With the combination of state, local, and federal taxes on businesses, some corporations could be taxed at almost 50%.
Without proper bookkeeping, small business’ profits could be severely diminished at the end of the year. Weighing your bookkeeping solutions is essential to understanding how much your company is making and how much you can expand.
If you’re a new business or a small one, you could spend your first losing money without seeing a return. This shouldn’t worry you as a business owner.
But by keeping track of your spending, you can adjust your tax bill at the end of the year and know where you could be making changes along the way.
With all of the different software options and bookkeeping solutions available, you might be tempted to go with the cheapest option.
Before you decide, check out our guide on what each of the many bookkeeping solutions can offer you.
1. Doing It Yourself
There’s nothing wrong with taking on tasks related to your business on your own.
If you have a small business, you know it as intimately as anyone else does. In fact, 75% of small businesses are so small that they have no employees beyond the owner.
While for some it’s a control issue to take care of things on their own, for others, it’s a necessity.
If you’ve been on top of everything related to your business, DIY could be one of the ideal bookkeeping solutions compared to hiring a third party. As long as you’ve got all of your invoices saved and you’ve been dutifully putting them into your accounting software, this could be a breeze.
Some companies are just part-time affairs. If you take one day a month throughout the year to get your affairs in order, calculating everything could be a click away.
If you’re the type who learns quickly, you’ll be able to get a strong understanding of how the financial side of your business is operating. You might spend more of your days working on products, inventory, and marketing.
Accounting is the last piece of the puzzle to get a feel for how you can set your sights on the future.
Handling your own finances isn’t without its downsides in the realm of bookkeeping solutions. While you’re worried about building spreadsheets and tracking expenses, you could have work piling up regarding your business.
Be sure that you’ve got everything running smoothly before you shut yourself into bookkeeping exile.
You could also end up spending an arm and a leg on bookkeeping software and tutorials. Calculate the real costs of your time and expenditures. Hiring someone might be cheaper.
2. Ask A Friend
If you have friends who offer bookkeeping solutions or run a small accounting firm, you could get a good deal working with them. They will know how your business works from knowing you.
Be honest and open with them and ask them if they think they could handle it.
Having a friend could be good for at least the first couple of years of your business. You could get to know some important information either to start handling bookkeeping on your own or else so that you know what to look for.
Friends can be honest with you in ways that a paid bookkeeper won’t be.
They could let you know honestly if some of the angles or projects you’re pursuing aren’t as good as others. They will be able to fairly assess your situation without needing to worry about keeping you as a client.
Be aware of the downsides of hiring your friends. It’s not uncommon for business associations to ruin friendships and might not be the best of all bookkeeping solutions.
Don’t put more on your friends than they can handle. Check in with them often, especially if you feel like you’re asking lots of questions and bothering them more than you would a paid professional.
Remember that your hired bookkeeper would charge you an hourly rate for every call, text, or email they respond to.
Respect your friend’s time if they agree to work with you.
3. Hire A Permanent Bookkeeper
Once you start making enough money to hire a staff, you might start thinking about hiring an on-site bookkeeper. Even if you’re a non-traditional company selling non-traditional products, the standard practices could help make sure you have the room to innovate.
This way, you’ll get a well-trained professional who you can count on for all of your budgetary needs.
You won’t have to keep tracking down every financial record, expenditure, and transaction while you’re managing everything else. Also, once you start growing your staff, you can start spreading work around more evenly and improve morale in your office.
A well-managed team can help to support each other and to facilitate growth. With a shared set of skills around, you’ll find that you’ll be able to tackle problems better than you could on your own.
You need to make sure you’re ready to train and manage your bookkeeper. If you just let them freestyle in your books, you might be surprised with what you get at the end of the year.
Even a well-trained and experienced bookkeeper will have their own style. Make sure your goals are clear to them before they begin.
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4. Cloud Accounting
You could manage your accounting and bookkeeping on your own in a new way. Rather than the classic way of writing things down or building spreadsheets, cloud accounting can integrate all of the payment systems you work with.
If you receive payments through various accounts or payment services, you spend half your day trying to get the money clients have sent to you. Without smart bookkeeping solutions, keeping track of all the invoices could be another headache.
While you’ll still need to take some time to learn the software and get acquainted with this kind of accounting, it’s usually cheaper than hiring staff. You’ll also have access to support channels and tutorials that could help you manage payments.
The downside is that you won’t get the kinds of advice and tax support that you’d get with full-time staff. You’ll also have to keep thinking about how much time you’re devoting to working with this software.
You’ll need to find a way to manage the schedule that allows you to sit down and enter your data on a weekly or biweekly basis. Otherwise, this might not be the kind of tool that’s worth paying for.
5. An Outsourced Team
There’s been a wild surge in outsourcing used by small businesses in the last few years. Outsourcing your bookkeeping could allow you to take advantage of the positive aspects of cloud accounting without having to handle everything on your own.
Your outsourced team will record all of your activity and give you constant access to your account without distracting you from running your business.
With all of the overseas firms that offer virtual assistant services, you can have all the advantages of an assistant for less. Without having to pay high full-time wages, insurance, and other costs associated with hiring, you can have great bookkeeping while you keep your overhead low.
Research the virtual team that you want to work with. Make sure there is someone you can have direct contact with who speaks your native language. This way you can have questions answered on the fly.
There are different firms that specialize in different industries. See if you can find one that specializes in your industry so that you can have that added expertise that can benefit your company.
If you’re worried about communication, check out our guide to communicating with your outsourced team.
6. Hire A CPA
Hiring a certified public accountant will give you the greatest possible benefit. You’ll have someone on hand who knows tax laws related to small businesses while also being able to manage the day to day tasks of bookkeeping.
Note the differences between accountants and bookkeepers. Bookkeepers typically have an associate’s degree or a special certification to assure you they know what they’re doing.
On the other hand, an accountant is usually board certified and has at least a four-year degree to back up their experience.
As far as bookkeeping solutions go, hiring a CPA is a slam dunk. But it will cost you.
They don’t typically handle the daily bookkeeping of businesses. They can be asked to do this but for the type of things they’re trained to handle, bookkeeping is a little more menial.
If your business is growing, if you’re being audited, or if you’ve got a strong budget, then hiring a CPA might be justified. Their time is valuable and so it’s going to come at a premium. Be prepared for sticker shock when you hire a CPA as one of your bookkeeping solutions.
Bookkeeping Solutions Keep Your Business Running
Choosing the right solution for your bookkeeping needs is essential to keeping your business going.
If your business grows at the pace where you’re making any profit at all, your bookkeeping could quickly grow out of control. Make sure whoever you hire to manage your business gets to know how your business runs and feels comfortable giving you feedback.
If you head in the wrong direction, your bookkeeper could save you from a nasty tumble.
Should you have any other questions about bookkeeping solutions, contact us for more advice to get your business growing in the right direction.