What Are Bookkeepers Worth to Your Business?
Blog post description.
8/14/20263 min read
Bookkeepers, whether in-house or outsourced, have a reputation of being a little more than the office clerk, yet their value is well understated and underappreciated. So what are bookkeepers worth to your business? And what type of bookkeeper should you use? Or should you opt for a full accountant role?
Why use bookkeepers?
A bookkeeper, in most circumstances, is a person who performs much of the role of an accountant without the legal title. It’s more complex than that, but for micro- and small business, a bookkeeper is all you need on a day-to-day basis.
Bookkeepers perform valuable roles and save small business money in myriad ways.
The first two, most salient reasons why bookkeepers are critical are direct and personal to the business owner.
As a small business counsellor, I often heard wannabe business startup entrepreneurs say, “I’m going to spend at least 30 hours of my workweek generating revenue,” followed by, “I project that I won’t need to work more than 40 hours per week.” Both are dramatically and woefully incorrect.
Typically, a new startup owner spends more time on administration than billable hours. Sales calls, customer service responses, bookkeeping, travel, administrative details and more take up, in the average business, 25 or more hours weekly. Billable hour may reach target, but that means your workweek now is over 50-55 hours.
Burnout, dissatisfaction and even disillusionment set in. “Is it worth it?” we ask.
Then, after a year or two, we still have not found time in our schedule to relax, to spend quality family time, to go on vacation.
So, the two most personal reasons for hiring a bookkeeper are that it gives you time to enjoy life and time to work on the stuff you excel at: billable time.
Find Balance & Make Recommendations
Bookkeepers who have a business background are particularly valuable. That experience helps them notice trends (either positive or negative) and respond to them. Numbers may be boring for most of us, but a good bookkeeper revels in the secrets that he uncovers.
Whether they are seeing worrisome financial trends or market evolution, they can alert you to risks and opportunities.
Efficient use of cost per hour
Now, should you out-source or hire? Out-sourcing for this role has several advantages. First, they are independent and do not have a vested interest in protecting their jobs by delay, convoluted record keeping or their own specialized way of keeping your books. Second, out-sourced bookkeepers have more diverse experience and ability to react to emerging problems. Third, while they may cost more per hour, they are more efficient because they do the work effectively. Fourth, they do not incur downtime. Thus, while their hourly rates are higher, they are not paid if they are not working on your books. Fifth, you don’t have to pay source deductions to a contractor. So, if an employee makes $20/hr, the contractor charges $25, your EI, CPP, WCB and holiday pay costs do not arise. At 15% or more, a $20 employee costs you $23, making the difference negligible.
Avoid government penalties and late fees
Bookkeepers routinely look after government submissions as well as supplier payments. An experienced bookkeeper is unlikely to miss these deadlines.
Prepare to qualify for loans
Bookkeepers always have your books ready to submit to banks and lending agencies, maximizing the potential for you to be approved.
Evaluate trends
Bookkeepers with a business background should monitor your current business health and robustness continually. They always are ready to note any trends or opportunities in the market and alert you.
Independence and less financial risk
Out-sourced bookkeeping is independent, with no personal interest in manipulating data to suit their needs, since they are paid based on the objective role they fulfill. And that means less risk of theft or fraud.
Cash flow regulation
It is the bookkeeper’s responsibility to provide timely reports. Each month, cash flow projections are revised. Every month, bookkeepers provide these reports so that you know what your cash flow status may be. Cash flow, unlike P&L statements, provides you with data on current and near-term activity.
Won’t miss deductions credits and benefits
Often, an employee with duties other than bookkeeping may miss credits, deductions or benefits available to you, whether from government programs and incentives or from suppliers. An out-source bookkeeper will not.
Bookkeepers Cost Less Than Accountants
For most small businesses, daily record management does not require accountants. At year end, your bookkeeper prepares year-end and reconciliation, readying your books for Canada Revenue Agency.
So, what are bookkeepers worth to your business? Success, more than survival. Foresight and planning. Peace of mind. And lots more.
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