What is the actual cost of doing your own books
Every business will eventually have to face the question of which tasks need to be outsourced in order to maximize profitability. If you can charge $90 per hour for your work and you spend four hours per week bookkeeping that’s a potential $360 per week in income that you’re letting slip through the cracks. It would make better sense to hire a bookkeeper who more than likely can do bookwork more efficiently and charge you less per hour than your time is worth.
DIY Bookkeeping V Hiring a Bookkeeper Maths Comparison
Cost of doing your own bookkeeping: $90 per hour X 4 how is= $360
Professional bookkeeper hire: $119/month (for NAME)
In this example choosing not to hire a bookkeeper is costing the business $241 a month
To work out your own cost, take the time to track how much time you really spend bookkeeping. Then calculate how much your time is worth. There are online calculators that can help you with this. If you discover that the time you spend bookkeeping is worth more than the cost of hiring a professional bookkeeper then it is probably worth hiring a bookkeeper.
An additional cost to factor in is the cost of accounting software. In the above example, if you added another $30 a month for the hire of cloud accounting software, you would actually be saving $271 per month by hiring a professional bookkeeper.
Indirect Cost Calculations of Doing Your Own Bookkeeping
Even if you don’t charge by the hour, there are costs associated with doing your own bookkeeping. The time you spend bookkeeping is the time you’ll never get back. If you are more proficient at marketing or investing time in customer relationships you can find the time to do these business building activities by hiring a bookkeeper.
If you believe that undertaking these income creating activities instead of bookkeeping would you generate at least an extra $115 per month then you really should consider hiring a bookkeeper.
A Bookkeeper Saves You Money In 3 Ways
In addition to freeing up your time to grow your business, a bookkeeper can also help you to save money. Consider these three potential savings.
Potential Taxation Savings
A professional bookkeeper will have the financial acumen to ensure that all of your business expenses are properly recorded. Their accuracy will assist you in taking full advantage of all possible tax deductions while ensuring that you would adhere to all applicable legislation ensuring that you won’t be subject to any nasty surprises in the form of fines at tax time.
Save On Accountant’s Fees
Accountants charge more than bookkeepers. The more complete your financial records are when you send them to the accountants; the less you will be charged. Accountants will charge between $150 and $400 per hour for work required to put your financial records in order. That work could have been done by a bookkeeper
Save Your Energy
Bookkeeping is a painstaking task that requires full concentration. It’s easy for mistakes to be made after working long hours and then having to do book work. Outsourcing book work is a good way to buy yourself some time and recharge the batteries.
Employing a good bookkeeper will help to ease your stress levels and save your energy
When You Should Not Hire a Bookkeeper
We’ve discussed a lot of the reasons why hiring a bookkeeper makes perfect sense, however, there is one situation that is likely to rule out the hiring of a bookkeeper – at least in the short term
That is when your business has just commenced or if you’re experiencing regular monthly cash flow problems. In these instances the additional cost may not be worth it. In these cases it’s probably best to stick to doing your own bookkeeping until the business is more established