If your books are also getting you down, you are not alone. Roughly 40% of small business owners find bookkeeping and taxes to be the worst part of running a small business.
This is quite understandable, considering that bookkeeping and tax preparation can take a lot of time and resources. And if not done right, it could end you up in hot water with the CRA. Fortunately, there is an easy, cost-effective and efficient way to solve your bookkeeping problems forever. It is called outsourcing.
Are you already wondering if you need to outsource the bookkeeping of your business? If so, here are 3 major signs which indicate that it is time to outsource your bookkeeping today. Read on to find out what these are!
1. You Spend Most of Your Time Being a CBO (Chief Bookkeeping Officer)
In the beginning, it is quite normal for most small business owners to start and maintain their business’s books. But as you begin to hire in help, and as your business takes off, doing your own books can place a major strain on a SMB owner’s time and focus. When polled, business owners in Toronto have reported in the past that managing the accounting and bookkeeping aspects of their businesses took up to 25% of their time. We think this is way too much.
Even if you delegate the bookkeeping of your business, you may still find that this number does not decrease all that much. If this is the case, then you are officially wearing the hat of CBO (Chief Bookkeeping Officer) instead of CFO (Chief Financial Officer). Starting and running a small business generally involves wearing many hats. But CBO does not have to be one of these.
If you are wondering when to outsource bookkeeping, and you are spending up to 25% of your time being a CBO, then now is the time! The quicker you get that 25% of your day back, the quicker you can channel it into things that will grow and improve your business.
2. The Thought of a CRA Audit Is Keeping You up at Night
If you are lying awake at night worrying about getting audited by the CRA, then it is definitely time to outsource your small business accounting. Hiring a small business accounting professional will help you to avoid audits and can reduce your taxes. When you outsource, you get a whole team of professionals, including a tax pro.
There are a number of reasons why having an accounting and tax professional on your side is invaluable when it comes to being tax compliant. Firstly, tax laws are apt to change, and if you or your bookkeeper are not keeping up with the changing tax laws – this could lead to some serious problems.
Secondly, a tax pro will know how to maximize your deductions so that you can pay the minimum in taxes. Something that you or your bookkeeper may not be as adept in.
3. You Feel like You Are Spending Too Much Money on the Financial Function of Your Business
Do you ever get the feeling that the financial function of your business is taking up an inordinate amount of finances? Paying too much for bookkeeping can feel very frustrating. It is also a major sign that it is time for outsourced bookkeeping services for your business. Many small business owners think that DIYing their books will save them money. Why else would anyone take on this time-consuming task? This is, however, a misnomer.
Say you do your own books, and your time is worth a C$20 an hour (to be very conservative, as your time is probably worth a lot more). If you spend 25% of your time on the books for your business, then this equates to a theoretical expense of C$833 per month. If you hire an in-house bookkeeper to handle things for you, you will need to pay them a similar amount, as well as the other expenses associated with an extra employee.
In contrast to this, businesses who outsource their bookkeeping spend can spend anywhere between C$100 and C$3 000 depending on the amount and complexity of transactions. Even if your business spends C$3 000 per month on outsourced bookkeeping, this will still be C$4 000 cheaper per year than paying a bookkeeper an average pay of C$41 000 every month (plus employee expenses).
Besides this saving, you will also not have to:
- Invest in computer equipment
- Maintain computer equipment
- Supply office equipment or office space
- Purchase bookkeeping software
- Consult outside (additional) accounting professionals
Taking all of this into consideration, no wonder 59% of businesses use outsourcing as a cost-cutting tool!
Scaling Will Only Make It Worse
If you are busy scaling your business, these high costs associated with in-house bookkeeping can be even more difficult to manage. In-house bookkeeping does not scale very well – for example, at what exact point do you hire a second bookkeeper? And when do you bring on board a full-time CPA or tax pro?
Outsourced bookkeeping, on the other hand, has none of these problems. Your books will seamlessly scale along with your business, without you having to give it any thought.
Your Cash Flow May Also Be Suffering
Besides saving you money, outsourced bookkeeping services can also greatly improve your cash flow. Having great cash flow is one of the financial secrets of growing a small business. Having a pro team handling your books means that you will receive accurate and timely financial reports that will allow you to manage cash flow like a boss.
There are many hidden costs of running a small business. Don’t let bookkeeping be one of these.
Is It Time to Outsource the Bookkeeping of Your Small Business?
Accurate and timely bookkeeping/accounting is vital to maintaining a healthy small business. However, this function of your business can begin to place a massive strain on your time, and your business’s finances. And after these investments into your bookkeeping process, you still aren’t guaranteed compliance and 100% peace of mind.
If any of these 3 signs are true for you, then it is high time you outsource the bookkeeping of your small business.