Small business owners are often used to handling many tasks. They may contact suppliers, deal with marketing, monitor sales and respond to customer inquiries and complaints. They may even take on accounting and bookkeeping tasks. However, doing financing tasks yourself may do more harm than good.
A bookkeeper can help a business owner manage day-to-day finances. These experts monitor cash flow from different accounts, bills and invoices and can organize your books to improve money management. We’ll share the pros and cons of hiring a bookkeeper and explain how these financial professionals operate.
What is a bookkeeper?
A bookkeeper is a finance team member who handles financial administrative tasks related to preparing your accounts and recording daily financial transactions.
Bookkeepers are responsible for consolidating accounts’ books, following up on past-due payments, sending billing reminders, processing payments for suppliers and running payroll. Bookkeepers are a more appropriate choice than accountants for basic financial tasks because their hourly rates are generally less expensive.
Did You Know?
Accountants and bookkeepers differ. While a bookkeeper manages basic financial tasks, an accountant provides advice and can handle financial forecasts, auditing and tax preparation.
What are the pros and cons of hiring a bookkeeper?
A bookkeeper is a financial professional who can handle your business’s money management and save you time, money and headaches. However, allowing someone else to manage your finances can pose risks for your business.
Here are the advantages and disadvantages of hiring a bookkeeper for your business.
Pros of hiring a bookkeeper
- Bookkeepers are experienced: Bookkeepers are generally more experienced in handling records than other employees. Although nonprofessionals and inexperienced staff members can handle some bookkeeping functions, they may make mistakes. Trained bookkeepers are less likely to make errors that can result in future penalties.
- Bookkeepers offer a fresh perspective: A new bookkeeper can offer a fresh perspective on your business and its operations. A bookkeeper can give you an outside viewpoint on budget management and share tips for running your business more efficiently. They can teach you ways to cut costs, provide insights into your spending habits and much more.
- Bookkeepers can help you save money: While there are costs associated with hiring any new staff member, ultimately, hiring a bookkeeper will help you save money. Knowledgeable, professional bookkeepers can help you avoid financial penalties and point out ways your company can save money.
- Bookkeepers save business owners time: Hiring a bookkeeper gives business owners and company leaders more time to focus on crucial business tasks like growth, customer retention, product development and more. When you don’t have to worry about organizing your books, you can spend more time and effort on your business’s core activities.
Cons of hiring a bookkeeper
- Hiring a bookkeeper means exposing your data: Hiring an outside bookkeeper creates a higher risk of exposing your data. Your bookkeeper can access sensitive bank information, such as account numbers and online banking passwords. While you’ll likely find a trusted financial professional, sharing vital, sensitive data is always risky.
- You’re liable for your bookkeeper’s errors: The bookkeeper’s accounting mistakes become your company’s mistakes. Your business is responsible for the bookkeeper’s errors, missed payments and noncompliance.
- Bookkeepers may have hidden costs: Hiring a bookkeeper may incur unexpected hidden costs. They may charge fees in addition to their hourly rate.
What are some types of bookkeepers?
Before you hire a bookkeeper, you must understand which type is right for your business. Consider the following options.
In-house staff bookkeeper
Hiring an in-house bookkeeper is ideal if you have a medium-sized business and want to keep track of the bookkeeper’s day-to-day duties. However, this type of bookkeeper requires a steep financial investment. If you hire an in-house bookkeeper, you must pay for all the resources they need, including their salary and employee benefits.
Freelance bookkeeper
If you only need a bookkeeper to consolidate your accounts once a year, consider hiring a freelancer. These independent bookkeepers usually charge an hourly rate that depends on their expertise.
Agency bookkeeper
Large enterprises often use agencies to handle their finances. However, small and midsize businesses can also take this route. The cost of using these agencies depends on the type of service you need.
Outsourced bookkeeper
When you outsource your bookkeeping duties to a third party, that company will set up and train a dedicated team to handle your needs. The outsourcing partner will provide computers with accounting software, voice-over-internet-protocols for billing reminders, office space and more.
