The common time waster that stops your business from growing
Being a small business owner can be fantastic. You get to be involved in every aspect of your business, from marketing to event planning, from sales to employee development. Being involved in so many areas of your business saves you from boredom and allows you to use skills you might not have known you had.
There is one area that many small business owners hate to be part of but still choose to take responsibility for: bookkeeping.
Most business owners don't choose to do their own bookkeeping because they love it, they do it to save money. What they don't understand is that doing their own books often winds up costing them more money in the end, not to mention the time and energy that goes into a task they despise or, at the very least, don't fully understand.
Here are some ways not having a bookkeeper can hurt your company.
Poor business decisions
Every day you make financial decisions about your company and those decisions have an effect on how successful and sustainable your business is. If you're responsible for the bookkeeping, you could be making errors that affect the decisions you make. You may think, because of an incorrect decimal place, that you have more money in the bank than you actually do. Or you may not fully understand how a decision today affects your business tomorrow.
A bookkeeper keeps track of your company's financial health and can advise you on decisions that can help you grow your business. They can also warn you if you're about to make a decision that could hurt your long-term growth.
Consider that you have a great month with a lot of money coming in so there's extra cash in the bank account. You might be tempted to upgrade your office computers, but a bookkeeper can warn you that there are upcoming payments the money is earmarked for. They can help you determine the best time to purchase those computers, so you won't suddenly find yourself with a zero balance.
This information becomes even more important if you're looking to undertake major financial transactions, such as taking out a loan or purchasing office space. A bookkeeper can help you fully understand the financial ramifications of such a move.
You might think a late bill payment here or there doesn't affect your business, but the fees associated with late payments add up and missing the wrong payment can affect your company's credit. That may make it more difficult to get a business loan or credit card.
Worse, you could miss vital transactions in one month that have ramifications for your business the next month or later on. By missing a payment in May, you may think you have extra money that then gets spent—until you notice in June you have to double up on a payment.
Bookkeepers stay on top of your financial transactions and understand how every transaction affects your business. They can help determine when the optimal time to pay debts is, and let you know if clients are behind on payments.
The information and insight a bookkeeper provides goes a long way to helping you make smart business decisions. Not having a bookkeeper not only adds unnecessary work to your load, it increases your stress and further increases the chances of errors being made.
On top of all that, bookkeepers also stay aware of changing laws, so they can ensure your company is compliant with payroll and tax laws, as well as any other financial rules and regulations that affect your business.
With all the negatives to doing bookkeeping yourself, why wouldn't you hire a bookkeeper so you can focus on growing your business?