It’s a sad fact that almost 60 per cent of Australian small businesses cease operating within their first three years. A common reason for this is poor financial control.
While many small business owners understand the importance of keeping good financial records, they often attempt to do the books themselves as they think they can’t afford professional support. However, DIY bookkeeping is generally regarded as a false economy. What I have found is that business owners become too busy with the day to day operations of their business and their bookkeeping suffers. Also, many business owners don’t have the expertise or accounting background to perform financial tasks so when they manage their own books, it takes them double, if not triple, the time a qualified bookkeeper would take. More often than not, the cost of a bookkeeper works out to be a lot cheaper.
Here’s why your business needs a bookkeeper:
They can be outsourced
Bookkeepers don’t necessarily need to be full-time. In fact, many are hired to work on numerous businesses part-time. The amount of hours a business owner would allocate to an outsourced bookkeeper depends on the size of the business. A small business with minimal monthly transactions would not require a great deal of bookkeeping time, probably about five to 10 hours each month. Of course, as the business grows, more time will need to be allocated to manage the finances.
A qualified bookkeeper will use proper accounting methods to record your financial information into accounting software and keep your records up to date and accurate. They also keep track of all the business’s financial transactions like bank reconciliations, payroll and accounts receivable and payable.
Access to premium accounting systems
Most bookkeepers are highly skilled at using accounting software and will be able to tidy up mistakes, advise you on the best systems to streamline your business workflow and teach you to understand and use your accounting software. Depending on what software your bookkeeper uses they may be able to provide you with detailed reports on how they are monitoring and managing your financials.
An outsourced bookkeeper is more likely to have a wide range of fiscal experience and knowledge and will work with you to make sense of your numbers and create better strategies to manage cash flow (for example, making sure you don’t pay your suppliers too early).
A good bookkeeper is worth their weight in gold. They will become a trusted advisor and offer day-to-day support to keep things running smoothly. If needed, they can also be part of your business’s long-range planning and decision-making processes.
Tips for hiring a good bookkeeper include:
1. Trustworthy. When hiring a bookkeeper trust is critical in your decision-making process. As finance is such a crucial aspect of your business, you need to trust the person dealing with it. Therefore, word of mouth can be very helpful when finding the right support.
2. Qualifications. At a minimum, your bookkeeper should have qualifications like a Certificate IV in Financial Services. Look for someone who is a member of a professional bookkeeping association, like The Institute of Certified Bookkeepers. If they are providing BAS services, they will need to be a registered BAS agent.
3. Fees and service. Fees for qualified outsourced bookkeepers can vary greatly so keep in mind you get what you pay for. General services a good bookkeeper should be providing include accounts payable and receivable, bank reconciliations, payroll and GST and BAS services.
What a bookkeeper is not
A bookkeeper is not a tax accountant. The main difference between the two being your bookkeeper manages the daily financial activities of your business while your tax accountant manages the compliance side of things, like your annual tax return and FBT. Ideally for your business to run smoothly, you would need both.
For more advice on why your business needs a bookkeeper please read our Why a bookkeeper should be the first person you hire [Click Here] post.
Cloud CFO provides customised CFO, bookkeeping and accounting services for small to medium businesses. We help business owners understand their financial position, manage overall business performance and grow their business. Please email us at firstname.lastname@example.org or post your questions in the comments.