Tip
To choose the right outsourcing partner, ensure you clearly outline the scope of the work required, vet their expertise and communicate clearly about your budget and their prices.
What should a business owner look for when hiring a bookkeeper?
Here are some factors to consider when choosing a bookkeeper:
- Knowledge and reliability: Your bookkeeper should be able to show a track record of success, especially among clients in your industry.
- Certification: A trustworthy bookkeeper should have some certification, although legal requirements for bookkeepers aren’t as strict as for accountants. Bookkeeper association memberships are another factor to consider.
- Location: Modern bookkeeping is primarily done online and can be accomplished via remote work. However, it can be smart to have occasional in-person meetings with your bookkeeper. As such, you may want to limit your search to bookkeepers in your area.
- Accountability: Ensure your bookkeeper is open to accountability measures like regular bookkeeping reviews, project management software, authorization for specific bookkeeping tasks and other employee monitoring measures. These controls help ensure your books accurately reflect your finances and don’t lead to trouble at tax time.
- References: Ask your bookkeeper candidates for references who can testify to the quality of their services. Reach out to these references with a list of questions.
FYI
When it comes to accounting and finance certifications for bookkeepers, look for accreditation through the National Association of Certified Public Bookkeepers (NACPB). Bookkeepers with this accreditation have completed an Accounting Fundamentals course and passed the Bookkeeping Certification examination.
How much do bookkeepers charge?
To hire a bookkeeper, you may need to pay as little as $10 per hour for basic data entry or as much as $75 for a senior bookkeeper with some accounting expertise. If a bookkeeper is also a certified public accountant, they may charge $150 per hour or more.
What is the best online bookkeeping software?
While many of the best accounting software solutions can handle bookkeeping functions, some bookkeepers may prefer dedicated bookkeeping tools. Here are some popular bookkeeping and accounting programs to consider for your finance team.
QuickBooks Live Bookkeeping
QuickBooks Live Bookkeeping offers basic bookkeeping services for small businesses. The service will assign a team of virtual bookkeepers to your account who will consolidate all your accounts and expenses in real time. You can chat with them, have a video call or share screens. You can also track their progress through the platform’s Live Bookkeeping Hub. QuickBooks Live can also arrange your books in preparation for your tax filing. However, it can’t file your tax documents.
FYI
QuickBooks Live Bookkeeping is available to QuickBooks Online subscribers for an additional cost. Read our QuickBooks Online review to learn more about this robust accounting software.
FreshBooks
FreshBooks is a popular accounting solution with many bookkeeping tools for small businesses. It can generate invoices and handle billing reminders and financial reports. The software has an easy-to-use interface and integrates with PayPal, Google Workspace, Stripe and other platforms. It also has a mobile app that lets you update and track your books on the go. Read our detailed FreshBooks review to learn more about features and pricing.
Zoho Books
You can organize your books and collaborations with Zoho Books on one platform. The software allows you to add your bookkeepers and accountants and monitor them through the platform. In addition to invoicing and billing reminders, Zoho Books can access your bank accounts and payments to organize your expenses. It also allows you to keep an inventory of your office supplies or product stock to know when and how to replenish them easily. You can also request reports, such as profit and loss statements and tax summaries. Our in-depth Zoho Books review has more details about features and functions.
Xero
Xero is cloud accounting software that lets you handle all accounting and bookkeeping tasks on one platform. You can check product inventory, save contacts and evaluate business performance through generated reports. It also has a sales tax feature that helps you file your taxes and prepare sales tax returns with automatic calculations. Read our review of Xero for more information on features and pricing.
Kashoo
Kashoo is considered a QuickBooks alternative; it has essential accounting and bookkeeping services suitable for very small businesses. It helps you track expenses and bills, create invoices and generate basic reports, such as income statements and balance sheets. The platform is easy to use but doesn’t offer full bookkeeping features like product inventory and pre-invoice documents. You can access your account through a mobile app for on-the-go tracking.
Jennifer Dublino contributed to this article.
