If bookkeeping is your least favorite part about running your business, you’re not alone. In a survey released by TD Bank, over half of the hundreds of entrepreneurs polled admitted that of all their daily tasks, keeping track of finances was the one they dreaded the most.
Despite that widespread sentiment, a fair number of business owners loath to ask for help. If working with vendors seems expensive and complicated, hiring an in-house accounting team is out of the question. Instead, many founders and other executives at the heads of growing businesses decide to suck it up and do it themselves.
…Until they make a mistake. Or run out of time. Or simply burn out.
Even if you or your fearless leader happens to be a financial expert, there are better uses of your or their energy and skills.
If this sounds all too familiar to you, it might be time to follow your instincts and let go of managing your business’s finances by yourself. But how can you ensure that it’s the right time to hand over your back-office operations? How can you tell if it will actually save you money, avoid impending, unnecessary risks? When is that sweet spot moment?
There’s not a single “right” time to outsource your bookkeeping—instead, there are several. The following moments and milestones indicate your business is in the right lifecycle when you should really consider making the switch:
Signs it’s Time to Outsource Your Company’s Books:
If You’re Losing Money
Counterintuitive though it may sound, periods of significant financial loss are precisely the right moments to think about working with an outside bookkeeper. Accounting professionals will help you identify and assess financial shortcomings and inefficiencies in your organization, and can coordinate with you to solve problems and handle liabilities. Thanks in part to our independence, companies like indinero have broad, objective views of various industries and remain up-to-date on best practices. That means we can show you how others have handled a similar crises to what you are or might be facing and found ways come out on top.
When Your Business Is in the Midst of Growth
The same holds true for periods of immense growth and opportunity. When business is booming, accountants provide the expertise and perspective needed to ensure it stays booming. In addition to helping you achieve sustainable growth, your bookkeeper can also help you make the most of a recent capital infusion. Investors want to make sure the companies they fund remain vibrant and successful. Whether strategizing with you as a co-navigator or merely taking some responsibilities off your plate, accountants empower you to lead to the best of your ability.
When You’re Busier Than You’ve Ever Been Before
Financial errors aren’t only embarrassing; they’re also dangerous. When you’re busy, you’re more prone to making small mistakes. A misstep such as an incorrect invoice or a late bill payment could hurt your relationships with clients, customers, and suppliers—or it could trigger something much worse.
Just as manufacturers have quality assurance supervisors, athletes have coaches, and writers have copy editors, business owners need bookkeepers on the lookout for any potential or ongoing oversights that could keep things from running smoothly.
Business Milestones That Are Made Easier With Outsourced Bookkeeping Accounting:
Before a Big Launch
About to roll out a new product or service? Your financials are about to change as well. Talk to an accountant before any major launch to discuss your objectives and uncertainties. A financial partner will give you the quantifiable measurements with which you can gauge each department’s performance so you can determine whether the launch was a success or not.
Accountants can also collaborate with sales and marketing staff to calculate the relative value of specific business initiatives and customer segments. This intelligence can help these teams focus their energy in a very hectic, high pressure situation.
Before an Audit
If you’re concerned about being audited by the IRS, a bookkeeper can put your mind at ease and get your organization ready for any likely or scheduled investigation. A financial expert will help you prepare by organizing your paperwork, tracking down and logging any missing receipts, and instructing you on how to act and what to expect. It’s our job, and we’ve been there before.
Additionally, if you are planning on going for a round of funding sometime soon many investors and lenders will require a third party audit and GAAP financials. If you’re unfamiliar with GAAP, think of it as the Magna Carta of all business accounting in the United States. This standardized accounting method is used by financial professionals, third-party auditors, and investors who are looking to peek into your company’s internal financial controls. In lieu of the recent trend of companies opting to present non-GAAP financials the chair of the Securities and Exchange Commission, Mary Jo White, warned that when companies use non-GAAP numbers, they confuse investors and strain audit committee resources.
Before a Transition in Leadership
Accountants are integral players in any merger, acquisition, or another transferral of business ownership from one party to another. This is true even in family businesses: without an independent person managing the books, it’s a lot harder to convey important organizational knowledge from one generation to the next, especially if the new owner of the business isn’t versed in financial matters and is looking at account information for this first time.
When working with an outsourced accountant, be sure to share your cap table, operating agreement, or any other documentation of ownership distribution from the very beginning. This may sound like an overshare, but it’s crucial for your accountant so they can set up the owner’s equity section of your balance sheet accordingly. If you’re operating as a corporation they’ll use the number of shares and dates they were allocated to create proper journal entries. If you’re an LLC/partnership they will use the percentage of ownership to allocate and distribute profits and losses accordingly.
The Best Times of the Year to Outsource Your Company’s Books:
After Filing Your Taxes
If you just filed your taxes, you no doubt have your organization’s financials on your mind. Why not take the opportunity to share what you have with a qualified accounting partner and bring them up to speed? Armed with recent tax returns, bookkeeping professionals get a comprehensive picture of your business instantly, and can thereby become fully integrated with your operations as quickly as possible.
Before Filing Next Year’s Taxes
Whether you do it as soon as a couple of weeks afterward or wait for a couple of months, it’s never a bad idea to get in touch with an accounting expert in the intervening period between this year’s and next year’s tax seasons. Don’t wait until March or April, when everyone is scrambling and overwhelmed. Instead, think about how much money you’ll save now—before you’ve already spent it—when you have a plan and planner on your side.
You know what they say about the present. There’s no time like it! To be candid: there’s no point in waiting for the “right time,” if there ever is one. A good accountant will make you wonder: “Why didn’t I hire someone like this before?”
Regardless of your business’s current circumstances, outsourced bookkeeping is designed to save you time and money. And when you’re the owner of a growing business, you could always use some more of both.
How to Outsource Your Books
First, it’s worth pointing out how many options businesses have for outsourcing their accounting, taxes, and other back-office tasks. Searching for the right solution can be time consuming and confusing, without the right guide on your side.
Once you’ve settled on the perfect option, your new accountant, bookkeeper, or tax expert will need to fully understand your business. This checklist for getting started with an outsourced accounting provider, like indinero, explains the materials you can provide to tell your business’s story including essential business information, ownership documentation, financial records, and information about any loans/debts.