With many small businesses thriving during the holiday season, this is the time of year that makes running a business exciting and enjoyable!
This is also the time of year to reconcile books and prepare for tax season.
How can owners balance both? We see so many of our small business owners struggle at tax time to make sense of their books because money has not been tracked appropriately. Even clients who maintain Quickbooks are still using a spreadsheet or haven’t linked accounts. This will result in inaccurate reports and may trigger an audit.
Did you know that the IRS estimates 40% of small businesses pay close to $845 per year in penalties for late or incorrect filings and payments? Aberdeen Research Group estimates that owners spend close to 24 days per year manually managing sales tax compliance. If your business gets audited, you could be hit with thousands of dollars in extra expenses.
Second only to IT, accounting services are the most outsourced service of small businesses owners. Wondering why?
Here are the top 10 reasons why small businesses hire a bookkeeper.
1. Dodge the Details
Whether you specialize in legal services, healthcare, retail or real estate, the devil is in the details. Bookkeeping can get tedious—balancing transactions, payroll, bank statements. Let someone who is good at the details and who is motivated by details do the work—and do it well.
2. Ultimately Saves You Time
If you have to spend days preparing your books for tax time, or worse, an accountant has to shuffle through all the paperwork, it’s going to take you more time and money to do the work than to hire someone else to do it. Your time should be spent growing your business and engaging with your customers.
3. Best Positions You for Tax Time
If you can hire a bookkeeper with tax preparation experience, you are well prepared for tax time. Depending on the way your business is set up, you will have various filing requirements. If those requirements are not met, the last thing you want on your plate is an IRS audit.
4. If You Think You Got It, You Most Likely Don’t
Unless you’re certified in Quickbooks, have an accounting degree, or have a background in finance, you most likely don’t have the experience to fully understand certain aspects of bookkeeping. Less mistakes will be made, more requirements will be met, bills will be paid on time, and credit scores will remain in tact if you work with a professional bookkeeper.
5. Your Business Needs YOU
No one else can run your business like you do, so you need to be there for it—for your customers. You need to nurture your business and focus on its growth, operations, inventory, and customer relationships. Give it your time and energy, and save the bookkeeping for someone else.
6. Built-In Buddy System
Sometimes running your own business may feel like living on an island. You do so much on your own. When your business starts to grow or you want spend time in other areas of your life, hiring a bookkeeper comes with a built-in resource system. You have someone there to bounce ideas off of, to ask questions, and to train you in areas where you need help. You’ll learn new perspectives, how to run new reports, and gain best practices.
7. Cash Flow is King
A bookkeeper helps you to manage cash flow, which is a sign of the overall fiscal health of your business. It shows how much money is available to run your business, pay staff, grow and invest back into your business.
8. Money Saver at the End of the Day
You may think that hiring a bookkeeper is going to cost you money, but at the end of the day, a bookkeeper is going to save you money…big time. A bookkeeper will lower your risk of an audit, late payments, human errors, tax penalties, and cash flow issues. Many of these issues will cost you way more than hiring a bookkeeper.
9. Serves as a Mediator
A bookkeeper wears many hats, even serving as a mediator between business partners, spouses, and vendors. If conflict arises regarding certain business expenses or finances, the bookkeeper maintains the books, sets guidelines, and creates rules for the approval process, so there’s little grey area left for conflict.
10. Work. Live. Balance.
We all strive to reach the perfect balance. If you feel that work is weighing heavily and impeding on your time with family and friends, it’s time to hand off some of the work to a professional and free up your time to experience and live life to the fullest.
Spend more time doing what you love most—running your business and achieving work-life balance. Feel confident knowing that your bookkeeping is operating at a more streamlined, efficient level.
If you have any questions about this article or how bookkeeping services can enhance your business, contact Kerry McMenamy at kerry@erocktax.com with any questions and to schedule a meeting or phone call. As always, we look forward to helping you.
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About Stu: With more than 30 years of experience as a tax professional, Stu Steinberg brings a broad depth of knowledge to his work with his clients. Stu founded Erock Tax to help provide tax and financial planning strategies to individuals, families and small businesses and is passionate about empowering his clients through education about their money health. Stu is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.