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Tuesday, December 29, 2009
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Thursday, December 10, 2009
When Do You Need A Bookkeeper?
I had a great meeting last night with a smart woman (I’ll call her Diana) who is getting her life organized. She is still working on getting the physical structure of her office set up and figuring out how to organize her paperwork (I recommended my favorite book of 2007 "Getting Things Done" by David Allen), and she asked a question I hear a lot:
“how do I know when I need a bookkeeper?”
The short answer is *everyone* needs a bookkeeper, but most people are able to do it themselves or have their accountant do it at tax time.
If you're doing your own books, the time you spend may be better spent developing new business opportunities. Accurate bookkeeping is crucial to a healthy business, but so is having the freedom to concentrate on creative direction and business development.
If an assistant is doing your books, she may be distracted by other tasks, may not have any expertise, nor have a vested interest in getting it done right.
Accountants specialize in taxes and tax law. While accountants can provide bookkeeping services, they organize your information to make tax filing easy, rather than to give you details of your financial picture. You might, for instance, track detailed sales by item or service, when an accountant might just call it all “Sales Income”. Having a good bookkeeper is just as important to the growing business as having a good accountant. One cannot and should not replace the other.
So, how do you know when you need to hire a bookkeeper?
You need a bookkeeper when you are ready to start being proactive about your finances rather than reactive. Sure, it is important to pay your bills on time and put a little away each month - but with good bookkeeping, you can evaluate the profitability of your efforts.
For instance, Diane has multiple income sources: she works freelance for two companies as well as pursuing her own clients and also working in the performing arts. She could be tracking not just how much she makes at each gig, but what her time investment and profitability is for each job so she knows where to focus her efforts. If she wants to hire an assistant, she can evaluate exactly at what point that would be wise to do so, and what her cashflow would need to be in order to be able to afford one.
Too many people hire a bookkeeper after being in business for years, when they run out of time to do the books themselves, but a bookkeeper should be part of your business team from the beginning. Bookkeeping should be a valuable tool for making smart decisions instead of one more hassle at the end of a long week!
“how do I know when I need a bookkeeper?”
The short answer is *everyone* needs a bookkeeper, but most people are able to do it themselves or have their accountant do it at tax time.
If you're doing your own books, the time you spend may be better spent developing new business opportunities. Accurate bookkeeping is crucial to a healthy business, but so is having the freedom to concentrate on creative direction and business development.
If an assistant is doing your books, she may be distracted by other tasks, may not have any expertise, nor have a vested interest in getting it done right.
Accountants specialize in taxes and tax law. While accountants can provide bookkeeping services, they organize your information to make tax filing easy, rather than to give you details of your financial picture. You might, for instance, track detailed sales by item or service, when an accountant might just call it all “Sales Income”. Having a good bookkeeper is just as important to the growing business as having a good accountant. One cannot and should not replace the other.
So, how do you know when you need to hire a bookkeeper?
You need a bookkeeper when you are ready to start being proactive about your finances rather than reactive. Sure, it is important to pay your bills on time and put a little away each month - but with good bookkeeping, you can evaluate the profitability of your efforts.
For instance, Diane has multiple income sources: she works freelance for two companies as well as pursuing her own clients and also working in the performing arts. She could be tracking not just how much she makes at each gig, but what her time investment and profitability is for each job so she knows where to focus her efforts. If she wants to hire an assistant, she can evaluate exactly at what point that would be wise to do so, and what her cashflow would need to be in order to be able to afford one.
Too many people hire a bookkeeper after being in business for years, when they run out of time to do the books themselves, but a bookkeeper should be part of your business team from the beginning. Bookkeeping should be a valuable tool for making smart decisions instead of one more hassle at the end of a long week!
Monday, December 7, 2009
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