- June 7, 2020
- Posted by: BackOffice LLC
- Category: BackOffice Blog
Starting and running a business can be a profitable and emotionally rewarding endeavor, but it is definitely not for the faint at heart. Business owners have to fill different jobs and juggle responsibilities to keep their customers and employees happy, while staying involved in the daily operation of the business.
Most small business owners play the role of a business planner, trainer, human resources, customer service representative, and technology expert all rolled into one – whether it’s of their own choosing or not. At times, they may even be responsible for taking care of the company’s bookkeeping and accounting. Sounds like a lot, right?
Why Consider Outsourced Bookkeeping and Accounting?
While this multitasking may work when you’re starting out, wearing a lot of hats can actually be counterproductive in the long run. According to a study published in the American Psychological Association journal, multitasking takes a serious toll on productivity, and may eat up as much as 40% of your productive time.
Instead of being an advantage, multitasking can sink your ship if you’re not careful enough. Numerous studies show that it can diminish creativity, hamper one’s ability to focus, cause memory impairment, and significantly increase a person’s stress level. So, if you’re serious about growing your business, you need to delegate some of your most time-consuming tasks to the experts – and you need to do it now.
Where do you start? First, try eliminating repetitive tasks that consume a huge chunk of your time; bookkeeping and accounting are prime offenders. Delegating tasks like these, so you can focus more on growing your business, is smart.
Hiring outsourced bookkeeping and accounting services can be a wise business move for a number of reasons. Consider these:
- You’ll be working with qualified professionals who are experts in their respective fields. This means you can focus more on the business without worrying about keeping track of your receipts, payroll, customer invoicing and collection, and other such mundane but equally important tasks. You also limit your risk of making erroneous entries in the company books.
- Outsourcing your bookkeeping and accounting functions is extremely cost-effective. You pay for the service you need when you need it.
- You have the option to scale more easily. It’s much easier to request additional staff at an outsourced accounting firm it is to hire a new accountant yourself.
When to Outsource Your Bookkeeping and Accounting
You’ll know it’s time to outsource your company’s bookkeeping and accounting when you start noticing the following signs.
1. You can’t keep your books and finances in order.
Let’s face it: Most business owners are not bookkeeping or accounting experts. They have to perform these tedious tasks since there is no one else to do it; they don’t have enough resources to hire a qualified professional for the position, but they want to keep on top of things. No matter what the reason is, if the company books are being maintained by a non-expert, they might be in a mess.
2. You are tied down to the day-to-day accounting process.
Even if you have an accounting background, you shouldn’t spend most of your time dealing with invoices, receipts, and travel logs. As the company’s owner and chief, you should focus more on setting the company’s strategies and direction, overseeing its operations, and making major decisions that will determine the fate of the business. You should keep your eyes on the prize, not on things that are better delegated to experts. Having someone do it for you helps you get back on track and start realizing your full business potential.
3. Your business is growing.
Outsourcing your bookkeeping and accounting needs makes perfect sense when your company is entering a phase of rapid growth. This will be one of the most challenging and stressful times you’ll experience, so you need to focus all your energy, attention, and creativity to make it work.
Doing the books is the last thing you want to have on your plate during these times. After all, you probably don’t have the time for it, and even if you do, you’ll only increase your risk of committing accounting mistakes that may jeopardize your company’s success.
As a general rule, consider delegating or outsourcing your bookkeeping and accounting functions if your company is reaching $1 million in revenues (the earlier, the better), has employed eight to ten people, is accepting outside investor capital, or is experiencing accelerated growth.
4. You’re losing money.
It’s easy to understand why you need to hire a professional when your business is growing, but why should you consider paying someone to do the books when your business is losing money? You’re supposed to be limiting your expenses, right?
You may not believe it, but hiring an expert can actually work to your advantage. An external bookkeeper or accountant can help assess and pinpoint financial inefficiencies better than someone without training can, and will work with you on how you can best handle your liabilities.
5. You are being slapped with tax penalties.
Most business owners agree that paying taxes is a very frustrating part of running a business. Missing the tax filing deadline and not paying your estimated taxes for the year can be an expensive mistake. The IRS can slap you with a 5% penalty per month for not filing your business tax returns before the April 15 deadline. Neglecting to pay your taxes comes with a 6% interest and a 0.5% penalty each month after the deadline.
If you’re not working with a professional bookkeeper and accountant, you can easily miss out on the potential tax deductions your business qualifies for. A professional bookkeeper can help you track, categorize, and keep a detailed record of your business expenses, manage your books on a monthly basis, and compile your tax information so your accountant can use it for preparing and filing your tax returns.
Need Bookkeeping and Accounting Help? BackOffice Solutions Has Your Back!
Do you want to have experts handle your bookkeeping and accounting? Contact BackOffice Solutions today for a free quote. We have over 30 years of experience under our belt and have helped countless businesses gain competitive advantage by providing unsurpassed financial insight, administrative support, and technical knowledge. With BackOffice Solutions, we’ll take care of your bookkeeping and accounting needs so you can concentrate on growing your business.