Should I hire a bookkeeping service provider or an employee to do the bookkeeping?
This is a very good question. Many small businesses don't need to have an employee doing the bookkeeping. However, not all businesses structures are the right fit for an outside bookkeeper. Whether you should consider outside services will depend on many factors.
Complexity of accounting, Experience Required and Desired Results should all be considered when deciding which direction is best for your business.
How complex are our accounting needs? Can the work being done be completed more quickly by consolidating the accounting tasks? Often accounting functions overlap other job duties. Most businesses don't pay bills everyday or do payroll every week. Bank statements and financial reporting only occur once a month. If you can consolidate the bookkeeping functions to once or twice a week, consider a bookkeeping service provider.
Do you have the proper separation of duties in place? Unfortunately because we often do have to wear many hats in a small business, one person may have more responsibility than they should. Duties such as signing checks and reconciling the bank statements should not be done by the same person. Keep your assets protected by putting separation between those duties as well as others.
Does the person answering the phone or doing other tasks have the knowledge to properly process the accounting and payroll functions you may be asking them to do? Do they have any formal training? Government agencies, both federal and local, are increasing audit efforts in the interest of collecting taxes and fees that may or may not have been properly accounted for.
Are you certain that all the bookkeeping functions are being completed properly and timely? If a situation arises, does your bookkeeper know how to properly handle it? Bookkeeping services have a wide range of industry experience. They have access to other professionals for support and can access resources that may not be available to an employee. They also understand the consequences of not properly reporting income and payroll in a timely and accurate manner.
Is hiring a bookkeeping service really more expensive than hiring an employee? With bookkeeping service providers, an employer can minimize their out of pocket expense but still receive experience, accuracy, dependability, responsibility and results. Unlike employees that need to fill their work schedules with tasks to validate their time on the job, bookkeeping service providers know their tasks at hand and can complete the work in fewer hours, giving you better results in less time. With accurate books, your CPA will spend less time on your tax return as well. With an employee comes other costs that are not as easily identified. Keep in mind vacation pay, holiday pay, overtime, employee benefits (health, dental, etc), worker's comp insurance, federal and state payroll taxes, mileage reimbursements are all costs that are incurred with employees.
What type of results are you looking for? Do you want someone to just pay your bills and reconcile the bank statements? Can the bookkeeper provide you with financials and are they correct? Do they know how to identify problems?
These are all valid questions you should address when deciding if a bookkeeping service provider is right for you. Each business has its own unique circumstances to consider.
Complexity of accounting, Experience Required and Desired Results should all be considered when deciding which direction is best for your business.
How complex are our accounting needs? Can the work being done be completed more quickly by consolidating the accounting tasks? Often accounting functions overlap other job duties. Most businesses don't pay bills everyday or do payroll every week. Bank statements and financial reporting only occur once a month. If you can consolidate the bookkeeping functions to once or twice a week, consider a bookkeeping service provider.
Do you have the proper separation of duties in place? Unfortunately because we often do have to wear many hats in a small business, one person may have more responsibility than they should. Duties such as signing checks and reconciling the bank statements should not be done by the same person. Keep your assets protected by putting separation between those duties as well as others.
Does the person answering the phone or doing other tasks have the knowledge to properly process the accounting and payroll functions you may be asking them to do? Do they have any formal training? Government agencies, both federal and local, are increasing audit efforts in the interest of collecting taxes and fees that may or may not have been properly accounted for.
Are you certain that all the bookkeeping functions are being completed properly and timely? If a situation arises, does your bookkeeper know how to properly handle it? Bookkeeping services have a wide range of industry experience. They have access to other professionals for support and can access resources that may not be available to an employee. They also understand the consequences of not properly reporting income and payroll in a timely and accurate manner.
Is hiring a bookkeeping service really more expensive than hiring an employee? With bookkeeping service providers, an employer can minimize their out of pocket expense but still receive experience, accuracy, dependability, responsibility and results. Unlike employees that need to fill their work schedules with tasks to validate their time on the job, bookkeeping service providers know their tasks at hand and can complete the work in fewer hours, giving you better results in less time. With accurate books, your CPA will spend less time on your tax return as well. With an employee comes other costs that are not as easily identified. Keep in mind vacation pay, holiday pay, overtime, employee benefits (health, dental, etc), worker's comp insurance, federal and state payroll taxes, mileage reimbursements are all costs that are incurred with employees.
What type of results are you looking for? Do you want someone to just pay your bills and reconcile the bank statements? Can the bookkeeper provide you with financials and are they correct? Do they know how to identify problems?
These are all valid questions you should address when deciding if a bookkeeping service provider is right for you. Each business has its own unique circumstances to consider.