As a business owner, you wear a lot of hats.
But unless your primary business is accounting, my guess is the “bookkeeping” hat is one that’s not super comfortable. After all, you probably started your business to solve a specific problem or share your craft with the world.
And now you find yourself doing that … AND bookkeeping for yourself on the side.
That’s not an ideal use of your time — and the last thing you need is to make financial mistakes because you’re not exactly sure what you’re doing.
Which begs the question… should you hire a bookkeeper?
Do You Need to Hire a Bookkeeper?
At first, hiring someone to manage your books just looks like an additional expense. I mean, why hire a bookkeeper when you can do the bookkeeping yourself?
While this may work up to a certain point, there comes a time when things become too much for you to handle.
It’s important to remember that as an entrepreneur, your focus should be on building and growing your business. You can’t possibly do everything in your business forever.
The truth is, having a bookkeeper on your team makes a lot of sense. But before you hire one, it’s best to understand what they do and how they can benefit your business in the long run.
What a Bookkeeper Does
Like anything else in business, hiring a bookkeeper is an investment.
And like other investments, it’s essential to understand what you’re getting into before you start spending money.
So what does a bookkeeper do?
Below are some of a bookkeeper’s typical responsibilities:
- Posting and updating of journal entries
- Processing of payroll, accounts payable, and accounts receivable
- Reconciling bank statements
- Preparing trial balance
- Performing month-end closing
- Tracking fixed assets
- Preparing depreciation schedules
A good bookkeeper should have above-average analytical and problem-solving skills that they’ll need in resolving discrepancies.
Bookkeepers are detail-oriented, but also need good communication and soft skills while working with vendors and suppliers.
What is the difference between a bookkeeper and an accountant?
Bookkeepers are not accountants. There are no formal certifications to become a bookkeeper, but a solid understanding of accounting and tax rules will certainly help.
To make it simple, a bookkeeper’s primary task is to record receipts, invoices, and other transactions.
Meanwhile, an accountant often provides business and tax advice based on the information compiled by bookkeepers.
When to Hire a Bookkeeper
This is a crucial question business owners need to answer right from the get-go. Ideally, you should have a bookkeeper on board shortly after starting your business — so you can have someone handle your day-to-day financials.
Of course, many of us are bootstrappers by nature, and try to keep costs low early on. I’m the same way!
That’s perfectly fine as long as you’re still able to perform your CEO functions. If you’re getting overwhelmed and you’re starting to see discrepancies in your financials, it’s probably time to get some help.
Business owners usually hire freelancers for two reasons:
- To free up their workload
- To do work they couldn’t otherwise do themselves
Whatever the reason, one thing is clear. Hiring a bookkeeper accomplishes both, and also comes with a few benefits.
Benefits of Hiring a Bookkeeper
Here are the main benefits of hiring a bookkeeper:
- Make tax season easier for you
- Free up your time from bookkeeping tasks
- Maintain current and accurate account information
- Avoid data entry mistakes
- Assist you in clarifying anything irregular about your income and expenses
Your Options for Hiring a Bookkeeper
The good news is, it doesn’t take a lot of effort to hire a bookkeeper these days.
I’ll do my best to outline some of your best options below.
1. Freelancer Bookkeepers
The gig economy is in full swing and it’s been very kind to small business owners in terms of providing talented freelancers that could perform different tasks.
From graphic designers to writers and social media marketers, these freelance marketplaces come with a deep talent pool that you can take advantage of. They also offer freelancers that are skilled in bookkeeping services.
FreeUp is a freelance marketplace of pre-vetted freelancers. That means is that you no longer have to review dozens of resumes or conduct interviews, because (in theory) FreeUp has already done it for you.
All you need to do is tell them about your ideal bookkeeper and your budget. FreeUp will then send you candidates that closely match your requirements. Next, you can set up a quick 15-minute conversation with them to see if they’re a good fit.
The service is great for entrepreneurs who don’t have the time to sift through resumes and conduct interviews. With FreeUp, you can be working with a freelance bookkeeper 24 hours after sending your requirements. It’s that quick!
2. Online Bookkeeping Services
If you’re looking for a more specialized approach bookkeeping services would be the better option. Below are some of the top bookkeeping services you can consider:
- a dedicated bookkeeping team
- powerful and easy-to-use financial reporting software
- monthly financial statements to help keep them on top of their finances
Bench offers pricing packages based on your monthly expenses.
As the name implies, Bookkeeping.com is an online bookkeeping service based in California that has been in business since 2011.
The company offers several services that go beyond bookkeeping including the following:
- Human resources
- Insurance services
- Tax Services
- Time Clock
Since the company provides customized bookkeeping solutions tailored to the needs of its customers, they don’t offer any set pricing and plans to choose from. You’ll need to speak to them so you can get a quote.
