One of the secrets of taking your business to the next level is outsourcing. As your business grows, you simply cannot keep doing it all on your own. What makes the most sense is to focus on the aspects of your business that you excel in, and outsource or hire employees to handle the rest. Outsourcing typically makes the most sense for small business person because you don’t have to worry about withholding taxes and providing medical insurance (especially with the health insurance changes coming down the pipes).
What can you outsource? I recommend first and foremost that you outsource your bookkeeping. This makes sense for a variety of reasons:
- Cost — Bottom line is that paying a bookkeeper is much cheaper than hiring a full-time employee to handle the task. A simple Google search will bring up a list of bookkeepers who offer different plans to fit almost any budget.
- Expertise — It’s crucial that your books are kept correctly, especially come tax time. You certainly don’t want to make a mistake that can get you fined. You don’t want to miss out on deductions and expenses you can claim to lower your taxable income. And you certainly don’t want to do something that’s going to get you audited. That said, it makes sense to hire out a professional, rather than trying to do it yourself.
- Ability to terminate — When you hire an employee, you’re entering into a long term relationship. Like any relationship, you invest a lot of yourself. You have the initial costs, all the training, and the learning curve. So if the employee ends up not working out, just like a marriage, it’s tricky to get out. Firing isn’t as simple as saying “Goodbye”. There’s paperwork and documentation needed. Then there’s that whole “filing unemployment” thing.
But when you outsource, you can cancel that relationship at any time. It’s like dating. You haven’t set anything that official, so if things don’t work out, well…no harm, no foul. You just move on.
Continuing with the dating metaphor, it may take you a few relationships before you truly find the one. That means you have to know when it’s time to break things off and move on. Otherwise you’ll get stuck in a relationship that hurts you and your business. So how do you know when it’s time to end things and fire that bookkeeper?
Signs That You Need to Kick Your Bookkeeper to the Curb
They don’t communicate.
I had a bookkeeper once who almost cost me a house. It’s true. The guy handled both my personal and business books. My spouse and I put a home under contract, and it was time to secure financing, which we knew would be a bit harder now than it was last time we bought during the boom. Well, when the loan went into underwriting, it got flagged because they needed to see proof that our tax return had been filed. No big deal, right? We had filed an extension. But as far as we knew, all had been taken care of. We turned in everything, paid the guy, and were just waiting on our return (hopefully).
But when we contacted the bookkeeper’s office to get proof of filing, we found out that it hadn’t been filed yet. His secretary said they were waiting on us to come in and sign some other paperwork. I blew up. As far as we knew, we had signed it all. No one ever contacted us to let us know we needed to sign more — and this is after I sent two emails that were never responded, too to make sure all loose ends were tied up. Needless to say, the relationship is over.
They can’t explain documents to you.
Any schmuck can lease a building, put a sign out in the front, and tell you they can keep your books. Doesn’t mean they know what the hell they are doing, though. How can you tell that they have no clue what’s going on? Well, the first sign is that when you ask them specific questions about paperwork, they can’t give you straight answers.
For example, as an employer, it’s crucial that you understand the W-2 form. If you hire contractors, you also need to understand W9s and 1099s. You need to make sure they are all filled out correctly. You also need to ensure that you send them out to the right places by specific deadlines. Your bookkeeper should be able to advise you accordingly. If not, well, they just don’t have a clue — because those are the basics.
They act defensive or shady when you ask questions or request documentation.
Want to see your profit and loss report? Wondering what this month’s bank reconciliation looks like? All you have to do is ask. However, if they seem annoyed or try and hold you off, well, there’s a big warning sign right there. That means they probably aren’t keeping up with things on a regular basis, because those should be readily available.
Not sure if your bookkeeper is on the up and up? Think it might be time to find a new one? Consider looking to the National Bookkeepers Association for guidance.