Why do you need an external bookkeeper?
Updated: Apr 5, 2020
You may be wondering why or if you need a bookkeeper for your business. Whether you’re just a local business or a start-up looking to go through growth in the years to come, external bookkeeping services will remove most of your headaches in terms of financials. We go through some of the main points below.
When accountants file your taxes at year-end, they end up having to clean up your books from mistakes and missing items, which can result in hefty fees. By having a bookkeeper do the job, this reduces the hours the accountant may spend on your file trying to reconcile your bank accounts & pull up invoices as a backup. You end up saving more given bookkeeper fees are much lower than your local accountant. You will still need your accountant, but he will spend much less time on your case which means more savings for you!
Facilitation of funding
If you plan on getting a loan or raising money from investors, those stakeholders will most likely want to look at your financial statements. A bookkeeper ensures that your books are clean and represent the true picture of your business’ current financial position. As a result, potential investors or lenders will have assurance on the financial information you are providing them.
If your books are clean, it will provide you with more clarity on your monthly cash spending which will help you forecast how far ahead your current cash will bring you. Having your books clean will allow you to quickly generate a cash-flow report showing you how much cash have you been spending over the past couple of months. It is vital for your business to understand how much you are spending.
Facilitates the audit process
By having a bookkeeper handle your financials, this ensure that the proper invoices are attached, expenses are coded to correct accounts, correct items are recorded on your balance sheet, etc. These are all important items for when your company is required to engage in audit services with an accounting firm. Not only will the auditors have more assurance on your financials, you will deal with significant cost savings as a result of clean books.
Reduced turnover and training costs
Most companies that hire an internal bookkeeper must re-hire every year given their candidate is usually an entry-level finance agent and ends up leaving. Once they’ve acquired their experience, they move up to bigger roles and such. With an external bookkeeping business, you are assured consistency through your years and growth. You will be avoiding having to re-train other candidates every year or such.
By hiring an external bookkeeper, you do not need to deal with someone that is located in your area of business. External bookkeepers work very well under remote conditions and this gives you the option to choose from bookkeepers all over the world rather than limiting yourself to a certain geographical area. It also provides you the flexibility of choosing between different time zones, different backgrounds, etc.