Why use a bookkeeper?

Small to midsize companies can find value using a bookkeeping service rather than just relying on their accountant. With a bookkeeping service, they will have someone watching the day-to-day numbers. They will have an intermediary with the accountant who can speak their language. They can save a small business some serious money and costly mistakes.

Many small to midsize companies are so busy running their businesses that they fail to see the financial minutia that can propel them from small to healthy growth. Some companies that use a bookkeeper just to set down the numbers in debit and credit format are missing a vital resource. This is a HUGE mistake. A bookkeeper will understand anomalies and catch problems and find you opportunities to save money. The definition of a bookkeeper should be updated to the time and economy in which we now find ourselves. As Jeannie Ruesch stated in her article, Bookkeepers are embracing the role of trusted advisor (12/2021), “bookkeepers are going the extra mile to help their clients with services that fall far outside the traditional scope of what bookkeeping firms do.” With changing technology, the current bookkeeper is freed of a lot of the repetition involved in handwritten books, allowing them to take on a more advisory role. (Pilot, n.d.)

The bookkeeper is an excellent intermediary between the business owner and the accountant because they speak the same language. Small business owners sometimes equate the accountant with honesty, so it’s important to know that a good bookkeeping service is insured and sometimes bonded not just for employee dishonesty but also errors and omissions. The insurance doesn’t only cover the service- it provides peace of mind for the client!

Business owners often feel they are on their own with budget planning and execution- not with a trained bookkeeper! With up-to-date, timely numbers, decisions on where and how much money and supplies are allocated are much more manageable. A full charge bookkeeper can help the business owner understand what the numbers are, what is driving them, and how they should be viewed for future planning purposes. As a small business grows, keeping track of cash flow, bank reconciliations, and setting up a correct chart of accounts is crucial to creating the all-important profit or loss statement. (Pilot, n.d.) It is always interesting to see a client the first time the bookkeeping professional tries to explain why that independent contractor they want to issue a 1099 to is really an employee by IRS designation. The accountant won’t question that; they will report it the way it is given to them. That leaves the small business owner to explain it to the IRS. The small business owner will have to get his point across to the accountant and hope he is understood. Having been into his books and done the data entry, the bookkeeper will see areas of potential savings. (American Nurserymen,1998)

A bookkeeping service can be a money saver for a small- to midsize company. Many times, it pays for itself in a very short time. A trained bookkeeper can often do in a few short hours a week what the business owner would spend evenings and weekends trying to make heads or tails of- because they have the appropriate skill set. Current costs to have an accountant do the books are often 3-4 times the cost of a part-time bookkeeper. A bookkeeping service is a 1099 company. You’ll save on employment costs because there would be no matching taxes, no additional employee benefits. With a bookkeeping service, the business owner can monitor his business performance and make modifications promptly instead of waiting for tax time. (Teicher, 2021)

Often, especially in the small startup business, the idea of having to pay a bookkeeper on top of everything else seems to be a bridge too far for them to overcome. That argument really can’t stand up against the money-saving, time-saving, and error-saving experience of a full charge bookkeeper. To the small- to midsize business owner, a part-time bookkeeping service can be the best investment made in the future of their business.

It is hard for the baker who has the best bread in town, or the attorney setting up practice in a small town, to see the need for a trained bookkeeper. That bookkeeper would probably know how to address that workers comp audit to save money on the premium or who, upon entering the 3rd or 4th vendor invoice, notices he is being charged a shipping and delivery fee when shipping was supposed to be free. These costs add up and quickly. A full charge bookkeeper following GAAP principles (which is ordinarily what you get from a bookkeeping service) is the first line of defense in preparing a small company for tax time. The bookkeeper will know that the Mexican Restaurant owner has a chihuahua that she uses in the advertising so she can write off the chihuahua’s expenses as an advertising expense. The accountant would not probably know this, nor is it her job to know that. She accounts- she doesn’t keep the books.

For a multimillion-dollar engineering firm with 30 employees, the attorney’s office with ten associates, to the restaurant dealing with tip versus payroll issues, the bookkeeping service is the economical answer. If this information can just be successfully transmitted to business owners, there may be fewer business failures. Lawrence Teicher is the founder and CEO of CFO Consulting Services and says in his article, “bookkeeping can make or break a small business.” He goes on to say, “Bookkeeping isn’t just for taxes. Businesses can monitor how much they are profiting, where money is being spent, and where they can cut costs. This allows businesses to modify business plans and boost efficiency.” (Teischer, 2014)

It’s easy to see that a bookkeeping service for the small business owner is the cost-effective, time-saving, and error-saving way to go if they wish to ensure the financial health of their business. As has been shown, a bookkeeping service will 1) allow the business owner to spend his resources on running his business not keeping his books, which he typically is not equipped to do, 2) be an intermediary with the accountant as they speak the same language, and 3) they will most certainly save the business owner money by avoiding costly mistakes. The bookkeeping service can enter the day-to-day numbers and give the owner a precise picture of his business. The bookkeeping service can express goals and concerns to the accountant and develop an accounting method to help combat these issues. It is the bookkeeper that will find cost savings in things like insurance audits and recurring vendor bills.

To the small business owner, more insight has been given in this argument to support what he probably already knows deep down. He is a professional at whatever he does. He needs a professional to keep the numbers right because he cannot sustain a healthy company without this service. As Mr. Teischer said, “bookkeeping can make or break a small business.” (Teischer, 2014)