May 14, 2018

Why does your small business need a bookkeeper?

Many small businesses don’t have a dedicated bookkeeper on staff.

There are several reasons for this, here are the top reasons:

They don’t need a full-time (or even half-time) person:
Most businesses only need 5-10 hours a week of dedicated bookkeeping.
It’s difficult to hire someone long term for so few hours.

Instead, many small businesses combine bookkeeping with other work to create a half or full-time position, or the owner handles the bookkeeping themselves, in addition to their other responsibilities. This can be a mistake.

If bookkeeping and cash flow management is only one of several duties, it may go to the bottom of a to-do list. Bills are more likely to be paid late, customers who owe money won’t be contacted, and the overall fiscal health of the business will suffer. If it continues for too long, the bookkeeping stops being a tool for managing cash flow and long-range planning.

A receptionist, general manager or even the owner may not have a fiscal background. They are more likely to make errors which won’t be apparent until tax time, and less likely to have the skills and experience to analyze the information a good bookkeeping system can provide.

Some small business owners don’t want to hire a bookkeeper because they are concerned about possible theft:

Most businesses need to give their bookkeepers personal information and access to bank and credit card information.

Hiring a short-term or very part-time person who has access to that level of confidential information is a risk. This is especially true if your bookkeeper signs checks AND reconciles bank and credit card statements, since no one else may know where payments are going.

The risk of bookkeeper theft can be minimized. If you set up a 2-person system anytime money goes in or out, you will make it much harder for a dishonest bookkeeper to steal from your business.

Risks with online accounts can be minimized by simply changing account passwords when someone leaves. You should also notify the bank and remove the person from the list of authorized signers if they were able to sign checks, and let your payroll service know they should no longer have access to payroll information.

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