Some owners of small and medium-sized businesses (SME) try to do their own books or hire a bookkeeper. This can be fine if you are lucky enough to find a good bookkeeper on your own. However, if you don't have a background in accounting and a good understanding of the accounting software, it can be hard to know what questions to ask during the interview.
Even if you find someone who looks good on paper, it can take months to figure out if they are doing a good job or not if you don't know what reports to ask for. Over half of our clients come to us because they had a bad experience trying to hire a bookkeeper on their own. Usually, we find things out in the first week like:
- Paying creditors twice as much as they are owed
- Underbilling of revenue
- When GST coding is wrong, GST credits are usually not claimed enough.
- Miscalculation of employees' and contractors' superannuation and payroll taxes
These mistakes can cost a lot of money and even kill some businesses.
Here are seven ways that having a professional bookkeeper on-site will save you money:
- Help you work on your business instead of in it.
I know, it's an old chestnut from that great book E-Myth. Most business coaching strategies are built around this idea. It is the key to growing any business, and it applies to all parts of your business, including bookkeeping.
Even if you hire a bookkeeper, you still need to keep an eye on how well they do their job, when they work, when they take vacations, etc. By hiring a professional bookkeeper to do all of your accounting and bookkeeping work, you can focus on growing your business, knowing that you are getting accurate reports on how well your business is doing and meeting all of your legal obligations.
- A bookkeeper who works at your business gets to know it.
Some bookkeeping services will take care of your finances from their office, which could be anywhere in Australia or even in India. This means sending source documents back and forth from your office to theirs, either electronically or in hard copy. This can work well for small businesses, but it can be hard once your business starts to grow.
Before you can give useful management reports, you need to know how a business works and what its key performance indicators are. Only by getting to know the company and the people who work there will you be able to do this well. This is only possible if the bookkeeping is done at the client's location.
- There are different kinds of "bookkeepers."
People who call themselves bookkeepers can have very different levels of skill. People who call themselves bookkeepers can be anything from data entry clerks to qualified management accountants, just like an apprentice "chippie" and his boss with 30 years of building experience can both call themselves "builders."
A professional bookkeeping firm should be certified in the accounting software your company uses, and they should have qualified accountants to help their bookkeepers so they can provide a management accounting level of service.
I hope this gives you some ideas about how hiring a professional bookkeeper can save your business money.
