Updated: Jun 16, 2020
Many business owners are hesitant to hire a bookkeeping service to track their expenses. They may feel it is an unnecessary cost, or some may be uncomfortable giving a third party access to this privileged information. While these concerns are valid, there are many advantages to hiring an outside party to take bookkeeping off your hands that may outweigh drawbacks.
1. Opportunity Cost
The bottom line is it takes time to keep your own books; this is time you could be spending on other areas of your business. If you are not an accountant or have little familiarity with software that assists with bookkeeping, the time it takes you to enter transactions into your ledger will be much higher than what is necessary. Think about cost not just in terms of the dollar amount you could save doing this yourself but also how much more you could earn for your business if you were not spending time keeping books. You may find it makes financial sense to bring in a third party, even if it involves some additional expense to your business.
When you hire a bookkeeping service, you are employing an individual with accounting experience or even a certified accountant. These individuals know how to enter and classify your transactions. This not only helps keep your books accurate; it also helps for pre-tax planning. When you keep your books yourself, you may find a certain amount of procrastination is natural. You get busy, and you decide to close out the month on the third of next month instead of the thirtieth of this month. A person employed for the sole purpose of keeping the books will procrastinate less, check more often and usually do a better job.
3. Conflict of Interest
You may be in a partnership or business arrangement where there is more than one individual with an interest in the accounting of your business. Even if you think you have a great business relationship, these relationships can easily turn sour if there is any accusation of misconduct with bookkeeping. Even an unintentional error at the hands of one person can cause a serious and unrepairable rift in a business relationship. Take the potential conflict of interest out of the situation, and use a third party to carry out the transactions. You and your business partners will be better able to deal with any potential issues if none of you are directly at fault.
Today, there is no need to hire an in-house bookkeeper or accountant for most small businesses. If your transactions demand a daily, full-time accountant, then it may be the time to seek one. However, if you simply need someone for a few hours a day or a few hours a week, consider outsourcing the job. You will save money on salary and benefits to the individual. With the advances of Internet technology, communicating with a third-party accountant is as simple as sharing your information with an external hard drive. You do not even need to have the bookkeeper in the office if you can share files effectively.
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Call Irvine Bookkeeping today if you have any questions regarding statement of cashflows. You reach us at 949-545-9980 or visit us at www.irvinebookkeeping.com