When a small business is first starting out, it’s natural for you to wear many hats in a variety of areas. As your business grows, you may notice tasks taking longer to complete than in the beginning, but you might assume it’s from normal growth and can’t imagine paying someone to take over any of those tasks for you. For many, this is especially the case with the corporate finances.
When it comes to keeping the company’s books, there’s a point where a business should outsource the finances to the experts and focus instead on expansion and customer service. How can you tell if your business is at that point?
No Small Business is Too Small to Outsource Accounting
The primary misconception is that your business is too small to worry about outgrowing your accounting method. Even if you’re a company of one, handling your own bookkeeping can be less cost effective than you think. Yes, paying a bookkeeper or accountant is an additional business expense, but unless you’re in the accounting business, at tax time it’s a relief to let a professional handle the heavy lifting.
Signs You Should Not Handle Your Small Business Accounting
Although the signs will be different for every business, there are some warning signs you should watch for:
- Inventory in your system doesn’t match on hand inventory
- Payroll takes longer to calculate each week and you still aren’t sure you’re withholding taxes correctly
- The IRS notifies you about an issue with your business taxes
- You keep a pile of receipts in a shoebox
- You missed your quarterly payroll or sales tax payment
- You don’t know the difference between accrual and cash accounting
- You aren’t sure which accounting method you used on last year’s taxes
- You must choose between keeping the company books or making additional sales
Alone, none of these signs means you should fire yourself from the bookkeeping tasks, but it may be time to reevaluate the way you handle the books before the situation turns dire.
Small Business Accounting Changes to Make
If you have a basic handle on your company’s finances but you feel overwhelmed, it may be a simple matter of changing your accounting system. If you’re recording everything by hand, maybe it’s time to employ a good spreadsheet or accounting software program. If you’re already using software, shop the competition’s programs, or look for more advanced software upgrades from the same manufacturer. Sometimes a training class on your accounting software is all you need to begin using it to full advantage.
On the other hand, remember that accountants are experts at taming unwieldy company books. Your specialty is running your business. Instead of trying to fit your skills into an accounting role, meet with an accountant to find out what the cost would be to have them handle all or part of the bookkeeping.
When you consider how much time you’re spending on the books and what revenue-producing activities you could be completing instead, it’s easy to justify the cost of hiring an accountant. Add to that the peace of mind that comes with knowing that a trained professional is handling your books for you, and it’s clear what the best choice is for your business.