Written by: Suzanne Cody, CPA CGA
As soon as you start a business, you need to start keeping track of every transaction no matter how small. Every movement of money in and out of your account needs to be recorded. Depending on the volume of these transactions, you may or may not be able to handle this yourself. Many entrepreneurs feel that they can do it themselves even as they struggle to find the time and wonder if they are really doing it properly.
Four important reasons you need a bookkeeper are:
1) To save time
If you don’t know a lot about bookkeeping, it’s not a good idea to try it yourself. Tracking receipts, expenses, and payments is only the start. A good bookkeeper will take all of your numbers and make sense of them as they enter them into accounting software. They will know how transactions need to handled, ensuring that you are provided with meaningful business reporting so that you understand how the business is doing.
2) Help to fine tune your financial strategies
Bookkeepers deal with the day-to-day business and this gives them a good insight into your company’s finances. They discover issues and bring them to your attention in time for you to do something about them, helping to keep you out of trouble.
3) To assist in managing your cash flows
Cash flow problems are one of the leading causes of business failure. The movement of funds should be tracked regularly and is not just the net income of your business. It includes many other figures such as account receivable, inventory, and accounts payable. A question commonly asked by business owners is ”How can I have made a profit? I don’t have any money in the bank!”. Growing a business often puts a strain on cash. A good bookkeeper can help you to keep an eye on cash outlays as you plan for growth and to speed up the receipt and processing of accounts receivable to increase available cash.
4) Minimizing potential errors
Bookkeeping errors will happen occasionally, but their likelihood of happening is increased by failing to follow procedures, making data entry errors, and failing to properly categorize income and expenses. A good bookkeeper will have the proper skills and training so that these types of errors are minimized.
Things to look for: Experience, professional education in the field, technical savvy, good references, and liability insurance.