When to DIY and When To Outsource Your Bookkeeping
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Let's be real—bookkeeping isn't exactly the most exciting part of running a business. But it’s absolutely essential. Whether you’re just starting out or you're scaling to your first million, understanding your finances is crucial for your success. If you’re just starting out you’re probably on the DIY bookkeeping train but you’ve got to know when it makes the most sense to hand over the reins to a professional and outsource your bookkeeping. No matter your case, keeping your books in order is crucial!
In this week's blog, we cover:
The perks of DIY bookkeeping for small businesses
When and why to get a second set of eyes on your books
Tips to stay on top of your finances like a pro
Signs it's time to outsource your bookkeeping
Essential tools and systems to streamline your process
The Benefits of DIY Bookkeeping
Starting a business is like raising a baby. How many times have you thought of your biz as your baby? GUILTY! You're involved in every little detail. In the early days, when your business is still small and manageable, DIY bookkeeping can actually be a great idea for a few different reasons!
You Get Intimate with Your Finances: When you’re the one paying the bills and tracking the income, you get a really good understanding of your business’s financial health. You see every dollar that comes in and goes out, which helps you make informed decisions.
You Feel In Control: Having a hands-on approach ensures that you’re in control. You know exactly what’s happening with your money and can spot any irregularities immediately.
This all probably sounds great, BUT we want to warn you that properly managing your bookkeeping isn’t as simple as it seems and you truly can’t afford to make mistakes, especially if you are in the early stages of your business. If you miscategorize your expenses or overstate your income, you could end up paying more taxes than necessary or risk an audit from the IRS. DIY could be great for starters, but keep in mind that it does come with its own set of challenges and you have to be really committed to actually getting it done and not just avoiding it at all costs.
Three Signs It’s Time To Outsource The Bookkeeping
There will come a time when your business starts to grow and you’ll find yourself swamped with tons of other important tasks and suddenly weeks or months have gone by and the books haven’t been touched. If you’re here, you should have already hired a bookkeeper, but don’t freak out, it will all be okay and we can get you caught up in no time! If your books are no longer top-of-mind and getting the attention you know they need, it’s time to consider bringing in a professional bookkeeper. Here’s how to know when it’s time:
Capacity Overload: When you’re so busy that bookkeeping feels like an impossible task or is set on the back burner over and over again, it’s time to outsource.
Hiring Contractors: If you’ve started hiring contractors or employees, managing payroll can get complicated. It’s no longer about just getting it done at this point, it's about doing it right and remaining compliant. The right bookkeeper can take this off your plate and leave you with confidence and peace of mind.
Complex Financials: As your business grows, so does the complexity of your finances. So if your business is growing quickly, your financials are quickly going to become intricate and complex too. Once you start having multiple income streams, paying contractors or team members, and having higher-level financial needs, you really should be leaning on a professional to ensure everything is accurate and compliant.
Tips To Keep Your DIY Bookkeeping on Track
Just like life, business comes in stages and everyone’s journey looks a little different. There is no one-size-fits-all solution, but at the end of the day your bookkeeping needs to get done and it needs to get done right. If you’re still in the DIY phase and have the capacity to properly manage your own books, here are some tips to help you stay the course:
Create a Task List: We LOVE and swear by Asana. You can use this tool to remind you of important bookkeeping tasks, stay organized, and ensure nothing slips through the cracks!
Monthly Check-ins: Don’t wait until the end of the quarter or year to check in with your numbers. Make it a habit to review your finances at least once a month. This way, you can catch any issues before they become costly errors and have a clear picture of your financial health.
Read Your Reports: Understanding your financial reports is key. If you’re not sure how to interpret them, consider having a consultation with a bookkeeper to answer your questions and explain what’s going on so that you can use your numbers to inform your decision as you scale your biz.
Sometimes All You Need Is A Second Set of Eyes
Even if you’re a DIYer when it comes to the books, it never hurts to have a second set of eyes. Whether it is quarterly, bi-annually, or annually, having a professional review your books could save you in more ways than one! A professional can catch errors you might have missed and ensure everything is in order. This not only helps you stay compliant but also optimizes your tax deductions and prevents costly mistakes.
When Outsourcing is a No-Brainer
If you’ve scaled your business already and hired a bookkeeper you might be able to relate to this… Many CEOs will say that they would have hired a bookkeeper sooner, but you won’t hear many say that they hired a bookkeeper too soon. Outsourcing bookkeeping is a smart move when:
You feel like you are spending a lot of time on bookkeeping when you could be doing other revenue-generating activities or focusing on growing your business.
You’re dealing with complex financial transactions and don’t feel like you truly understand your books anymore
You want to ensure you are getting the most out of your tax savings and keeping your business compliant.
The thing about hiring a bookkeeper is that you are going to be spending money to save more money. Yes - hiring the right bookkeeper can (and should!) actually save you money in the long run. We’ll help you avoid any costly errors, optimize your finances, and ensure you’re making the most of your deductions. Plus, you’ll get your precious time back so you can focus on what you do best—being the CEO you were born to be!
Bookkeeping may not be glamorous, but it’s the backbone of a successful business. Whether you choose to DIY or hire a professional, the key is to stay on top of your finances. When it comes to your books, it’s not just about getting the work done it’s about doing it right to remain compliant and ensure you are reporting the correct numbers to Uncle Sam.
If you ever feel overwhelmed or unsure, don’t hesitate to seek the right support and find that just-right bookkeeper to bring on for your business. After all, a little investment in professional bookkeeping can lead to big savings and peace of mind, and that is truly priceless. Grab a free consultation with us here to see if we are the right team for you.
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