Being a small business owner these days is tough. Entrepreneurs face challenges at every turn and it requires personal investment of time, talent and treasure to be successful. Not the least of these challenges is stretching available resources by taking on operational tasks personally.
It’s no secret entrepreneurs wear many hats; many times they are the marketing department, the HR department, the purchasing department and the cleaning crew all rolled into one. Even those businesspeople who have grown past the stage where they have to do everything themselves still feel that tug to stay connected to many of these functions in the name of retaining tight controls.
Bookkeeping is one of those business functions that’s often an afterthought for small business owners, something to be done on weekends or passed off to one’s spouse, in order to save money. That works in theory, but with everything else that can pop up, bookkeeping tasks are also easy targets to be pushed to the side. With everything that can come along unexpectedly in a typical day, it’s altogether too easy to save updating the books for another time.
One big negative of postponing your bookkeeping tasks, maybe because a machine broke or a client moved up a deadline, is such tasks have a tendency to snowball, putting you constantly in catch-up mode and increasing the chance for errors. Moreover, bookkeeping is more than keeping an up-to-date ledger, it’s a roadmap for how your company is doing and what direction to take next to overcome challenges and maximize opportunities in the marketplace. You can’t do that very well without accurate, up-to-date records.
A Helping Hand
When it comes to bookkeeping functions, business owners of every size can benefit from the help of a designated individual, be it through hiring the right help, assigning the tasks to an existing employee or enlisting the services of a third-party vendor. Sometimes the decision to farm these tasks out is made for the entrepreneur, as their business has grown beyond the limits of their available time and expertise. Whatever your motivation for considering a designated bookkeeper, there are several factors you need to consider.
First, consider your needs for timeliness and accessibility of information. If your business demands access to your financials daily or several times a week, it’s probably better to have someone just down the hall than to go through an outside vendor who, besides being offsite, is taking care of several clients besides you. Companies who don’t need that level of access may find it more cost effective to retain outside help versus shouldering the load of salary, insurance and office space of a new hire.
Of course, many small companies maximize their investment in employees by giving them additional responsibilities, such as HR or office manager functions. Here again, one runs the risk of bookkeeping duties taking a back seat to other matters, all of which are demanding the employee’s immediate attention.
There’s also the old adage, “The right tool for the right job,” to consider. Is the person to whom you’re assigning these duties up to the task in terms of training, organization or skill set? If you hire someone new, are you willing to share such company sensitive information with someone you don’t know well?
One strategy that many small business owners have employed is splitting the bookkeeping work to include the best elements of in-house and outside help, saving time and money in the process. Companies train someone on staff for day-to-day data entry with some management oversight, then have a qualified outside entity clean it up, reconcile everything and get reports to management in a timely manner.
This hybrid system also keeps tasks within the realm of a business owner’s — or their employees’ — respective skill set. As with legal services, airline pilots or your doctor, there are some things where you’re just better off leaving things to a professional. A reputable outside firm is going to have the expertise to handle just about anything your business can throw at it and, equally important, translate those issues into terms you can understand. That alone often justifies the cost of such services.
Put another way, you are the expert in your business and accountants and bookkeepers are the experts in theirs. Recognizing the value of such expertise can save you a lot of time, headache and ultimately money over doing it yourself.
Kelly M. Phillips, CPA
Principal, Bell & Company, P.A.