…

Stop telling yourself you’ll stay on top of things moving forward and just hire a bookkeeper!

It’s time.

Your business AND your wallet will thank you.

I promise.

9. Sign #4: Your Accountant IS Your Bookkeeper

If I didn’t make this clear enough earlier…

Having your accountant as your end of year bookkeeper is a BAD IDEA.

If you thought being a couple months behind on your bookkeeping sounded bad…

Imagine how blind your business decisions will be if you wait all the way to tax time to find out how things have gone for the entire year.

Yikes.

Instead of hiring your accountant to do far more work than is necessary during the already stressful season of filing your taxes…

Invest in a bookkeeping service or personal bookkeeper to begin with.

You’ll be able to make sound financial decisions throughout the course of the year.

AND your accountant will be eternally grateful.

Because your bookkeeper will know exactly what they need from you come tax season, and will know how to get everything ready for them.

So all you have to do is sit back, relax, and wait for that tax return to show up.

Sounds nice, right?

10. Sign #5: Tax Season is a Hot Mess

Which brings me to my next point.

Taxes are a necessary evil.

You can’t run your own business without dealing with some level of complication with taxes.

Whether it’s collecting sales tax from your customers, dealing with payroll taxes, or filing taxes at the end of the year…

Just hearing the word “taxes” can be enough to trigger a migraine for many business owners.

If you consistently arrive at the end of the business year and dread calling your accountant…

Or if you frequently feel like filing your business taxes is the definition of a hot mess express…

It might be time to bring in the professionals.

There’s seriously no reason to put yourself through unnecessary amounts of stress and anxiety during tax season…

Simply because you didn’t want to shell out a little extra money for an accounting service or a bookkeeper throughout the year. 

It’s just not worth it.

Plus, having a designated bookkeeper will have some major tax time perks.

They are skilled at finding creative tax write-offs for your startup that you would probably have overlooked. 

The sooner you are made aware of tax deductions for business, the better!

That’s extra cash in your pocket, my friend. 

11. Sign #6: Sales VS Profit

The last sign that it may be time to hire a bookkeeper is when the relationship between your businesses sales and profit become blurred. 

Maybe you perked up a little when you saw that bookkeeping solutions could increase your profit margins by an average of 16%. 

If so, then you might find yourself in a frustrating but common situation.

Leads are flowing in, your sales have gone up, and your revenue has increased…

But your profits haven’t budged.

When your bottom line feels like an impenetrable force field, it’s a sign that something isn’t right on the back end of your business accounting.

Deciphering the problem on your own can sometimes feel overwhelming and very nearly impossible.

It can be extremely discouraging to see your sales and revenue increase, only to find out that it feels like money is practically disappearing from your account the moment it hits. 

Having a bookkeeper come in during these situations will help you pinpoint where your business might be bleeding money, and where you can cut down on spending.

A fresh set of eyes on your finances will ensure that your profit margins remain stable (or maybe grow!) alongside your business.

12. Choosing the Right Bookkeeper

So how do you choose the right bookkeeping solution for your business?

When it comes to hiring a bookkeeper or choosing a bookkeeping service, one size doesn’t fit all.

You need to have a clear picture of what your specific business needs are. 

Start by asking yourself these questions:

  • "Do I need year round support, or just a seasonal bookkeeper for paying quarterly projected taxes?"
  • "Do I need someone to help me scale my business through strategic financial insights?"
  • "Do I need assistance with budgeting and managing my business's cash flow?"
  • "Do I need someone who is easily and rapidly available?" 

From there, you need to choose between hiring an in-house bookkeeper, a third party bookkeeper, or a local bookkeeper.

The only reason you would need to have a designated position within your startup for an in-house bookkeeper is if your company has truly grown to a scale that requires this full time position.

Hiring a third party is usually a much better decision for several reasons:

  • Greater security and privacy information
  • More affordable
  • Unbiased financial input

Lastly, you should also consider looking for a local bookkeeper within your areas.

Sometimes, working with a third party bookkeeping service can feel impersonal.

Finding a bookkeeper within your area that potentially even specializes in helping small businesses within your specific industry can be extremely helpful.

You can usually meet with them in person, and they will get to know your business on a more personal level over time.

But whether you choose a bookkeeping service or a local bookkeeper, make sure you know the level availability they have, and the amount of access you will have.

When facing important financial issues you’ll want to know whether you can call them 7 days a week for support.

Take your time, and make sure that the bookkeeping solution you choose will serve all of your needs.

Don’t be afraid to ask questions, and never settle for a bookkeeper or accountant that talks down to you.

If they speak in complex financial jargon and seem annoyed when you ask them to break it down for you…

Pass and find someone else.

Your bookkeeper is there to serve you. 

A Bookkeeping Service is a Game Changer for Your Business… But Lead Gen is Even Better:

Finding the perfect bookkeeping solution for your business startup can feel like striking gold.

Especially when the systems and structures put in place through effective bookkeeping start to increase your profit margins.

I have a feeling that you’re going to be pleasantly surprised at the difference it makes when you finally take the plunge and hire out your bookkeeping.

But if you thought that a bookkeeper was a business game changer…

Then I have something that can really blow your mind.

The not so secret “secret” to my personal success as an entrepreneur and online business owner is even more of a game changer than a top notch bookkeeper.

I’m not exaggerating when I say that this “secret sauce” literally took me from making 2K per month to making 50K per month in five years.

Talk about increasing your profit!

And it’s all been through online lead generation.

Not only is online lead generation an amazing stand alone business model for any online entrepreneur…

But it is an invaluable skill set for anyone running their own startup company.

Because let’s face it…

You’re never even going to need that bookkeeping service unless you have a steady flow of business.

And online lead generation can ensure that you have exactly that.

Local lead gen is simply using Google and SEO to generate a consistent supply of new leads for small businesses.

Which is the number one thing that most small business owners will tell you that they need more of. 

So if you’re one these business owners…

Check this out and prepare for your mind to be blown:

Follow Me
Ippei Kanehara
Founder/CEO Ippei Leads

$52K per month providing lead generation services to small businesses

Ippei.com is for digital hustlers, industry leaders and online business owners.

His #1 online business recommendation in 2021, is to build your own 6-figure lead gen biz. You can learn more here.
Leave a Reply

Your email address will not be published. Required fields are marked

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}