June 14, 2024
Should you work with a bookkeeping firm, hire an accountant, or DIY your books?
As an independent contractor—whether you’re a plumber, electrician, roofer, or any other trade professional—managing your finances can often feel like a second job. From juggling client invoices to tracking expenses and ensuring tax compliance, the financial side of your business can become overwhelming. At NetProfit Advisers, Inc., it’s our mission to make accounting simple, freeing up your time to do the things you do best.
In this guide, we’ll explore the different options you have when it comes to managing your books:
Working with an accounting and bookkeeping Firm
Hiring a full-time accountant
Doing It Yourself
Understanding the pros and cons of each option can help you decide which one is best for you and your business.
Aside from eliminating the stress of accounting, hiring a bookkeeping and accounting firm offers numerous advantages that can transform the way you manage your business — many of which our clients are pleasantly surprised by.
Here are some of the benefits of partnering with a bookkeeping and accounting firm for your financial management needs:
Firstly, knowing that you have a trusted partner to help you maintain accurate and up-to-date financial records and to council you through important business decisions can relieve a significant burden that all business owners face.
Having a Bookkeeping and Accounting Firm on your team not only frees up your time and reduces stress, but it also allows you to focus your time serving your clients and growing your business. Instead of spending hours on bookkeeping, you can dedicate more time to your core business activities. Whether it's fixing plumbing issues or installing electrical systems, your time is better spent doing what you do best.
Improving your financial health is another key benefit. Depending on our clients’ needs, our bookkeeping team provides detailed monthly or weekly financial reports. Keeping recent records gives you a clear picture of your business’s current financial health, which means you can pivot before profits dip.
This helps you make informed decisions and avoid unpleasant surprises.
For example, the drastic inflation increase over the past few years has put many contracting companies in a precarious position. Costs of parts and labor drastically increased, yet service charges didn’t move. Our clients, who receive regular financial updates, were able to see within a 30-day-window of accuracy just how much of a hit their profit margins were taking. Using this information, they pivoted their services and pricing to correct the difference and remain profitable. Without this data, these companies would have either guessed at a new pricing model or took a drastic hit on their profits, not knowing the outcome until tax season.
Accurate and organized financial records also make you more appealing to lenders, improving your chances of securing loans for expansion or emergency needs. It’s also something that potential partners, individual investors, banks, and investment firms look at when considering an investment into your business. Finally, if you are looking to sell, any buyer will want to see consistent, accurate, and up-to-date business records before making a purchase decision.
One of the most overlooked and arguably the most valuable perks of working with bookkeeping professionals is that they can actually save you money.
A good Bookkeeping and Accounting Firm will pay for itself plus some by helping you catch costly mistakes, cut costs, grow revenue, and make smarter financial decisions. It will also drastically reduce how much you’ll need to pay your CPA since you will be handing over organized, up-to-date books and won’t need to pay your tax preparer to sort through a year’s worth of receipts, invoices, payroll, and other business finances.
Moreover, professional firms will represent you in case of an audit, ensuring compliance and accuracy, and will review your taxes and point out any discrepancies that might be costing you money.
Running a business alone can be hard, especially when it comes to managing parts of your business that you’re not an expert in. At NetProfit Advisers, Inc., we merge our expertise in finance and business to serve as your trusted business adviser. In our consultation calls, we’ll help you make sense of your books and financial trends and serve as your sounding board for important business decisions.
Finally, knowing that you have a trusted partner who is doing your books, keeping you compliant and up to date, completing your payroll, and reviewing your taxes can relieve a big burden of stress and responsibility from your shoulders. Instead, you can move forward growing your business and using your data to make well-informed decisions.
While many businesses choose to partner with a bookkeeping firm that can offer robust benefits, some decide to bring their accounting services in-house by hiring a full-time employee.
Typically, companies will hire an employee when they are looking for dedicated, full-time support and prefer to have someone in-house who is deeply familiar with their specific operations and culture.
However, there are several important factors to consider before committing to a full-time employee vs working with a firm, such as cost, flexibility, and diversity in experience and expertise.
