One of the top questions that we hear all the time (like, Google search results sends folk to our website all the time…) is do I need a bookkeeper?
Obviously we’re biased, but we believe this is hands down one the best investments you can make as a business owner. The biggest differentionator we see time and again between kick-ass, growth-oriented, thriving-businesses and those that are struggling along is engagement with the financial data of the business. That’s it.
How do you know you’re ready, beyond you have a business and are making money?
Read on, dear business owner…
1. You’re not keeping up with it.
This is for the folks with early fantasies of DIY and saving a buck. Odds are 1 in 1000 that you’re keeping up with it. We’ve met one. One. They did bookkeeping every. single. morning. before heading into the business. Everyone else falls behind, procrastinates, or leaves a half-finished trail of untidy transactions. No shame, you literally have 5million more important and more fun feeling tasks on your to do list.
If you have an unsightly trail of messy books on your tail, it’s time.
2. You have no idea how much money you made last month, hell, even this year… or if you can pay yourself yet.
If you’re one of the legions that say something like “I have no idea what our revenue is like…”, it’s time.
3. You have a decision to make in your business: hire someone? Invest in a studio or office space? Buy that online coaching program?
This is the big one, and related to number two. Bookkeeping gives you the financial reports to tell you the results of all the past decisions you’ve made in your business. If you don’t have that information to inform your decisions, you’re effectively driving up a winding mountain road blindfolded (scary, right?).
Still skeptical if about whether you can get away without hiring one? There are a few circumstances that will let you off the hook:
1. You have one of those super diligent and routine-happy personalities that has a schedule and system down pat. ( Odds are 1 in about 1000.)
If this is you, we all want to know your secret.
2. You’re still figuring out regular revenue, and have few and far between-expenses. If you’re still starting out, haven’t cracked more than $40-$60K a year yet, probably in the first year of running your business, hiring out bookkeeping shouldn’t be a priority.
Service-based businesses will have an easier time of this; get a nice spreadsheet, or use something like Mint or You Need A Budget. Open two bank accounts, and put about 1/3 of every payment you bring in into your second account for taxes. That’s it.
3. You’re a solo service provider making a comfortable living, with predictable expenses and no plans for growth. I know a few lawyers and some high-end executive coaches that fall into this category. They know what their expenses are, have no problem making revenue or finding new clients, and are not looking to change how they’re running their business anytime soon.
In this case, you can have your accountant catch you up at the end of the year ( **though they might still yell at you to hire a bookkeeper )
For most of us, here’s a run down of bookkeeping options:
Have your Accountant do it —
Pro’s: one stop financial shop; your taxes are done by the same person that keeps your books clean.
Con’s: It’s very rare to get enough detail or information, and to get reports on a monthly basis (which is how often you should get them).
Your accountants job is to care about taxes. Your job is to care about the day-to-day operations and long term strategy of your company. We don’t know a lot of accountants that offer dedicated bookkeeping, or if they do, that offer it through the lens of day-to-day operations, because that’s just not what they’re trained to do.
Hire Someone In-house
Pros: often a good idea for larger companies. Once you’ve got over $5 million-$10 million in sales a year, it’s usually a good idea to get someone in-house, at least part time. Your bookkeeping will have a level of complexity that needs daily attention, and having a person on the ground to process payroll, paperwork and admin will streamline the workflow.
Cons: You need to have someone around that knows finance well enough to direct an in-house bookkeeper. Can you train and manage? Is there someone on your team that is savvy enough to be able to spot mistakes on reports?
We’ve seen a lot of businesses who have someone who “knows a bit about” books or another admin person, who may be super smart and seems like they can handle it, nearly take down the business, and cause thousands of dollars in problems because of bad bookkeeping. It takes a lot of experience and training, and the learning curve is steep. Tread cautiously.
You don’t need an in-house bookkeeping if your revenues are less than a couple million a year.
Pay a Freelancer by the Hour
Pros: Often the most affordable and flexible option.
Cons: One human only knows so much. Can they grow with you? It’s also hard to find awesome folks, the ones we know are generally booked up and not accepting new clients.
Hire a Company That Specializes in Bookkeeping.
Pros: Expertise and multiple brains! Folks that will handle any staff transitions, and able to grow with your businesses, because they’ll likely be growing too.
Con: Costs more than a solo freelancer, usually. Sometimes your day-to-day bookkeeper might change, and you probably won’t have a say in it (hey, we know you get attached to your person!).
Wanderwell, of course, falls in this last category. We’re always happy to discuss our service and finding the best fit for you; know that our low-key approach sometimes involves referring potential clients somewhere else that may be a better fit. More information, and how to work with us can be found here.