For any small business, bookkeeping is a sensitive topic. The internal financial affairs of your operation should be some of the most closely held information that exists, regardless of the nature of your business.
Even if you are wary of bringing in outsiders, hiring a trustworthy bookkeeping service can help carry the burden of preparing and analyzing your business’s financial data. There are some clear benefits to letting a bookkeeping service take care of your accounting while you focus on expanding your company.
Small business owners considering bookkeeping services probably fall into 1 of 2 situations: either they’re looking to hire an accountant in-house or they’re doing all the bookkeeping themselves. Businesses in the former category are probably larger and already have at least a few employees, but the considerations are similar regardless. There can be large resource advantages to outsourcing your bookkeeping no matter the size of your staff
You’ll Avoid Biased Advice
Though accounting seemingly revolves around hard facts and numerical figures, emotions can creep in as well. Full-time bookkeepers might feel a need to prove that they are worth their salary or feel compelled to present accounting information in a way that pleases the boss. If you’re doing the bookkeeping yourself, you might interpret the details in a rosier manner than an outsider.
A bookkeeping service, on the other hand, will give you unbiased information. If you hire a good service, the person or company behind your books will focus on accuracy and double-check the math. They will know how to classify transactions and will have absolutely no motivation to conceal or alter the numbers.
Because this service is separate from your company, they are not personally invested in the overall financial health of your business. This outside perspective is actually a good thing—you need of a bookkeeper, not a cheerleader.
You Won’t Have to Memorize the Tax Code
While any small business owner will want to have a general understanding of how and why the company is being taxed, a bookkeeping service can make tax time much more efficient. The people hired by bookkeeping services study tax law and stay updated on the endless changes.
A service will ensure that your financial documents are accurate and that you’re taking advantage of all relevant deductions and credits. They will also push you to keep the necessary documentation and receipts. In the case of an audit, an unbiased, high-quality bookkeeping service will be your first line of defense.
No Conflict of Interest
Because a bookkeeping service is not a part of your company, it has no conflict of interest. Accusations of altering the books can be bandied about, especially if a small business owner does the accounting. These kinds of complaints are compounded if multiple owners are leading a company. Even if mistakes are unintentional, quibbles about the financial situation at a company can easily sour business relationships—perhaps permanently. A bookkeeping service eliminates this threat.
Even removing the appearance of a possible conflict of interest can have long-term benefits for the future of your company. Using a third-party firm for your accounting can be helpful if you want to receive funding from a bank, impress possible investors, or even sell your business. For those outside of your operation, financial information compiled by a bookkeeping service is automatically more trustworthy because there is no apparent conflict of interest.
You Could Save Money
Many small businesses, especially one-person outfits, don’t need a full-time accountant working on the financial end of the company all year round. This limited use is why a bookkeeping service is attractive to many small business owners—it only bills you for the time spent working on your business’s books, which might change week to week. Before making a decision, you should do some accounting yourself—using a bookkeeping service will very likely cost less than the salary and benefits of an in-house accountant.
Accounting is a specialty—there’s a reason why accountants go through years of education and certification. In most cases, a bookkeeping service can do your business’ accounting more efficiently and more accurately than you. If you’re doing the accounting yourself, you might find that a service is well worth the time it saves.
Outsource Paperwork Headaches
Unless you are an accountant yourself, you probably didn’t open a small business to do bookkeeping. Accounting is one of the most frustrating aspects of business for many entrepreneurs. However, cutting corners in this area can quickly lead to the destruction of your business and might even lead you to jail.
Beyond the accuracy and unbiased accounting a bookkeeping service provides, these companies can scale with you as you grow. As your financial documentation mounts, an independent bookkeeper is in a better position to tackle it.