Here are some elements to consider when making a choice for your business:
Expertise and Experience
Hiring an Employee: When you hire an employee, their expertise and experience will vary based on their background. You may need to invest in ongoing training to keep them updated on the latest financial regulations and accounting software. You’ll also need some level of accounting knowledge to know you are investing in someone who will be a good fit.
Contracting with a Firm: Bookkeeping and accounting firms typically employ a team of professionals with diverse and extensive experience. They are well-versed in the latest industry standards and regulations, providing you with a higher level of expertise without the need for additional training.
Cost
Hiring an Employee: The cost of hiring a full-time employee includes not only their salary but also benefits, taxes, and other overhead costs such as office space and equipment. These expenses can add up quickly and become a significant financial burden for your business.
Contracting with a Firm: Contracting with a firm can be more cost-effective, as you pay only for the services you need. There are no additional costs for benefits, taxes, or office space. This can result in significant savings, especially for small businesses and independent contractors.
Flexibility
Hiring an Employee: An in-house employee is dedicated to your business and can be available whenever you need them. However, their workload and availability may be limited to a standard workweek, making it challenging to handle peak periods or special projects without additional help.
Contracting with a Firm: Firms offer greater flexibility, allowing you to scale services up or down based on your needs. This means you can easily adjust the level of support during busy times without the commitment of a full-time employee.
Risk Management
Hiring an Employee: With an in-house employee, there is a risk of theft or fraud. You need to establish and maintain strong internal controls and conduct regular audits to mitigate these risks. Additionally, dealing with employee turnover can disrupt your business operations and incur additional costs for recruiting and training replacements.
Contracting with a Firm: Professional firms have robust security measures and protocols in place to minimize the risk of theft and fraud. They also handle staffing internally, so you don’t have to worry about turnover or the associated costs of replacing employees.
Access to Technology
Hiring an Employee: Your employee will likely need access to accounting software and other tools, which can be an additional expense. They may also require training to effectively use these tools.
Contracting with a Firm: Firms invest in the latest technology and tools, ensuring that your bookkeeping and accounting processes are efficient and accurate. You benefit from their investment in technology without having to bear the cost yourself.
Focus and Specialization
Hiring an Employee: An in-house employee may have a broad range of responsibilities, which can sometimes dilute their focus on core accounting tasks. They might also lack specialization in certain areas, which can be a disadvantage if your business has specific accounting needs.
Contracting with a Firm: Firms often have specialists in various areas of accounting and bookkeeping, allowing them to provide targeted expertise for whatever your business needs. This can be particularly beneficial if your business requires specialized knowledge, such as tax planning or compliance with specific industry regulations.
Long-Term Commitment
Hiring an Employee: Employing someone full-time is a long-term commitment, which can be beneficial for continuity but also limits flexibility. If your business needs change, it can be challenging to adjust quickly.
Contracting with a Firm: Contracting offers more flexibility, allowing you to modify the scope of work or switch providers if your needs evolve. This adaptability can be advantageous as your business grows and changes.
So, how do you know if you’re ready to work with a bookkeeping and accounting firm? There are several indicators.
If your business is growing and you’re finding it hard to keep up with the financials, it’s time to consider professional help. As your operations expand, so do your financial transactions. Managing this complexity without expert assistance can lead to errors and missed opportunities. If you’re spending more time on bookkeeping than on your trade, outsourcing could be the solution.
When considering professional services, it’s important to ask the right questions. Understand the fees involved and make sure you know what you’re getting for that cost. Services typically include monthly financial reporting, tax compliance, payroll management, and strategic financial advice.
Finally, assess your budget to determine if you can afford the service. Businesses with substantial gross income are generally a good fit for professional bookkeeping services. However, even if you’re just starting out, the right financial partner can help you grow efficiently and quickly. If hiring a firm is beyond your current budget, there are still valuable tips for managing your books effectively on your own.
March 21, 2024
Managing your business’s financial books is not for the faint of heart. It requires a ton of time, knowledge, organization, and coordination. While some businesses choose to take on bookkeeping themselves, many prefer to rely on the expertise of a professional bookkeeping consulting firm to support their needs. Here are just a few of the reasons why choosing to hire a bookkeeper will be beneficial to your business.