Your number one reason for not hiring a bookkeeper is probably "I can't afford it." But here's the thing: doing your own bookkeeping is probably even more expensive.
In this post, we'll compare the actual cost of hiring a bookkeeper versus the costs you could incur by doing it all yourself.
It's easy to think of your own time as "free," but if you could be generating income with that time, then it's far from free.
There comes a point in your business's lifetime where you have to ask yourself which tasks are worth getting someone else do to instead. For instance, if you're billing clients $85/hour, and your bookkeeping takes you four hours a month, then you're actually making more money by hiring a bookkeeper and using those four hours for billable client work instead.
Doing your own bookkeeping: $85/hr x 4 hours = $340
Hiring a professional bookkeeper = $249/month (for Accracy)
In this case, not hiring a bookkeeper would actually cost you nearly $100 dollars a month.
To do your own calculation, start tracking how much time you actually spend on bookkeeping. Then use an online calculator to figure out how much your time is worth. If the value of your time is more than the cost of bookkeeping, then hiring a pro is probably worth it.
If you're paying for software to do your taxes, that's an additional cost to factor in when doing your calculation. In the example above, adding $30/month for cloud accounting software into "doing your own bookkeeping" equation will have you saving $121/month by hiring a bookkeeper (like Accracy).
If you're not billing client hours, you might not lose direct dollars by doing your own bookkeeping, but you could still miss out on growing your business indirectly. Are you an excellent marketer? Great at building customer relationships? Time spent on bookkeeping, means that you're not doing these other things that help you build your business.
If you estimate that these indirect revenue-generators will bring in at least $121/month, then hiring a bookkeeper is worth it.
Besides freeing up your time to grow your business, a bookkeeper can also save you money in other ways.
A good bookkeeper has the skills and knowledge to make sure that all of your expenses are tracked correctly and comprehensively. This means that they're helping you to both take advantage of all possible tax deductions, and track everything in the correct way to avoid IRS fines at tax time.
Accountants are much more expensive than bookkeepers. If you're not confident that your DIY books are tax-ready, your accountant will charge you $150"“$400 per hour for work that could have been completed by a bookkeeper.
The simpler your books are when you send them to your CPA, the cheaper it will be to file your taxes.
Bookkeeping is a demanding, detail-oriented task. When you're already working 60+ hour weeks and you're exhausted, it can be easy for things to fall through the cracks. Not to mention the fact that overwork can lead to burnout, which means time away from your business and clients.
Having someone else do your books can take one more stressful thing off plate.
We've talked about a lot of hypotheticals so far, like "think about how much money you could make with your freed-up schedule."
But lack of cash is a real constraint that might mean you can't afford a bookkeeper.
If your business is just starting out, or if you're in a month-to-month cash crisis, it's probably best to do your own bookkeeping for now.
And just because you can afford a bookkeeper, doesn't mean you need to hire one. Not sure if that's you? Read Signs You Need to Hire a Bookkeeper to find out.
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We are offering free 1 Month Basic Bookkeeping to all new customers so you can experience Accracy's seemless and professional services.
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