How do I know when to outsource bookkeeping?
“I don’t have time to deal with this pile of receipts! Can’t I just wait until the end of the year? Or is this an example of when to outsource bookkeeping?” exclaims the business owner to her accountant.
“Well, your HST return is due this month, and you’ll have to pay more if you file late,” replies the accountant.
“OK, fine, I’ll have a look. Wait, what was this receipt for? I don’t remember.”
“If you aren’t sure it’s a legitimate business expense, you shouldn’t record it.”
“I remembered what it was for, but it seems like a big expense for that kind of job. I wonder if I made any money?”
“Are your expenses for that job all booked and tied to that job?”
“I don’t know.”
Knowledge is power
The hardest challenge entrepreneurs face is managing all the different balls they have in the air – a good bookkeeping service can help reduce that stress by assuming responsibility for key finance functions:
- Analyzing profit
- Categorizing expenses
- Collecting receivables
- Processing transactions
- Tracking tax deductions
- And so much more!
Professional Bookkeepers have a wide range of knowledge. They continuously stay up-to-date about the most important issues your small business may face regarding keeping good records, staying compliant with Canada Revenue Agency (CRA) and ensuring that your spending isn’t more than necessary. Remember, you have nothing to show for all your hard work without a set of records. If CRA comes knocking, it can be a very tedious, unpleasant and expensive lesson to learn when you don’t have good records.
Bookkeepers understand the bookkeeping cycle and how to help a business comply with CRA deadlines – they can save money by preventing penalties and interest. Beyond helping you comply, bookkeepers can also liaise with the year-end accountant to save you time, confusion and frustration on your business taxes.
When do I outsource to a bookkeeping service?
If the following situations apply to you, it is time to seek help:
- Your taxes are late
- Your GST/HST returns are late
- You don’t have a financial system
- You feel lost about your business
- Feeling frustrated and disorganized
- No time to learn bookkeeping
- CRA is bothering you
Even if none of these situations apply to you, getting a bookkeeper involved early can help you ensure that you are on the path to success – not on the path to a disaster. Knowing your runway (how much time before your money runs out) and how much has been used is particularly important for start-ups.
Looking at your numbers should be engaging and exciting, not an afterthought.
When do I involve my team in bookkeeping?
Your team members who are involved in earning for the company or have the approval to spend on the company’s behalf will need to be involved in the bookkeeping process. Having a bookkeeper who focuses on the details can help keep things simple for your team and help keep them focused on their key functions.
Unfortunately, bookkeeping is usually a drastically overlooked segment of the financial team. The cheapest option available is often sought out. An underqualified or inexperienced bookkeeper can create many more problems than they solve. Watch for our next blog post about how to hire a good bookkeeper for more details.
When do I need good bookkeeping?
Your bookkeeper knows when everything is due. She knows whether you’re making a profit or spending too much money. He has all your receipts saved and ready for when CRA comes looking for them. In short, you always need good bookkeeping so you’re prepared and know what’s going on with your business.
“But Jonathan, why should I hire a bookkeeper?”
“Bookkeeping services save you time, money and stress. Who wouldn’t want that?”
Read more about why bookkeepers help your business now.