The issue of doing your own bookkeeping became prevalent with the advent of low cost accounting software in the early 1990’s. On September 27, 1994 Intuit purchased a program called MoneyCounts from Parsons Technology for $64 Million. Intuit changed the name of MoneyCounts to QuickBooks and created a very effective Unique Selling Proposition “You can save money by doing your own bookkeeping” . That USP resulted in Intuit capturing almost 85% of the small business market. Accountants were no fans of this extremely popular software program for several very valid reasons. First, it was not a true accounting program with serious security flaws. Second, it was promoting inexperienced individuals take on a crucial segment of the financial process. Third, it was distracting business owners from their core business, and last, it drastically cut into the accountants business Irenas Bookkeepers.
Addressing all of the issues concerning DIY bookkeeping in great detail would require a book. I will cover as many of the main issues here to provide the reader with an opportunity to gain a better understanding of an extremely important subject. I welcome any questions and comments regarding the subject matter in an attempt to assist entrepreneurs that may not have had the opportunity to properly make an informed decision.
If you’re reading this special report chances are you’re one of the millions of small business owners struggling with the issue of “doing your own books”. For many, the idea of retaining an outside bookkeeper or accountant to handle your personal financial matters is sort of like opening up your closet to a complete stranger. I believe that this issue of personal privacy is valid. To be perfectly honest, one of the reasons I decided to become a CPA was because I knew I would be in business and wanted to be in control of my own finances. Most entrepreneurs don’t have that option or the skill set. The issue of DIY bookkeeping is of tantamount importance because it could affect the financial viability of the enterprise. There are a number of issues to address including:
The use of bookkeeping information to prepare tax returns
The integrity of the financial information produced
The validity of historical data to project future results
The management of cash flow
The cost of retaining a professional
The time, effort and frustrations of keeping your own books
Addressing the government’s increasing propensity to audit
The time and effort learning about bookkeeping
Creating the bookkeeping processes
The trust factor
As you can see there are a lot of issues to address in making the right choice. This is by far, not all inclusive. There may be many other legal, financial and/or personal issues at stake. The point here is that the subject of creating and maintaining a set of books and records for a small business is of significant importance. The decision as to how it will be done should not be made on a whim or by the uninformed. An individual operating a small business doesn’t know what they don’t know. Operating a business comes with certain responsibilities and obligations. Not knowing is not a valid reason when the books and records fall into question. I submit that as business owner it is your duty to know exactly what the issues are and make an informed decision about addressing each of them. You are, by default, the President of your company which comes with all of the associated responsibilities including tax, legal and personal liabilities.
There are many concerns and aspects about the business that you need to look into. The most important thing is for you to generate profit. This means more promotion or more rapport with the customers. However, you can’t deny the fact that bookkeeping is also important. But since you only have one body, you need to delegate the tasks. When you delegate the task for bookkeeping, your options are to hire an in-house bookkeeper, employ a freelance bookkeeper, or outsource the bookkeeping duties.
Getting a bookkeeper for your flourishing business is not a task that comes easy. This is because you would not only have to deal with getting someone who can perform the tasks that you need to be done like keeping your accounting books well-maintained. You must also take note of the bookkeeping rate that you would need to add on to your business expense. Presently, the range for this rate runs from $15 to more than a hundred for every hour. As such, when it comes to getting a freelance bookkeeper, you should always have a number of considerations in mind, as these could also greatly affect the bookkeeping rate that you need to pay.
Bookkeeping Rate Considerations in Hiring a Freelance Bookkeeper
Here are some of these considerations that you should look into before getting a freelance bookkeeper:
– A bookkeeper who has attained a degree in accounting come with a bookkeeping rate that is higher.
Although it is not imperative for a bookkeeper to have an accounting degree, those who have would be better off than those who do not. Because they already have a background on the matter, they understand basic business concepts like taxation, payroll and cash flow better. As such, their training would not be as extensive as those that would have to be done to those who do not have a grasp of the basics of businesses. So, if you are looking to pay a bookkeeping rate that is cheaper, then it is best that you hire a newly-graduated freelance bookkeeper who is just new to the field.
– The level of experience a bookkeeper holds is also a great determinant when it comes to his bookkeeping rate.
If a bookkeeper already has a wide experience in the field of accounting, then even if he has not attained a degree, he would still fetch a higher bookkeeping rate than others. This is because he would already have the needed knowledge when it comes to handling such business needs like creating financial statements, recording and organizing invoices, processing business papers and developing a payroll. Although this kind of bookkeeper would not come cheap, the cost of training them has been put to a minimum. So, if you want an experienced bookkeeper, then you would also have to be wise in judging if his experience measures up to his bookkeeping rate. If you are not all that convinced, then you could ask for more credentials or references to back up his said experience.
– A bookkeeper who is always updated on bookkeeping rules fetches a higher bookkeeping rate.
Change is always constant and this is the same when it comes to particular bookkeeping rules. So, if there is a bookkeeper who keeps himself abreast of these changes, then he is a definitely a good one. The modifications that this bookkeeper will have updated himself with will be reflected on his work. As such, it is best that you interview a bookkeeper stringently before hiring him. You could ask him questions about the changes that have already occurred in the bookkeeping world and his insights about them. This way, you will know if he has been keeping tabs on these changes or not.
– The bookkeeping rate should be commensurate with the tasks you will be giving a bookkeeper and his capacity to do them.
If a bookkeeper does an excellent job in keeping up with all the accounting tasks that you ask him to do, then he should be accorded with a higher bookkeeping rate. However, if you only need a bookkeeper who would only have to concentrate on particular aspects in your business like handling the invoicing or the payroll, then you could look for someone who fetches a bookkeeping rate that is much lower.