Chances are, you launched your business with a great idea, a novel solution to an unmet need, or a unique skill at which you totally kick ass that the world wants. This is the stuff of entrepreneurism. You likely did not start your business to stay on top of quarterly taxes, payroll taxes, sales tax, and generate profit & loss statements and balance sheets. And here’s the real turd in the punchbowl: Every minute you devote to these tasks is a minute you DON’T spend working on the reason you launched your business in the first place.
Here’s where you say, “But CPAs are expensive and I need to keep money in the business.” That’s what’s called a false choice. Yes, you do need a CPA, but not for basic bookkeeping functions mentioned above. What you do need is a damn good freelance bookkeeper who takes care of the majority of your financials, and works in concert with your CPA, who handles the very occasional big stuff like filing tax returns, long-term financial planning, etc. And you can find a damn good freelance bookkeeper for $40-$60 per hour (You pay more than that to get your car detailed) for just a few hours each month.
Unless you have a background in finance or accounting, doing bookkeeping yourself brings huge risk and tiny reward. Why? Because a great bookkeeper is inexpensive and bookkeeping mistakes can cost you deeply. Take it from me, just the penalties for late payroll tax payments will kick your ass. And as any seasoned entrepreneur will tell you, “Know your numbers. All the time.” You have to know where you’re at financially, at any given time, for negotiating office space, applying for a bank loan, line of credit or corporate credit card, hiring, investing in supplies and equipment–damn near any business-related move you want to make. And how will you know what your numbers are, let alone have them documented and up-to-date on paper, when you’re busy doing the thing you built your business around?
With a bookkeeper, you also get something else vital to your success: Objectivity. Face it, you’re not an impartial third party when dealing with your business’s financial situation. This is your baby, and you’re likely to interpret the baby’s health in a more positive or negative light compared to an unbiased set of eyeballs. This objectivity is even more crucial when business partners are involved. (Again, I speak from experience.) To take on your company’s bookkeeping is to put a target on your back. Questions will be raised, as will eyebrows and suspicions, when something doesn’t add up or gets overlooked.
Hey, you’ve done the hard part. You plunked your chips onto the table and gone all in on starting a business. Bravo! Don’t take an unnecessary risk by taking on the bookkeeping duties. Professional help is plentiful and cheap. So do your dream, not your books.
