Your small business is starting to do pretty well after your first year of really hard work, but you find yourself stretched a little thin and you’re concerned about accounting and small business tax preparation. This might have led you to spend less time with your web-based accounting tools and fail to leverage their power, or perhaps to fall behind on your bookkeeping, increasing your future workload with tax forms like the 1099K. As the different responsibilities and tasks necessary to run your business become complex and increase in number, you’re going to have to find ways to maximize your own effectiveness and manage your business, and this will probably involve investing in getting some help.
One of the most difficult decisions that small business owners have to make is when to start outsourcing their bookkeeping and accounting. The added cost of hiring a part-time bookkeeper, for example, can feel like a major deterrent for small businesses that have a limited budget. The choice is further complicated by owners’ desire to maintain a firm hold on the bookkeeping and accounting, motivated by the accurate belief that they will be better at running their business if they have a strong grasp of its financial situation.
This example of “outsourcing” important tasks indicates the types of variables small business owners have to weigh as the business grows. There are several clear costs to hiring a bookkeeper and accountant: the financial expense, the time to communicate with them and oversee their work, and the time you have to spend reviewing the accounting reports they produce are some of the biggest. But there are clear benefits as well. You will have more free time to focus on the core activity of the business and marketing if you were devoting a lot of effort to keep clean books and learn more about accounting. And you’ll probably have more accurate, clearer accounts along with more useful accounting reports when a pro produces them. This could lead to higher deductions when you conduct small business tax preparation, and will help your confidence in your accounting once you get used to the idea.
It may be difficult to quantify some of these costs and benefits to decide if the investment is worth it. In the case of getting a seasonal accountant and a part-time bookkeeper, the odds are high that the change will be very profitable. With other responsibilities, such as marketing, filling online orders, or managing inventory, the question really comes down to the specific costs and value. But the important thing to understand is that you have to actually take the time to “do the math” and make a logical decision instead of one motivated by emotion.
Whether the person you’re considering hiring would just help with small business tax preparation or some more integral part of the business, if you are getting to the point where you have too many responsibilities for the hours in the day, it’s time to consider investing in help.