“Why do I need a professional bookkeeper?”
The question isn’t always this blunt. Often, a prospect will ask it a different way:
“What do you do if you don’t file tax returns?”
“Isn’t there software that will do the bookkeeping for me?”
“I can hire someone to do that AND manage my back office for $10/hour. Why would I pay a bookkeeping firm more to do less?”
Through no fault of their own, many business owners don’t understand why they need a professional bookkeeper. The reason for this is two-fold. Business owners often have a poor understanding of exactly what bookkeeping is and what a bookkeeper does. At the same time, those of us in the profession aren’t always the best at communicating the benefits of good bookkeeping in a way that encourages business owners to make this investment in their businesses.
A CPA once told me, “Never say you are ‘just’ a bookkeeper! A good bookkeeper is vital to the financial success of a business.” Yet, many professional bookkeepers slip back into the habit of telling prospects they are “just bookkeepers” when explaining their services to a prospect or a networking partner.
So, why do you need a professional bookkeeper? There are many reasons, but I’ll narrow it down to three.
Bookkeeping isn’t just useful at tax time
As I mentioned a couple of weeks ago, bookkeeping firms see an influx of inquiries from prospective clients in January. It makes sense: in January, everyone is focused on taxes, and the first step in the tax filing process is to organize all your financial documents. Business owners often turn to bookkeepers to do this, or they spend every weekend in January doing it themselves. But having everything in order so you can easily file your tax return isn’t the only reason businesses need a professional bookkeeper.
Bookkeeping done correctly throughout the year provides business owners with the vital information they need to make decisions about their businesses. Can you afford to hire another team member? Should you raise your prices? Can you fund the development of a new product using your current cash flow, or does it make sense to take out a loan? Knowing you can rely on accurate financial reports prepared by a professional bookkeeper will help you make these decisions with confidence, rather than resorting to guesswork and luck.
Software is only one part of the equation
Accounting software companies are constantly tweaking their products to make them more accessible to business owners. Now they are also putting a lot of effort into the automation of the most common accounting tasks.
At my firm, we strive to empower our clients to understand not only their financial statements, but also the software we use to do their bookkeeping. We fully embrace automation and encourage our clients to do the same. However, the tools used for bookkeeping are just that – tools – and a tool needs an experienced professional in order to be used to its full potential. This is especially true when you are using automation. Managing data brought in via automation requires a different skill set than traditional manual transaction posting.
Businesses need a professional bookkeeper who understands both the functionality of today’s software and the fundamentals of accounting in order to reap the full benefits of the tools available to them (and to avoid some catastrophic messes.)
Oh, the suspense!
This was originally going to be one post, but it was nearly 1,000 words long. So, come back next week for one more reason why you need a professional bookkeeper.