Most small business owners aren’t aware of all the options they have available to them when it comes to bookkeeping and accounting.
And it shouldn’t be that way!
When it’s time to open up a bank account for your business, the options for banks are usually quite clear. While there are still some complex aspects of choosing one bank over another, banks have made it relatively easy to weigh your options and make a decision.
Not every service you need for your business is as easy to find and decide on as a bank account.
All business owners know that trying to grow a business while handling their own bookkeeping is a difficult and time-consuming challenge. To help you sort through your options, here are the bookkeeping options you have available as an entrepreneur.
DIY is where most of us begin out of necessity. We’re not bookkeepers, but it needs to get done. And we’re usually our only employee when just getting started.
To do it yourself, you need a disciplined approach to capturing activity as it occurs; a bookkeeping system to process the activity into, the time to load and enter items into the system, and a working understanding of accounting and requirements is a great disciplined approach.
Benefits: Taking the time to do it yourself, if you’re able to stick with it and learn quickly, will give you a full picture of the financial side of your business and help you better understand what you need to do to grow the business. You’ll also save money and know your bookkeeping is in trusted hands – your own.
Setbacks: As mentioned, you’re not a bookkeeper. Also, your time is extremely valuable. You will need to buy and manage the accounting software you decide to use, and then be able to keep up with daily transactions and learn how to pull forward-looking financial statements.
2) In-House Bookkeeper
The most common bookkeeping solution entrepreneurs turn to is an in-house bookkeeper hired, trained, and managed by the business owner.
Benefits: Having a bookkeeper means you’re free of having to record and manage daily transactions. And that you have a professional bookkeeper on your team, which is an asset. Growing your staff can improve morale and corporate culture if managed correctly, meaning proper time and training is given to the bookkeeper and if they possess the skills to benefit your business and want to stay with you long-term.
Setbacks: To have a bookkeeper, you have to train and manage a bookkeeper. If there aren’t checks and balances in place, your business could be at-risk for mistakes, or worse. Also, there are employment costs above their hourly wage that need to be taken into consideration.
3) Cloud Accounting DIY
Managing your accounting in the cloud is much different than the “old school” way of keeping books with a pad of paper and a pen, or even spreadsheets on your desktop computer. Cloud accounting software allows you to access your files and documents from anywhere with an internet connection. It still takes time, knowledge of the software, and knowledge of accounting, but it’s more versatile and easier to automate than standard DIY bookkeeping.
Benefits: Versatile, relatively inexpensive, and not at-risk of being lost or stolen. You can have multiple logins allowing several people to keep track of your financials. The cloud nature of the software allows someone to assist or manage whether they’re in the backroom of your business or across the country. You also may receive a limited amount of support, although the software company will not provide specific accounting or tax advice.
Setbacks: Time is still a consideration, as whoever in the business is handling the system will need to create a process of entering data and managing the software, and update daily, or weekly at the very least.
4) Outsource to a Virtual Team
Cloud accounting has made outsourcing your bookkeeping to a virtual team an excellent option. Accounting teams can monitor and record all of your activity using integrations and by receiving receipts and updates via email.
For example, Kahuna has a team that oversees and manages accounts while having a certified accountant dedicated to each account. The accountant will provide monthly updates and financial statements while alerting the business owners of possible risks, mistakes, and items that need to be reconciled.
Benefits: Having a virtual team take care of your bookkeeping allows you to have bookkeeping coverage while not having to directly train or manage an employee. The company has checks and balances in place to prevent fraud or common accounting mistakes and you will know exactly what to expect from them.
Setbacks: Costs are less than that of an internal employee, but all benefits come at a monetary cost. You also need to carefully consider the virtual team you choose to work with. Will there be a direct contact person to help catch mistakes and answer your questions? Does the virtual team specialize in serving your specific type of business? What do they offer versus what they charge? These are all things to consider when picking the specific company that will handle your business’ books.
A Certified Public Accountant is who we turn to when it’s tax time. Since many entrepreneurs only think of the accounting side of their business when it’s time to do taxes, we see CPA’s as a viable option to do the accounting for our business.
6) Administrative Assistant
Small businesses often have catch-all administrative assistants that handle a wide variety of tasks. It’s definitely a step up from having only the owner handle every aspect of the business. While it’s not often their core strength or something they are trained in, an administrative assistant is an option.
Benefits: Administrative assistants, especially the growing number of AA’s online, provide an affordable solution to take over several of your business’ responsibilities. They have a little experience and training in many different fields and do several things extremely well.
Setbacks: Bookkeeping is not the strength of an administrative assistant, although many can learn and do a solid job if they have enough management and freedom to focus on bookkeeping while handling several other tasks as well. One of the additional risks is that bookkeeping takes them away from other tasks within the business, limiting the value they bring to your business in the areas they specialize in.
Interested in learning more about Kahuna Accounting can help your business? Schedule a strategy call with Kahuna Accounting and we can discuss best practices for bookkeeping, driving cash flow, profit, and growth!Schedule Discovery Meeting