Spending Money That Makes Sense

Here it is! Tax season and you spent the entire month of March trying to remember what expenses were business and what were dinner out with the little league team.

Entrepreneurs thrive on a DIY mentality: Do everything you can yourself and don’t pay for anything new until you have absolutely must. They find it especially difficult to justify hiring financial help like a bookkeeper.

With user friendly software such as QuickBooks available, many business owners feel they should be able to do keep
their records on their own, even as they wrestle with finding the time and wonder if they’re doing things correctly.

Entrepreneurs who hire accounting help usually discover they weren’t doing nearly as well on their own as they thought they were.

Veterans ask us all the time, what options are available for professional help with financial tasks? Here is a primer:

Do I Need a Bookkeeper or an Accountant?

Actually it’s a trick question. You may need both. Think of it as needing to hire both a carpenter and an architect when building a house.

An accountant can analyze the big picture of your financial situation and offer strategic advice. He or she produces key financial documents, such as a profit and loss statement, if needed, and files a company’s taxes.

After tax season is over, an accountant can also act as an outsourced chief financial officer, advising an entrepreneur on financial strategies, such as whether to secure a line of credit against receivables when introducing new products. In contrast, a bookkeeper does the day to day hands on tasks: making sure new employees file all the right paperwork for the company’s payroll, submitting invoices (promptly) and following up on them,
and paying the bills. The bookkeeper also tracks company expenses and can assure that every cost has been entered
and recorded correctly into software like QuickBooks so that the business is ready for tax time along with filing any other reporting to, say, creditors or investors.

“Knowledge is power,” even when it comes to the small details. If you don’t have a bookkeeper, you’re probably not being as strategic as you could be in how you spend your money.

When do I Bring in a Bookkeeper?

Initially you may need a bookkeeper for a few hours a week within a few months after starting a new venture. For the first six to nine months, you may be too busy to focus much on record keeping, then things may begin to stabilize. Then you can see trends and you can start to think strategically about where your money is going and where you can save. This is when a bookkeeper becomes valuable. The rates for hiring a bookkeeper on a part-time basis in the U.S. can range from $15 to $60 an hour, depending on location, the workload and whether work is done at the company’s office or from home.

When do I Hire a Staff Accountant or Bookkeeper?

Many small entrepreneurs can probably stick to outsourcing accounting or bookkeeping services for quite some time.
The typical service business can often outsource its chief financial officer tasks and bookkeeping until its revenues rises well above the $1 million mark or until it has about 30 employees. Until then, most businesses usually don’t have enough work to keep a full-timer busy every day. It’s time to hire full-time help though
when you’re calling your accountant often enough that you wish he or she were in the office all the time. Bring in a full-time bookkeeper when your part-timer is spending two or three full days in the office and still falling behind.

Be sure to seek out a bookkeeper and an accountant who can speak to you plainly. Many financial or accounting professionals struggle with this. Also, never be afraid to stand up and say, “I’m not fully understanding what you are telling me. Can you rephrase?” Accounting can be a lot of gobbledygook and is a language all its own. Professionals can be very good at what they do, but they also need to be able to explain concepts easily.

A professional demeanor, friendly personality, and honesty are also important. You want to be sure that if
there is something crucial that needs to be discussed, the discussion is timely and isn’t put off if it’s unpleasant. Most new business owners find a staffing solution somewhere along the continuum that ranges from trying to go it alone and paying for full-time help. If you need assistance making this decision, reach out
to the Center at 314-531-VETS (8387) orinfo@vetbiz.com. Our consultants can help you assess your company needs as
you grow your business.

Debbie Fanning, Administrator at the Veterans Business Resource Center and all around guru of numbers. She can be
reached at fanning@vetbiz.com where you can discuss her love of gardening, cooking and how she puts her CPA
background to excellent use for Veteran small business owners. (But really ask her how much she loves peas!)

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