Having a Bookkeeper helps you to constantly monitor the cash flow. It is very important in regards to your business’s ability to survive and thrive.
As an entrepreneur, you have the sole responsibility of operating and growing your business. You are responsible for marketing, sales, customer service, and accounting. While it is mandatory for you to handle most of your business functions as you are starting out, this should not be the case once your business begins to grow. As your business becomes more complex in operations, it is impossible for you to properly handle all these different functions on your own. Continuing to operate in this manner will only stifle the growth that your business has experienced thus far. This is because you are trying to maintain too much day-to-day control over your business when you should be focused on growing your business and planning the way forward as a true business owner.
A true business owner employs a diverse group of people with specialized skills to handle specific areas of his business. Each of your employees handles their specific duties so that everyone works together as a whole to accomplish the goals that you have determined. You are the architect of your business and your employees are the builders who work to make your design come into fruition.
This is especially important when it comes to a business’s finances. The financial health of a business is critical to its longevity. Financial reports show how much money is coming into the business, how much is going out, and for what reason. When financial reporting is sound, it is easier for changes to be implemented due to specific insights into the exact problems the business faces and their various causes. It would take you, as a busy business owner, too much time to meticulously record and understand every detail of your business’s finances. A professional who specializes in financial accounting needs to handle this duty for you. This person does not have to be a full-time in-house accountant but ideally, they should at least cover all bookkeeping duties.
Having a dedicated bookkeeper is very important in regards to your business’s ability to survive and thrive. The following 10 reasons will further explain the importance of a dedicated bookkeeper.
1. Your focus remains on your core business needs.
The core functions that a business owner needs to focus on are marketing, sales, and product development. These are income generating activities that bring revenue into the business and combine to produce consistent growth. As a business owner, time cannot be spent on daily operational activities. This only bogs you down with menial tasks that do not produce the massive results needed to develop your business into a successful company. An activity such as bookkeeping is very tedious work. Making the mistake of trying to perform this mind-numbing work along with your revenue-generating tasks will end up in failure. Focus on making money and let the financial professional work to understand how your money can be better budgeted and put to use.
2. Stop wasting time on things you do not understand.
You did not become a business owner to focus on the intricate details of finances. You became a business owner to provide a product or service that enables you to make a lot of money. The two areas of focus are not the same. Both are time consuming and both can be negatively affected if they are not given the amount of attention required for a business to prosper. Neither can be neglected and a business owner cannot possibly do both. This is why specific areas of a business must be performed by professionals who are solely dedicated to handle those duties. Get out of your own way and let the people you hired do their jobs to keep your business running.
3. Maintain a work-life balance.
It is no secret that building a business is a full-time job. You are literally on call 24/7. If an issue happens within your business, you immediately drop what you are doing to rectify that problem. This type of behavior can be limited by reducing the amount of responsibility you take on as a business owner. Delegate specific responsibilities to your employees and alert them when an issue arises that they are tasked to deal with. This includes the important bookkeeping function in your business. This delegation allows you to maintain a well-functioning business, while still giving yourself the ability to have a personal life.
4. Learn the true health of your business
Just because you have money coming into your business does not mean that your business is profitable. This mistake can easily be made when you are the one who is operating the business and maintaining its finances. You are looking at numbers but not really understanding what those numbers mean. A bookkeeper can process the complex language of your financial records and communicate to you how your business is really performing. They can give you suggestions about what should be added, retained, and eliminated. This helps you identify what is holding your business back so that it can no longer be a liability.
5. Escape the tedious aspects of business.
There are not too many people who are passionate about accounting and bookkeeping. Although most entrepreneurs are motivated by making money, it does not mean that they enjoy the process of keeping detailed records of that money. Having to deal with this task makes business ownership dull and tedious. Let the people who find this boring work exciting handle this area of your business. It is smarter to pay for a job well done, than save money doing this yourself only to cause serious harm to your business as a result.
6. Have someone make sure that everything is paid on time.
The day-to-day functions of operating a business are busy and challenging. There are so many things going on at one time, making it easy for you to forget those things that are not on your mind at the moment. One thing that easily gets lost in the mix of the business ownership grind is the bills that need to be paid. You are so busy hustling to make money that you forget bills have to be paid to keep your business operating. The bookkeeper is responsible for handling this task so that your business can continue operating without being held back by overdue bills or late payment penalties.
7. Make sure tax filings are correct.
You never want to be in the position of being audited by the tax authorities because you forgot to submit your quarterly or annual tax filings. The tax requirements that you will be forced to follow will be dependent on the type of business structure that you choose to operate. These requirements may include estimated tax payments, corporate tax payments, special procedures and forms for contractors or freelancers and various other filings. Therefore, a bookkeeper is needed who can handle tax preparation, conduct payroll, and ensure that other financial issues are properly taken care of.
8. Keep cash flowing into business
Sometimes you can get so busy that you do not even realize that some of your clients have still not paid their invoices. These late payments can cause serious cash flow issues – making it hard for you to pay your vendors and to make payroll. This can put your business at serious risk of failing due to the lack of sufficient funds to keep running your business.
A bookkeeper’s job will be to constantly remind your clients that they need to pay their invoices. You don’t have time to do this because you are too busy building your business and acquiring new customers. A positive cash flow is also an added bonus when it comes to banks and investors. These parties will be more willing to loan you money if they see that your business is financially healthy.
9. Resolve financial conflicts of interest with business partners.
When more than one founder is involved, it can lead to many disputes about how money should be handled and who should be having access to what. These arguments can thwart the growth of a business as a result. A bookkeeper is needed to be the impartial arbiter to prevent or resolve these types of issues. Since they understand the inner workings of your business, they will be able to provide the best advice on how money should be handled.
10. Reduce the cost of financial obligations.
It may be tempting to forgo hiring a bookkeeper to keep track of your finances on your own but this is a very big mistake. You will most certainly commit errors that could have been avoided by a trained financial professional. It makes absolutely no sense to try to save money only to seriously damage your business as a result. Hiring a bookkeeper makes it easier for you to perform your duties as a business owner so that your business can continue to grow.
It may seem like hiring a bookkeeper is expensive and should be avoided but that type of thinking is a big mistake. You will need a bookkeeper on your business team because they keep your finances in good order and provide you with great advice on how to save more money while increasing your revenue and profits at the same time.
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