Your Business is Booming, But Are Your Books in Order?

Your entrepreneurial spirit may have given you an intuition for making profits by fulfilling people’s needs, however, bringing in money and managing it are two very different things.

Numbers are not always intuitive – especially the complex equations required to turn numbers and decimals into meaningful outputs. Perhaps you have a knack for customer acquisition, team management, and leveraging niche markets, but your business finances really shouldn’t be left to instinct.

Mismanaged financial records can bring even a successful business to its knees. Poor record keeping leaves you open to fiscal and legal penalties, even if mistakes were unintentional due to ignorance or disorganization.

So, you must ask yourself, “Do I really have the accounting skills necessary to protect my business from potential financial ruin?” If you find yourself waffling about the answer, you’ll find 5 reasons why you should hire a bookkeeper in this article, including why you should outsource this vital position.

5 Benefits of Hiring a Bookkeeping Service

1. You Can Always Expect Honesty

Accountants are supposed to give you the cold hard facts that numbers make evident. However, since accountants are human rather than just walking computers, they can form emotional attachments to their coworkers and the business. Unfortunately, this means that they could be prone to sugarcoating the facts, believing that they are protecting you from stress and anxiety when what you really need is a dose of reality. An independent bookkeeping service won’t have emotional ties to your business, so you can count on them to provide the unvarnished truth.

2. Maintain Trust Among Your Business Partners

Human beings are full of good intentions. Unfortunately, when our good intentions run up against difficult situations, desperation and panic might win out – not always, but the risk is real. Perhaps a partner might be tempted to manipulate the numbers to protect the business or even out of self-preservation. There have been countless examples of good people, people smart enough to know better, who act unethically when life increases the pressure. Even if unintentional mistakes in record-keeping were made, this can breed an element of mistrust among your peers and employees. An external bookkeeper can help maintain equality and trust among you and your partners, as they have no vested interest in the day-to-day operations of your business – their only priority is ensuring the records are balanced and up to standard.

3. Ensure Uniformity

Do you have a business partner or even multiple partners? If you do, and you all contribute to the financial records, you’re only creating chaos where uniformity and perfection are absolutely necessary. This is especially true if none of you have training in or a basic understanding of accounting. Financial record-keeping is one area where the entrepreneur’s individuality is a disadvantage. Mismatched techniques can result in vast sums of money lost or opportunities to invest unseen. Instead, a better option is to assign one partner the task of collecting and organizing all the necessary financial documents to hand over to an independent accountant.

4. Protect Your Bottom Line

According to the Bureau of Labor Statistics, the median pay for bookkeepers, accountants, and auditing clerks across the US was $42,410 in 2020. In California, where the cost of living is much higher than elsewhere in the US, a bookkeeper could set you back around $50,160 per year.

These figures, of course, only represent the average: hiring an experienced bookkeeper for full-time employment could cost you upwards of $64,000 – and don’t forget the cost of benefits. Does your business have tens of thousands of dollars to spare? If you’re a startup, small business, or even a struggling business that has fallen on rough times, the answer is probably a resounding no. Even established companies could benefit from outsourcing their bookkeeping needs and using the savings to reinvest and expand.

An in-house bookkeeper or accountant is entirely unnecessary. Instead, outsource the management of your financial records to an experienced bookkeeping firm for a fraction of the cost. You’ll be able to reinvest in your company, give your hardworking employees a well-deserved raise, or pursue any number of other countless profit-boosting options.

5. Avoid the Dreaded Audit

Business bookkeeping isn’t elementary school arithmetic – there’s a reason accounting degrees exist. You might believe your accounting skills are solid, but the IRS will descend upon your business even when you’ve made mistakes without malicious intent. Common reasons the IRS audits businesses include:

• Simple math errors
• Unreported income
• A suspicious number of charitable donation deductions
• Too many reported losses
• Questionable business deductions
• Neat, round numbers

Accountants are well-versed in ever-evolving tax codes and financial standards and have the attention to detail needed to avoid intrusion from the IRS.

The Right Qualifications: The Standard Every Bookkeeper You Hire Should Meet

Now that we’ve convinced you as to why you should hire a bookkeeping service, it’s important to focus on exactly what you should be looking for during the hiring process.

Hire a Certified Professional Accountant (CPA): Emphasis on Certified

While a bookkeeper may be able to help you with some simple bookkeeping functions, they likely do not have the advanced training of a Certified Public Accountant (CPA), who can easily complete the complicated financial analyses required by complex business operations.

The path to CPA certification is rigorous and has additional requirements set forth by the state of California. When selecting the right bookkeeping service for your business, you should ensure their CPAs have these basic requirements:

• A Bachelor’s degree in accounting or related field
• A passing score on the Uniform CPA Examination proctored by the Association of International Certified Professional Accountants (AICPA)
• A passing score on the California Professional Ethics Exam (PETH)
• A California-issued CPA License

Additionally, financial bookkeeping needs will vary from business to business. For instance, a company dealing with primarily intellectual assets, such as copyrights or patents, will have vastly different accounting needs than those that deal with physical assets, such as machinery and property. Choosing a bookkeeping firm with experience with a variety of business types will ensure they are following the best industry-specific practices.

Secure Your Business’s Financial Health with a Seasoned Bookkeeping Service 

A CPA will not only keep your books in order but can also help you make sense of the hieroglyphs that can be financial records. They’ll be able to inform wise financial decisions based on the best accounting metrics for your specific industry.

By hiring a CPA, you can protect your assets and shield your business from the prying eyes of the IRS, while being able to refocus your energy on entrepreneurial pursuits.

Give Our Bookkeeping Team a call today to schedule a complimentary phone consultation to discuss how your business can benefit from our services. We have qualified, seasoned CPAs who can help you make sound business decisions, avoid costly mistakes, and save you time – all at a fraction of the cost of an in-house accountant.