Owning a successful business and actually running one are two quite different things. You might have huge amounts of capital and plenty of regular customers, but your business won't thrive if you don't have effective bookkeeping skills as well — at least if you intend to run the financial side of things yourself.
Bookkeeping is an essential role that every business owner should be able to handle, and he should enlist the help of someone who can take care of this task if he cannot. You don't necessarily have to hire an accountant or in-house bookkeeper to do this for you. Many business owners outsource their bookkeeping needs instead.
Here's a look at some of the benefits of and considerations involved with hiring an external bookkeeping service for your business.
You'll Get an Unbiased Financial Opinion
One disadvantage of hiring an internal bookkeeper is that he may become emotionally involved with the day-to-day running of your business. An external bookkeeping service has nothing to do with your business. Its goal is to give you a clear insight into your business's financial position, not to pat you on the back and tell you everything is going to be OK even when it's not. A bookkeeping service need only do the accounting work required to keep your business up and running and show you its financial strengths and weaknesses. It's not technically part of your company.
You'll Avoid Conflict of Interest
It can be risky for some businesses like partnerships to entrust the accounting to one of the owners. Accusations of misconduct could potentially ruin the business relationship, even when an error in record keeping is unintentional. An owner might find himself in the unfortunate position of having to make a choice between what is best for himself and what is best for the company. This isn't to say that he wouldn't put the business first, but others within the company might wonder about his intentions if something should go wrong. Using an independent bookkeeping service avoids this pitfall and can boost confidence among the owners that all accounting statements are true, accurate and without bias.
What to Look for in a Bookkeeping Service
External bookkeepers are typically individuals with relevant experience in accounting and auditing services provided to a wide variety of business types. When interviewing bookkeepers, choose one that is well acquainted with your type of business. Look for an external bookkeeper who specializes in working with companies that are similar to yours, but don't overlook basic expertise in the process. The service should also possess excellent overall skills and the experience to determine profits, turnover, and losses among other financial ratios to help you determine the financial position of your business.
You'll Lower Costs
One of the key components of running any business is keeping a firm grasp on the overall costs incurred. A business owner's goal is to reduce the total costs of his operation, and one way to do this is to control the wages and salaries of workers — usually by employing fewer people.
The salary and benefits paid to an in-house bookkeeper can be significant. A business can run without a bookkeeper on staff if the business owner — or one of the business owners — collects invoices, payments, credit sales, and other pertinent financial information. He can then hand the necessary documentation over to the external bookkeeper for accounting purposes. The cost of outsourcing your accounting is typically significantly less than employing a full-time bookkeeper.