When You Should Hire Your First Bookkeeper

A practical guide for small business owners who want to know how and when to hire bookkeeping help

Healthy business stands on the right financial records. As your business expands, having to record income, expenses, payroll and taxes can become a quagmire that pulls time away from actual revenue production activities. Hiring bookkeeper support at the right time is a critical decision: if you hire too late, mistakes will be made and opportunities lost; hire too early, you’re paying for services that aren’t yet necessary. This post offers crystal-clear clues indicating when it’s time to bring on your first bookkeeper, discusses common price ranges for bookkeepers, and provides some helpful suggestions for hiring and getting the most from your new hire.

Signs you should outsource to a bookkeeper

You're wasting time doing the same thing over and over again financially

If you’re spending hours on stuff you always do each week, like reconciling accounts or categorizing transactions or running reports, what could you spend that time on instead time that would be more productively spent selling to customers, developing your products and services, or serving your best ones? And, when bookkeeping responsibilities consistently take you away from your core business focus this is a powerful indicator that it’s time to hire bookkeeper help.

Your books are in the rear or they aren't so!

If transactions are left unreconciled for months on end, if receipts are absent, or if you can’t easily verify whether a vendor has been paid — that’s risk in the making. A bookkeeper can clean your messy books, put processes in place to make sure they stay neat and build you a really solid monthly close process that enables better decision-making.

You make frequent bookkeeping errors

Errors in classification, tumbles in recordkeeping or payroll work are all expensive mistakes. If you are seeing the same errors happening over and over again, or if you feel apprehensive around your tax obligations, a trained professional can bring accuracy, controls that reduce risk.

You are getting ready to scale up or apply for funding

Lenders and investors, after all, want clean, timely financials. If you’re scaling up, applying for a loan or trying to raise capital, hiring a bookkeeper will ensure that your numbers, which are a part of every application process and pitch deck, are organized and credible.

Payroll, sales tax, or compliance is simply too daunting.

Specialty functions such as payroll calculation, sales tax reporting and regulatory compliance are time sensitive and operationally complex. Hiring bookkeeping services can help you avoid fines and give you a peace of mind at not having to negotiate through these areas yourself.

You want better financial visibility

A bookkeeper is more than someone who enters transactions: they generate actionable reporting that helps you understand cash flow, profitability by product or service and trending month-over-month. If you require continual financial guidance for decision making, it’s time to think about bringing someone on board.

Understanding bookkeeper cost

Cost to hire a bookkeeper Bookkeeper expenses vary depending on their experience, location, the size of your business and whether you’re hiring them part time or full time, or contracting them out. Common cost models are hourly, monthly or full-time price.

— Hourly rates: Hourly bookkeeping is how many small businesses begin. Rates vary quite a bit, but tend to run between $25 and $75 an hour, depending on experience level and geographical location. Writing in a simple transaction, is less expensive; skilled work, such as setting up or cleaning up payroll, costs more.

— Monthly retainers or packages: For ongoing monthly bookkeeping, you might find a range of packages that cost anywhere from several hundred to several thousand dollars a month. A mom-and-pop business with simple transactions could pay between $300 and $800 a month, while someone who serves payroll and inventory may pay $800 to $2,500 or more.

Full-time hire:

If bookkeeping is heavy enough that you need someone to take on the role full time. Wages are going to be different across markets, not to mention that you need to account for payroll taxes and benefits when calculating the true cost of paying wages.

Project-based cleanups: If you need just a single cleanup, pay attention to any flat fees based on the scope. These could be relatively small projects, or they could cost several thousand dollars.

How to calculate what you will pay

Begin by measuring the number of hours you're currently investing in bookkeeping tasks each week and then attach a dollar value to your time. Compare that to the hourly or monthly rate at which you can hire. Factor in the cost of mistakes.: A lost deduction, a missed payment or inaccurate financial statements can be more costly than professional bookkeeping.

How, when and what to hire for

Part-time or fractional bookkeeper:

Ideal for companies that are growing and require regular upkeep and monthly reports but not a 9-to-5 presence. This model gets you expertise without the expense of hiring someone full time.

Outsourced or virtual bookkeeper:

Typically cost-efficient and adaptable. Transactions can be handled by virtual bookkeepers as well as reconciliation and reporting. Communication is importants is the secure handling of documents.

— In-house employee: Ideal when you require someone onsite for integrated tasks (daily cash handling, invoicing) or working alongside operations. Hiring an employee means onboarding, benefits administration and management’s time.

— Accountant vs. bookkeeper: Accountants are for strategy, taxes and year-end reporting; bookkeepers maintain daily records. At most businesses, a bookkeeper covers regular day-to-day tasks while an accountant deals with tax planning and filing.

How to prepare before hiring

Clean up current records

A simple clean-up prior to hire saves time and also money. Collect receipts, sort through bank statements and write down regular transactions.

Define responsibilities

Determine if you require transaction entry, bank reconciliation, payroll, accounts payable and receivable functions or monthly reporting. A well-defined scope avoids misunderstandings and provides a basis for comparisons between candidates.

Set realistic budgets

Know what you can afford monthly and balance that against the time and risk you’re reducing by hiring. Keep in mind too that better financial records can pay for themselves in saved time, fewer errors and clearer decision-making.

Ask for references and samples

Ask for references and examples of monthly reports or cleanup work. A good bookkeeper will present organized reports and discuss procedures for keeping data secure.

Onboarding tips for scaling with your new company

Make bank statements, and invoices, and payroll records available.

Establish regular communication and reporting (weekly, every two weeks or monthly updates).

Come to an agreement about how files are going to be shared and what security precautions will be used.

Begin with a trial or specific initial project to assess fit.

Conclusion

When to hire a bookkeeper really boils down to time, accuracy, compliance and the desire for more financial visibility. If paperwork is devouring growth and books are anyone’s guess, or if payroll and taxes are a free-for-all, hiring a bookkeeper can make the sky bluer and everyone a little happier. Know common bookkeeper cost structures—hourly, monthly, and full-time rates—determine the scope of work, and get your books in order to facilitate a streamlined onboarding process. With the help you need, you will gain confidence in your numbers and free yourself to concentrate on growing your business.