The Great Debate
DIY or Hire a Pro? It’s not a question just for those needing to repair something on the house or replace a car part, but for bookkeeping as well. In business terms, it’s inhouse vs outsource and it will never go away.
If you’re not sure bookkeeping is all that necessary, read the previous blog post, Bookkeeping – Is it really that important?
The short answer is bookkeeping is the language of business, so… Yes!
Current and accurate books are essential for making good business decisions.
Can you actually afford that new equipment? Do you have expenses that are too bloated?
Some consequences of bookkeeping neglect.
- Pay more in taxes.
- Pay way less in taxes and get in trouble with the IRS and then they end up taking more.
- Less cash than expected.
- KPIs are off and not telling you the right story about your business.
Now that we’re on the same page, you find yourself wanting to improve your bookkeeping. You’ve read a few articles and maybe watched a couple videos and now… you’re still not sure where to begin.
This takes us back to the main event – inhouse vs outsource.
It sounds like a copout, but when it comes to DIY or hiring a pro, it really does depend. Every business is different, and every business owner is different.
Some of you might like dealing with numbers and want to be involved in all aspects of your finances, so you have someone else do some of the other things you don’t need to do yourself. While others are fine getting a weekly or monthly report and leaving the bookkeeping details to someone else.
What seems to happen at this point is a business owner will either want someone else to do the books, but not perform much due diligence in finding a good bookkeeper or do what they can themselves when they can and hope for the best.
Not great strategies.
We’re going to get you over that hump and put a sound strategy in place to always have accurate books.
It begins with WHO is going to do your bookkeeping and you have three options.
There is no reason you can’t do the bookkeeping yourself. You might not want to, but you are certainly capable and disciplined to do so. It’s more likely a lack of knowledge and experience with bookkeeping that’s holding you back.
One benefit of learning how to do the bookkeeping is so you have a better understanding of the reports you are using to make business decisions. Bookkeeping really is the language of business, so as a business owner you’ll be ahead of the competition with your knowledge of bookkeeping.
Hire Inhouse bookkeeper
If you don’t want to do the bookkeeping or perhaps you have been doing it yourself and feel like you have the foundation you need, hiring an inhouse bookkeeper might be what you’re looking for.
You’ll have more oversight, and it’s generally a more budget friendly way to have someone else doing the day-to-day bookkeeping.
But… be aware of the potential you-get-what-you-paid-for problem.
More often than not, the bookkeepers that are looking for a job in a small business like yours and are willing to work for a modest hourly wage, aren’t as experienced as you might realize. Sure they’ve done some schooling or are in the process. Maybe they have some fancy certificates that sound impressive. The problem is they don’t have much of an interest in your business success. It’s a job and they can get another one if it doesn’t work out.
Now this is not to say they are all like that. It’s a good option in order to free up more of your time for important owner level tasks.
Outsource to a Professional
When you start looking and getting quotes for a bookkeeping professional you might be surprised to find they are more affordable than you thought. The added value of not having to worry about it as much is very freeing for a business owner.
Another disclaimer – not all bookkeepers are alike.
One major issue you need to be honest with yourself about is when you go looking for a professional, are you wanting a bookkeeper or a consultant?
Bookkeepers are great, but they can be glorified data entry staff. They’ll track your transactions and categorize them how you want. They’re just imputing the data you send them to make sure you are in compliance and everything is accounted for. The software they use does a lot of work for them. They won’t tell you if putting that transaction in this other category would actually save you some money on your taxes, or putting this transaction in this category might send a red flag to the IRS.
This is another reason why you should in the very least have an understanding of accounting so you can verify you bookkeeper’s work.
Whether you hire inhouse or outsource, it’s important to be aware of how most bookkeepers’ work. That way you can ask all the right questions to set expectations up front. Know exactly what they do and don’t do for their clients. This will save you a lot of frustration in the long run.
In my opinion, this is the best option to maximize the value of consistent and accurate bookkeeping for your business.
The key is to do your due diligence and find one of those great accountants that understand bookkeeping and want you to succeed because it benefits both sides.
Outsourcing to the right accountant will give you more time back, to focus on growing your business with accurate data.
Inhouse vs outsource, the choice is yours. And to make it work, you need to make a choice. Once you’ve decided, give them your expectations and set up your system.
You’ve made it past the hardest part. It’s generally maintenance and small tweaking of your system from here on out.
For other blog posts in the series…
For more general info on our Bookkeeping Services.
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