If you own a small business, you might be used to doing many tasks independently. For example, you may be responsible for contacting your suppliers, marketing your products, monitoring sales, and responding to customer inquiries and complaints. You might even do bookkeeping on your own. Although you might think you’re saving money by managing your cash flow, you can do more harm than good to your money management.
An accountant or a bookkeeper can help you manage your day-to-day finances. These experts monitor cash flow from different accounts, bills, and invoices, and they can organize your books to improve your business’s money management. However, before you hire a bookkeeper or an accountant, it’s important to understand the differences between the two, the pros and cons of hiring one, and what to look for in a bookkeeper.
A bookkeeper handles financial administrative tasks related to preparing your accounts and keeping a record of your daily financial transactions. Bookkeepers do not analyze these numbers or offer financial advice.
Bookkeepers handle financial administrative tasks. They are responsible for consolidating accounts’ books, following up on past-due payments and billing reminders, processing payments for suppliers, and even processing payroll. For basic financial tasks, it’s usually better to use a bookkeeper than an accountant, since the former charges a cheaper hourly rate.
Whereas a bookkeeper manages basic financial tasks, an accountant is more suitable for a higher level of financial analysis, such as financial forecasts, auditing, and tax preparation. Accountants are more likely to give business owners financial advice and insights.
A bookkeeper handles your finances more professionally than you but having someone else manage your finances can pose risks for your business. Here are the advantages and disadvantages of hiring a bookkeeper for your business:
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Before you hire a bookkeeper, you need to know which type is right for your business. Consider the following options:
Hiring an in-house bookkeeper is ideal if you have a medium-sized business and want to keep track of the bookkeeper’s day-to-day duties. However, you need to cover all of the resources they need, including salaries and benefits. [Check out our accounting software page for further details.]
If you need a bookkeeper only for consolidating your accounts once a year, consider using a freelancer. These independent bookkeepers usually charge an hourly rate that depends on their expertise.
Large enterprises often use agencies to handle their finances, but small and midsize businesses also take this route. The cost of using these agencies depends on the type of service you need.
You can outsource your bookkeeping duties to a company that will set up and train a dedicated team for you and covers all of the expenses needed for their work. These resources include computers with accounting software, VoIPs for billing reminders, and the office space where they will work.
Here are some factors to consider when choosing a bookkeeper:
To hire a bookkeeper, you may need to pay as little as $10 per hour for basic data entry or as much as $75 for a senior bookkeeper with a bit of accounting expertise. If a bookkeeper is an accountant, they may charge $150 per hour or more.
When you hire a bookkeeper, you might ask if they prefer a particular bookkeeping tool or accounting software. Here are some popular bookkeeping software programs:
QuickBooks Live Bookkeeping offers basic bookkeeping services for small businesses. The service will assign you a team of virtual bookkeepers who will consolidate all of your accounts and expenses in real-time. You can chat with them, have a video call, or share screens. You can also track their progress through the platform’s Live Bookkeeping Hub. QuickBooks Live can also arrange your books in preparation for your tax filing. However, it can’t file your tax documents. [Read our full review of QuickBooks.]
As one of the most popular bookkeeping tools for small businesses, FreshBooks offers a full range of services, including invoicing, billing reminders, and financial reports. The software has an easy-to-use interface and integrates with platforms such as PayPal, Google Workspace, and Stripe. It also has a mobile app that lets you update and track your books on the go. [Read our FreshBooks Software review.]
You can organize your books and collaborations with Zoho Books on one platform. The software allows you to add your bookkeepers and accountant and monitor them through the platform. In addition to invoicing and billing reminders, Zoho Books can handle your bank accounts and payments to organize your expenses. It also allows you to keep an inventory of your office supplies or product stock to easily know when and how to replenish them. You can also request reports, such as profit-and-loss statements and tax summaries. [Read our Zoho Books review.]
Xero is cloud accounting software that lets you handle all accounting and bookkeeping tasks on one platform. It allows you to check your product inventory, save contacts and evaluate business performance through generated reports. It also has a sales tax feature that lets you file your taxes and prepare sales tax returns with automatic calculations. [Read our full review of Xero.]
Kashoo has basic accounting and bookkeeping services suitable for very small businesses. It helps you keep track of your expenses and bills, create invoices, and generate basic reports, such as income statements and balance sheets. The platform is simple and easy to use but doesn’t offer full bookkeeping features, such as product inventory and pre-invoice documents. You can access your account through a mobile app for on-the-go tracking.
Additional reporting by Max Freedman.