When to Hire a Bookkeeper: Scenarios for the Self-Employed

By Erin Ollila, Contributor, on April 12, 2018

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Before I finally hired someone to take over my bookkeeping process, I spent a lot of time manually managing my books. I mean, a really long time. How do you know when it’s the right time to hire a bookkeeper? The truth is, this isn’t a one-size-fits-all decision, but there are many clues that can help you find your way.

First, make a list of all the tasks you’d want your bookkeeper to complete, like processing payments or maintaining payroll. Before you consider hiring anyone, make sure these responsibilities fall under the role of a bookkeeper — not an accountant. In basic terms, a bookkeeper helps with day-to-day finances and ongoing financial transactions or recordings.

Candie Conat, a veteran bookkeeper with over 25 years of experience, says, “A good, experienced bookkeeper will explain, teach and interpret the numbers in your business to help you be sure that your income and expenses are properly classified prior to handing [them] over to a tax preparer.” Accountants, on the other hand, are who you’ll turn to for financial-planning advice. They can analyze the data your bookkeeper collects and facilitate your taxes for you.

Once you’re clear on what you need your bookkeeper to do, here’s how to determine the right time to hire one.

No, It’s Not Time to Hire Yet

Is your business still a side gig or just starting out? When you’re brand new to the freelance world, it’s easy enough to keep your own records. Similarly, if your profits are still low — let’s say you make a few thousand dollars per year — your financial tracking likely won’t require a contractor’s help.

Consider how long it takes you to complete your bookkeeping. Is it something you only touch monthly and spend less than an hour on each time? If so, it’s not time to hire. Once you find that you’re spending more time on this task, you can reconsider. Until then, just complete the work and move on to one of your many other freelance responsibilities.

Another sign that it’s not time to hire? You actually like sending invoices, tracking payments and reconciling the differences. Just because offloading the tasks takes something off your plate doesn’t necessarily mean you should do it. If you enjoy certain parts of your business, do them yourself. As a bonus, you’ll start to understand the areas in your business that need work, and the areas where you can be more hands-off. “Handling your own invoicing is a great way to stay in tune with your business and your monthly sales,” says Conat.

You Might Need to Hire a Bookkeeper

If managing your books is causing you anxiety, it may be time to consider hiring a professional to tackle this task. After all, in order to be the best business owner you can be, you should strive to focus your energy on items that don’t weigh you down. The rest of the work can be offloaded to contractors — especially when you have a hard time understanding the data or creating financial reports. Do you need more time to get other items checked off your to-do lists? Sharing some of your administrative workload lets you focus on tasks that are more aligned with your skills, while someone else takes care of the math.

If you don’t need help on a daily or weekly basis, you can consider using a bookkeeper as a consultant. “Many experienced bookkeepers offer monthly, quarterly or annual review services,” explains Conat. “This is where they can log in and look through things to make sure cash is properly balanced, check on classifications of sales and expenses and ask all the right questions to make sure things are in the best possible shape.” Essentially, you do the work, and they do the review. If you’re not sure whether you need a bookkeeper, this is a great option to consider.

Yes, You’re Ready to Hire

In many ways, the type of business entity you own can help you define when you need to hire a bookkeeper. If you’re running an S Corp or other corporation, it’s time to interview potential candidates. Similarly, the amount of money you have in business profits can also indicate when a bookkeeper may be helpful. If that number is over $60,000, start putting some feelers out.

Do you have any employees? Managing payroll is complicated, especially if you have employees and contractors. According to Conat, “Bookkeepers can verify that you’re paying the right amounts to the right people and government agencies on the proper due dates, too.”

Another difficult bookkeeping measure is staying on top of inventory and digital products. With so much money coming in at different rates for different items, leaving the processing to a pro can save you some time and help you avoid a major headache.

Don’t fall back into your old routines this year. Commit to managing your financial records like a pro, and make strides to stay organized. When you have quick and painless finances, you may want to tackle them on your own. But when the numbers start to get overwhelming, take a step back, hire a bookkeeper and focus on developing your freelance skill set.

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