Finance Pal is another online bookkeeping service that offers a range of bookkeeping and accounting services to small and medium-sized businesses.
The company is fairly new, starting its operations in 2019 and currently based in Chicago.
Describing their business as a one-stop-shop for all of your business’s finances and accounting, Finance Pal also provides a host of other services including:
- Entity formations
- Payroll solutions
- Recovery and catchup
- Sales and use tax
- Tax preparation
They currently have 3 pricing plans to choose from like Basic, Plus, and Custom, each of them offering a different set of services customers can choose from.
3. Virtual Agencies that Offer Bookkeeping
Apart from freelance marketplaces and bookkeeping services, some agencies offer back-office support with bookkeeping being one of them. The following are some of the services that fall under this category:
Established in 2010, BELAY started by helping churches and pastors outsource their administrative work.
The company, which employs only US-based assistants, has since expanded its operations and is now serving businesses nationwide.
BELAY helps its clients by providing them with virtual assistants that can help with admin work, bookkeeping, and website support and maintenance.
A well-established company, My Tasker began its operations back in 2012 and is currently based in Kolkata, India.
Just like BELAY, the company also helps its clients by providing virtual assistant services remotely under the following expertise:
- Accounting and bookkeeping
- Writing and editing
- IT support
- Web design and development
My Tasker provides several plans that start at $140 for a 10-hour a month plan.
Remsource is a virtual administrative assistant company founded in 2009 and located in Baltimore, MD.
What makes RemSource different from its competitors is that it offers live admin support during regular 9-5 office hours. Their VAs can perform various tasks including answering phones and emails, scheduling appointments, customer service, and bookkeeping just to name a few.
RemSource is also just one of the few US-based virtual assistant companies where VAs work from an office instead of their own homes.
Their Monthly packages start at around $500-600 per month, depending on the client’s needs and requirements.
How Much Does it Cost to Hire a Bookkeeper?
Since a freelance bookkeeper isn’t technically an employee of yours, you’re not required to pay them any of the mandatory benefits a full-time employee is entitled to.
Depending on the kind of service you choose, freelance bookkeepers are usually paid for hours worked. Apart from skills and knowledge, a bookkeeper’s years of experience also plays a huge role in determining the cost.
A typical bookkeeper, whose role is basic data entry, could cost you between $10 to 35 per hour.
A more seasoned bookkeeper, with more accounting skills for example, can cost around $40 to 75 per hour.
More common with the virtual bookkeeping agencies is to simply charge a flat monthly fee. For example, Bench charges $139-349 per month, depending on the size of your business.
You can also refer to the prices for each of the services mentioned above.
Questions to Ask a Bookkeeper
Once you’ve decided on the platform and you have your budget in place, you’re ready to hire a bookkeeper.
To get the best person to help your business, you must ask the right questions during the interview. Below are some of the essential points you need to touch on.
What is the Scope of Work?
Though we’ve established a bookkeeper’s typical duties, different business owners have different requirements. There may be other tasks you need them to help with, so it’s important to find out if they’re capable of doing it or not.
- Do they have experience processing payroll?
- Are they good at reconciling bank statements?
- Do they know how to prepare a trial balance?
- What kinds of financial reports have you prepared?
Make sure to check if they’re capable of doing everything you need, and how much it’ll cost.
What Software Do You Use?
It’s important to establish early on the specific software your new bookkeeper will be using. Many bookkeepers specialize in Quickbooks, Xero, or other solutions.
You may already have a software you use in your business, so make sure to ask if they’re familiar with it — or if they recommend switching to another tool.
What Certifications Do You Have?
When it comes to bookkeeping certifications, there are no formal or legal requirements to practice.
Specific software tools and industry groups offer their own certifications. For example, Quickbooks encourages bookkeepers to certify as a “ProAdvisor“. Meanwhile, the National Association of Certified Public Bookkeepers has their own certification program.
These show that bookkeepers are serious about their practice, but shouldn’t necessarily disqualify a candidate if they’re not certified.
Instead, ask for referrals to clients with businesses similar to yours. If they had success, odds are you will too.
How Will Tax Filing and Preparation Work?
Tax season is one of the busiest seasons in an entrepreneur’s life. This is also one of the best reasons to hire a bookkeeper.
While a bookkeeper usually won’t be filing your taxes, they should be able to make it easier for you and your accountant by providing complete and accurate financial information.
Ask what documents will be provided and what the typical process looks like.
Final Thoughts on Hiring a Bookkeeper
Given the skills and experience they can contribute to a business, it’s safe to say that just about every business owner will need to hire a bookkeeper at some point. This won’t just just free up your workload, but also helps ensure your financials are well taken care of.
A bookkeeper is a worthy investment, especially since the cost to hire one is relatively low compared to the benefits.