No small business owner – even those who proudly claim the title “solopreneur” – can manage every task alone. In fact, smart, successful business owners know that trying to do it all yourself will quickly lead to overwhelm and a bad case of burnout. Health Matters Media offers a wide variety of virtual assistant services, including bookkeeping, to help you effectively grow your business into a thriving and profitable company.
When is it Time to Hire a Bookkeeper or Accountant?
In order to make this decision you need to weigh the benefits of hiring outside help against the cost – not only in dollars, but in your time and frustration level as well. Hiring an accountant or bookkeeper, as with other outsourced tasks and projects will save you time and money. Sure, you can probably do your own taxes and manage your own books, but is it worth the time? Maybe not.
The key in deciding whether to outsource a task or not is to consider three key points. Do you enjoy doing the task? Do you know how to job? Should you be doing the task? If you answer yes to any of these considerations you need to outsource the project so that you can focus on building your business and concentrate on income generating tasks.
The Differences Between a Bookkeeper and an Accountant
Simply put, a bookkeeper keeps the books. He or she manages your income and expense records, most often using a software such as Quickbooks to ensure all receipts are properly filed so that when it’s time to calculate profit and loss and quarterly or year-end taxes, all the information is available.
An accountant, on the other hand, takes this information and uses it to determine how much you owe in taxes and when, and to offer advice on potential tax savings. He or she will help you decide if it’s better to claim your new computer as an expense, or to depreciate it over several years. Your accountant’s job is to ensure you are taking advantage of all the tax benefits available to you, while avoiding the fees and penalties that can occur if you are incorrect in your calculations.
Your accountant can also help you set up a basic bookkeeping system that you can manage yourself, allowing you to avoid having to hire a bookkeeper for the job.
Accounting Do-It-Yourself Pitfalls to Avoid
Keeping your own books doesn’t have to be difficult, but there are a few things you need to keep in mind before you make a commitment. First, if you’re not organized or disciplined about it, you’ll be better off letting someone else handle the task. Letting your receipts pile up all month (or year!) is a recipe for disaster. Much better to set aside an hour or so each week to keep everything organized. It’s a lot less stressful, and you’ll have a lot less risk of missing something important.
Also, you need to be sure you fully understand how income and expenses should be classified within your accounting system. If you’re recording a business expense, is it rent, or office supplies, or capital equipment? Incorrect categorization can cause trouble at tax time, and end up costing you more at the accountant’s office. When in doubt, give your CPA a call and ask.
Finally, don’t make the mistake of trying to handle your own tax returns and quarterly tax payments. Your accountant is up-to-date on the latest changes to the tax code, and you are not, so unless you want to devote a lot of time to learning to be a CPA, you’re better off paying him for his expertise.
So do you have to have a bookkeeper and an accountant if you’re just starting out? Not necessarily. If you’re earning a few hundred dollars as a sole proprietor and don’t want the hassle of deducting your expenses, you can simply include your business income in your personal tax return and call it good. But once your business grows to the point that it’s earning a significant income, and you’re looking at different business structures like LLCs and corporations, it’s time to get serious about your accounting practices. The money you spend on a good accountant and bookkeeper will be recouped many times over in time – and maybe even taxes – saved.
If you are ready to hire a bookkeeper or an accountant please contact us today.