4 Signs It’s Time to Outsource Your Bookkeeping
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If you’re thinking about hiring a bookkeeper, it can be hard to determine if it’s a good investment for your business. Here are 4 signs it’s time. If you find yourself nodding along to some or all of these, definitely look into hiring someone to take your bookkeeping off your plate. Whether you hire me or someone else, it’ll help your business run more smoothly and reduce your stress level by A LOT!
1. Your cash flow can handle the expense
First things first: you need to be able to handle the added expense of outsourcing your bookkeeping. Because by definition, “outsourcing” means you're paying money for someone else to take something off your plate. Got the cash flow? YAY! That's the first step. Not quite there yet? It's probably not a good time for you to be outsourcing. And that's okay! It's something you can work towards. (Because as much as I’m a fan of outsourcing, outsourcing your bookkeeping probably isn’t something you should go into un-mindful debt for.)
THAT SAID: This does NOT mean your business needs to currently be profitable!
In fact, I have multiple clients whose businesses aren't profitable right now. One is in the beginning stages of her business. Another is currently investing heavily in upgrading products and infrastructure. Both are spending more than they are making each month. AND. They both have solid plans for growth and are confident that their savings (and/or credit card balances) can handle the expenses until they DO become profitable.
2. You want or need to take bookkeeping off your plate.
Choose as many as apply:
You simply don’t like doing your bookkeeping.
You physically don’t have the time, or just don’t want to make the time.
You want to focus your attention/spoons elsewhere.
You don’t know how to use bookkeeping software and have no desire to learn. (it's okay to save those brain cells for something else!)
You sort of know how to use bookkeeping software, but are anxious about making a mistake (see #4 below)
For any number of reasons (ex: money trauma, AHDH, chronic illness) being that up-close-and-personal with the details of your business finances (ie looking at every.single.transaction) feels overwhelming and/or simply sucks your energy. You want the big picture, but getting lost in the weeds is the epitome of unhelpful.
If any of those apply to you, congrats - it’s probably a good time to outsource your bookkeeping!!
3. Your bookkeeping is out of date
Even if you like and want to do your bookkeeping, if you’ve fallen behind, it’s probably a sign it’s time to hire a bookkeeper. Let’s face it. Even though bookkeeping is SUPER important, it’s not urgent, and is easy to let fall to the back burner. But the back-burner isn’t where bookkeeping should be. (Remember, bookkeeping isn’t just about being ready for taxes. It’s about SO MUCH MORE.)
And let’s be honest: the further you fall behind, the less likely it is that you’ll be able to catch up. And the MORE likely that when you try to catch up, you’ll make a mistake. (Take it from me, even as a professional bookkeeper, doing “clean-ups” is NO JOKE.)
If you don’t have the cash flow to pay someone to do your monthly bookkeeping (see point number 1 above!), look into quarterly bookkeeping, or hire someone to get your books up to date so you can start fresh.
Because life is too short for staring at your accounting software and feeling completely overwhelmed.
4. You’re afraid of the IRS
While there’s not much in business where there’s a right way and a wrong way, bookkeeping is one of those few things.
Recording your income and expenses NEEDS to be done correctly. Not to put too fine of a point on it, but bad things can happen if you mess up and subsequently file inaccurate tax returns with the IRS. If you’re afraid that you don’t really know what you’re doing when it comes to bookkeeping, it might be a sign to hire someone to help you. That way you can rest easy knowing that everything is being done correctly, and that you’re not accidentally committing tax fraud.
To be sure, having good bookkeeping won’t stop you from being audited, but if you are audited, you’ll know you have nothing to worry about.
(Also, in case I made you anxious about the “bad things” that can happen if you mess up your bookkeeping. I can assure you with 99.99% confidence that “bad things” don’t include you going to jail. No IRS agents will show up at your door. What happens is that you get a letter from the IRS. You’ll probably end up hiring an accountant. It’ll cost you some time, some money (in accountant fees and possibly penalties, depending on what the audit uncovers), and some frustration/annoyance. But that’s it. You’ll make it through and everything will be fine!)
