Why Small Businesses Should Hire a Bookkeeper
Time is your most valuable commodity
As a business owner you wear many hats and work long hours. The number one complaint that we hear is that owners feel burned out and need more work life balance. As the owner of a small business you are an expert in your niche, which is where you produce the most value. Bookkeeping is busy work that does not add value to your enterprise, nor keep your employees paid and customers satisfied.
While you can do it, the question is should you? Because bookkeeping is not usually thought of as mission critical, owners often get weeks or even months behind, resulting in long hours catching up at month or year end: Time that could be spent working on the business or with family.
Once you get behind on your accounting, it is like flying a plane blindfolded. Your books are like the instruments in the cockpit. They give you information to navigate, maintain altitude and make decisions that will get you safely to your destination. Your business is the same, with up to date books, you can make metrics based decisions, to keep your business profitable and growing. You don’t want to find yourself at the end of the year looking out the window to see trees rapidly approaching.
Bookkeeping is so much more than just processing numbers. The cost of an outside bookkeeper is almost always a fraction of the value of the owner’s time. As an expert a good bookkeeper can complete the job in less time with higher accuracy, making the decision a no-brainer.
Get strategic: save money and stay out of trouble
A good bookkeeper and tax professional will help you save money on taxes and out of trouble with the government. There are many ways that businesses can save on their taxes including deductions, and tax credits. Most business owners don’t take advantage of all the tax benefits, and often unknowingly take some that they should not, putting them at risk in the event of an audit.
A tax firm can advise you on whether you are eligible for R&D credit, employee retention credit, or work opportunity credit among others. You should have a strategy to optimize your tax situation.
No one wants an audit, but if you get one, you’d better be prepared. If you don’t have clean records, and copies of receipts, you can expect to spend hundreds of hours searching through receipts and records in addition to a large tax bill in disallowed tax deductions. The IRS won’t take your word for it.
Hiring an outside bookkeeper will ensure that your records are well organized making it easy to provide an auditor with the information required.
Don’t leave money on the table: Exit strategy
Businesses that engage outside accountants and tax professionals achieve up to 20% higher valuations. You may not be planning to sell your business any time soon, but circumstances sometimes require it. Unexpected health conditions, accidents, divorces and other life events can require a sale.
A potential buyer is going to want to see 3-5 years of professionally prepared financial statements, prior year tax returns and a quality of earnings report. Having consistent and professional accounts will provide confidence in business performance and will make it more attractive to a buyer allowing them to pay a premium rather than demanding a risk discount.
Start now. Hire a professional, so that if you unexpectedly get an opportunity to exit, you will get the price you deserve.
