For entrepreneurs, bookkeeping is on the list of things that has to be done but not among the things that are the best use of their time.
For example, a lawyer traditionally makes money for every billable hour of work, but many aspects of running a business come outside of billable hours. Freeing up even an hour or two of their time a week can be worth thousands of dollars in a given month.
Accounting is the lifeblood of every business. However, that does not mean you need to be the one to figure it out or spend the time doing it each day, week and month. Without concise accounting, there’s no guarantee that your next sale or billable hour will even result in a net gain for your company (watch our tutorial on profit margins). Knowing the state of your company’s money, both incoming and outgoing, is critical. The problem is, if you’re not going to do the bookkeeping, who is?
So, if you want to get out from under your bookkeeping, what’s the best solution?
There are several options worth considering, but in this discussion, we will focus specifically on the decision many small businesses are forced to make when it comes to managing and analyzing their finances – hire a bookkeeper or working with a virtual team.
Hiring a Bookkeeper
The benefits of having a bookkeeper on staff is that you have an additional staff member on your team that can contribute to your corporate culture and help boost morale around the office. Our newest accountant here at Kahuna Accounting recently brought in two dozen donuts. You can’t put a price on an early morning sugar rush from delicious yet fattening donuts. Bringing in good people to your team can have a tremendous ripple effect on the other employees. Bringing in the wrong person can have the complete opposite effect.
Hiring the perfect employee for any position is difficult. You need to consider their work ethic, financial needs, integrity, how they best communicate, if they will fit in with your team, and what motivates them. You also need to dedicate a staff member or have a process in place to properly train and manage this employee.
Assuming finding the perfect bookkeeper is possible, cost then becomes the primary consideration of whether or not your business can afford to bring them on, and if this is the best value for your money.
According to MAG Bookkeeping’s infographic on the costs associated with having an on-staff bookkeeper, an employee earning $17/hour costs the company around $30.87. This is 82% more than the actual earnings of that bookkeeper after taking into consideration other employee-related expenses.
There are also liabilities associated with working with a single bookkeeper. Years before the start of Kahuna Accounting, our founder hired a bookkeeper who turned out to be completely untrustworthy and hurt the business. Because there was only one person responsible for this position (no checks and balances in place or someone to directly manage and oversee activity), they were able to do a lot of damage before it was ever discovered.
The last consideration with hiring a bookkeeper in lieu of outsourcing your small business bookkeeping is their available workload. Depending on your business’ needs and the capability of the bookkeeper you hire, one employee may not be enough. The need for multiple accountants usually signals that your business is doing well enough to staff several, but that’s not always the case, and not always the way to get the most value for your money.
Going Virtual: Working with a Team
With cloud accounting services, utilizing a virtual team for your bookkeeping gives you access to a full team with decades of experience that specializes in your exact business for less than the cost of a part-time in-house employee. Specific benefits also include:
- You don’t have to train and manage the outsourcing company’s employees
- You have a team available instead of a single person
- Recourse in the case of discrepancies
- No internal turnover
- It’s less expensive
- Access to additional resources provided by the company
Similar to needing to find the right fit for an on-site bookkeeper, finding the right virtual team for your business can also be a challenge. You need to find a responsive and trustworthy company that can give you the specific care and service your business requires.
Not all virtual accounting companies will operate the same way or provide the same level of service. Also, specific companies may specialize in niches. At Kahuna Accounting, we have Clio certified Consultants, meaning they fully understand the practice management tool that many lawyers use on a daily basis. We are 100% based in the U.S., meaning we understand your business and the practices and laws your business needs to abide by. We also have entrepreneurs on staff that understand internet-based businesses that use software like Infusionsoft and have a deep understanding of brick and mortar businesses.
One of the most significant benefits to working with a virtual accounting team is avoiding training periods, vacations, and turnover. This burden shifts from your company to theirs – which is a significant benefit to consider. It’s very unlikely that their entire team will take a vacation during the same week or all quit on the same day.
You will also gain a team of people who have different experiences and backgrounds to help problem solve. Having an outsourced team of bookkeepers ensures that simple or even hard to find mistakes will be found and corrected.
Bookkeeping needs to be prioritized. If you are leaving the financials of your business in a shoe box or passing them off to someone who doesn’t understand how they can be used to power your business, you’re putting your business at-risk and missing opportunities.
After you decide to prioritize your bookkeeping, you need to decide who is going to lead these efforts. There is no easy answer, but going virtual or hiring an internal bookkeeper is better than avoiding the financial side of your business.
At Kahuna Accounting, we pride ourselves on and greatly enjoy helping entrepreneurs succeed. We love what we do and don’t consider bookkeeping and accounting “only a job.” We have a passionate team that wants to see our clients thrive and achieve their dreams. For more information,