Monday, 28 October 2013
When to Hire a Bookkeeper or Accountant
A serial entrepreneur Aaron Sylvan who lives in New York, contrasts the circumstances to requiring to hire both a carpenter and an architect when building a house.
An accountant can analyze the big picture of your financial situation and offer strategic advice as he/she produces key financial documents, like profit-and-loss statement, if needed, and files a company’s taxes.
An accountant can also act as an outsourced chief financial officer, advising an entrepreneur on financial strategies, like whether to secure a line of credit against receivables when introducing new products after tax season is over
On the contrary, a bookkeeper’s jobs are the day-to-day hands-on tasks: making sure new employees file all the right paperwork for the company’s payroll, submitting invoices (promptly) and following up on them, and paying the bills.
The bookkeeper also tracks company expenses or company financial statements and can assure that every cost has been entered — and recorded correctly — into software like QuickBooks so that the business is ready for tax time along with filing any other reporting to, say, creditors or investors.
“I don’t keep receipts; they’re a pain,” says Sylvan, who runs Sylvan Social Technology, an ecommerce-services company. “Every month I get a bank statement with a gazillion transactions,” such as taxi rides, meals, conferences and other expenses he has placed on his company’s debit card.
He said his bookkeeper spends a few hours a week sorting it all out. Consequently, Sylvan has a better idea about how his expenditures stack up in opposition to his budget. He is certain he won’t bill clients wrongly or miss important payments.
“Knowledge is power,” even when it comes to the small details, Sylvan says. “If you don’t have a bookkeeper, you’re probably not being as strategic as you could be in how you spend your money.”
When to Bring in a Bookkeeper
Sylvan has typically hired a bookkeeper for a few hours a week within a few months after starting a new venture in his running half-dozen businesses the past 15 years. For the first six to nine months, he’s usually too busy to focus much on recordkeeping, then “things begin to stabilize,” he says. “Then you can see trends and you can start to think strategically about where your money is going and where you can save.” And this is when a bookkeeper becomes valuable. Since Sylvan has fewer than a dozen employees at each new company, the bookkeeping takes about one day a month, he says.
When to Hire a Staff Accountant or Bookkeeper
A lot of small entrepreneurs can almost certainly stick to outsourcing accounting or bookkeeping services for pretty much some time. The usual service business can frequently outsource its chief financial officer tasks and bookkeeping in anticipation of its revenues go up well above the $1 million mark — or until it has about 30 employees. Thus far, most businesses more often than not don’t have sufficient work to keep a full-timer busy every day.
You may need full-time help when you’re calling your accountant often enough that you wish he or she were in the office all the time, then it’s time to hire a full time bookkeeper.