It’s no secret that bookkeeping is probably the least favorite task of most creative business owners because it doesn’t produce any profit and can be overwhelming. Outsourcing this piece of your operation can be beneficial, but doing it yourself has its benefits too. Let’s take a look at the pros and cons of each.
Hiring a Bookkeeper
It’s so hard to hand over control of a business process, but if you weren’t keeping up with it in the first place, hiring someone to get the job done can be a serious weight off your shoulders. Outsourcing this monthly task gives you more time to focus on the parts of your business you love, which usually translates into making more money.
Another benefit of outsourcing your bookkeeping is that it’s done on a timely basis. This lets you make decisions based on the health of your business rather than what’s left in your bank account. You won’t continue the game of catch-up after the year’s over and stressing out because you had no idea you made that much money (and now have to pay tax on it)!
There are a couple downsides to outsourcing this task. One is that it’s an additional monthly cost that you’ll need to plan for. Most bookkeepers charge between $75-300 a month, depending on how many transactions you have and how many accounts need to be balanced. This is probably the biggest barrier for most businesses who are thinking about hiring a bookkeeper.
Another downside to outsourcing this task is that sometimes, by not being knee-deep in the numbers every month, business owners become less hands-on with their business finances and lose touch with the financial side of things. To avoid this, be sure to review your profit and loss statement and your balance sheet each month. Pay attention to any expenses that are getting out of control and check to make sure your income is where you want it to be by this time of year.
Do It Yourself Bookkeeping
As an accountant, I even struggle with taking time out from working on client work to get my bookkeeping up to date, but that feeling of crossing it off my list and knowing how much money I’ve made is a huge motivator for me. Besides crossing something off your list, there are several benefits to doing your own bookkeeping.
Probably the most obvious benefit is that you’ll save money by not paying someone else. You may still want to invest in some bookkeeping training if you don’t have bookkeeping experience, but it will still be far easier on the bank account if you DIY.
Another benefit is that you will be very aware of where your money is going and when it’s coming in. I know that sometimes I’m shocked after finishing up my bookkeeping and I see how high some of my expenses have gotten. That’s when I take steps to reign in my spending in future months.
Just like with hiring a bookkeeper, doing it yourself can have some cons. I think the biggest one is that it’s completely up to you to keep up with the bookkeeping. It’s such an easy thing to continually put to the bottom of your to-do list and most people don’t have someone checking in on them to make sure it’s done. To combat this, find a business friend who also needs a little accountability. Have a date each month that you plan to check in with each other so there’s a little pressure to get it done!
The other bummer to DIY bookkeeping is that it takes away from your time to be creative and do the part of your business that makes you happy. Unless you’re an accountant, you probably didn’t start your business because you love dealing with money and keeping track of it. Some people grow to love this part of their business, but some don’t and then end up putting it off until tax time which usually isn’t very fun.
Whether you decide to outsource your bookkeeping or continue to do it yourself, the key is to get a consistent process in place to make sure it gets done each month. It sounds easier than it is, but once that happens, you can stop stressing and focus on other aspects of your business.