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Entrepreneurs are skilled at a lot of things, making money being one of them. However, properly managing those finances is a different story.
Balancing between quarterly reports, tax deadlines, and organizing reimbursements while still having enough time to invest in growing a company can become overwhelming and complicated, fast.
Entrepreneurs feel like they need to have a “do-it-all” leader mentality to be successful. But, how do you know it’s time to wave the white flag and save valuable time by hiring a bookkeeper?
While the question might be hard to confront, the signs that it’s time to hire a bookkeeper to tackle your finances could be right in front of you.
Common Financial Dilemmas for Business Owners
Many entrepreneurs will regretfully fall into the mindset that every penny they make is theirs so they start spending without ever looking to see how much is coming in and out. Then, they wonder where it’s all going and why they don’t have enough.
To successfully grow a business, you need to be aware of where your money is coming from and where it’s being spent.
Therefore, cash flow is something that needs to be looked at weekly to understand how much money you actually have and if you can meet the financial obligations you’ve agreed upon such as payroll, rent, taxes, etc.
Although entrepreneurs are great at making money, they’re not so great at managing it. And not knowing how to properly manage business finances leads to tension, stress, and eventually, overwhelm.
The Value a Good Bookkeeper Provides
A good bookkeeper will stay on top of the cash flow managing expenses and organizing financials to assist you in making more informed decisions and setting goals for your business.
They’ll provide proper reports such as a balance sheet to help you stay up-to-date about the reality of your accounts. With this information laid out by an accounting professional, you will now be aware of assets, liabilities, and potential problem scenarios that could be looming if not addressed.
In addition to a balance sheet, a bookkeeper can provide a profit and loss statement. This will be used to create a proper business budget. Using this information, you can set bigger goals and track your progress toward reaching them.
Essentially, your bookkeeper is the doctor of your business finances, keeping a pulse on the blood pressure, cholesterol, and health of your bank accounts. Knowing these levels is what ultimately keeps your business afloat, payroll flowing, and the lights on.
The First 90 Days
Once you decide it’s time to outsource your finances and hire a bookkeeper, the first 90 days are the nitty gritty, clean-up process.
This involves gathering and organizing financial documents so they gain a clear picture of the health of where your business really stands.
In a no-judgment process, your bookkeeper will gain access to your bank statements, balance sheets, business assets, client payments, and payroll list to start asking questions to gain clarity about your business finances.
In the first 90 days, you will get into the details of everything you need to address with your bookkeeper. They aren’t there to judge, they help you sift through every detail of your business so you can stay out of the red and build a thriving company that makes more money than it spends.
How a Bookkeeper Will Help You Save Money
First and foremost, every entrepreneur should have a budget. If you haven't established a budget for your business yet, it's crucial to do so.
Your bookkeeper can help by analyzing your expenses, identifying areas of overspending or non-compliance with guidelines, and suggesting benchmarks based on industry standards.
They can also help you manage accounts receivable and identify ways to improve cash flow, ultimately saving you money and improving your bottom line.
To save money, you must start to gain margin in your business and spend money more efficiently. A bookkeeper will help identify key growth areas to streamline ordering processes, better utilize service providers, and gain the gross margin needed to scale your business.
Bookkeepers and Taxes
Tax season can be a dreaded time for business owners. And while bookkeepers aren’t going to replace your CPA fully, they can make the tax filing process streamlined and easier.
A bookkeeper will ensure your business expenses are categorized correctly, making tax preparation more accurate for your CPA. While they may not provide specific tax strategies, they'll work alongside them communicating regularly and ensuring all necessary paperwork is in order.
This partnership can save you money in the long run by avoiding penalties and ensuring you take advantage of available deductions.
Characteristics of a Good Bookkeeper
As entrepreneurs, your business is your baby. You have a right to feel protective over the ins and outs of the company. With that being said, handing over any sensitive information such as the financial statements can feel scary and daunting.
That’s why it’s so important to hire a bookkeeper you can trust fully.
Your bookkeeper should feel like an extension of your business, not a liability. A good one will be trustworthy, personable, and have a strong understanding of financial software.
Additionally, a good bookkeeper should also be able to communicate financial information clearly to help you make informed decisions about the goals and strategies of your business.
In this episode of Business Made Simple, Donald Miller and our CFO Lisa Zeeveld discuss the importance of hiring a good bookkeeper for small businesses, common financial dilemmas many business owners face, and offer practical advice on how to overcome them.
The secret weapon to being an entrepreneur who is good at making money and managing it is knowing that outsourcing bookkeeping will make the biggest difference in your success.
Learn valuable lessons from Lisa about how to scale your small business and gain financial peace of mind with a BELAY Bookkeeper.