Bookkeeping is a marathon, not a sprint. The task begins as soon as you start to put money towards your business and will follow you throughout your journey as a business owner. Just like a spouse, you don’t want to make this decision lightly.
Fortunately (unlike finding a spouse), there are only three options to choose from—each with its own strengths and weaknesses. It’s important for business owners to be familiar with each of these different options and how they will affect their business.
The “Traditional” Method: Accounting Firms
The most traditional method of bookkeeping is to hire an accountant or accounting firm, your traditional mom and pop shops/freelancers.These guys offer great benefits over the DIY self method—like the fact that you’ll barely have to lift a finger and you’ll also be privy to expert insight (pending they’re qualifications of course).
Of course there are also some drawbacks such as high hourly fees and slow turn around times. Transparency is low, many times business owners are never quite sure of what’s included in their services, and what’s being billed—causing a lot of anxiety when it comes to seeking out answers. Communication is also one way, meaning you send them your information and they send you their work in return. There is no way to monitor things as they progress, as is the case with digital dashboards. This lack of real-time analytics can make it difficult to set a steady course for your monthly budget.
When it comes to the traditional method, business owners will have to consider whether or not they want to hire an in-house bookkeeper or an external accounting firm.Both methods can be expensive with hourly consulting fees and salary/benefit considerations for in-house hires. In-house accountants can be a solid option if you own a large operation and need constant oversight. Smaller businesses however, might find that costs don’t outweigh the rewards when it comes to hiring a full-time accountant.
The "Semi-Traditional” Method: DIY Software
DIY software is an increasingly popular option, giving business owners a great UI to track their finances. Companies like Quickbooks provide robust software that can help facilitate advanced accounting functions. Not only are many of these types of tools extremely helpful, they can also save money when it comes to hiring a traditional accountant. Although this is a great option for accountants, it may not be optimal for business owners.
Having a good piece of software doesn’t make you knowledgeable about the US tax code, regulations or requirements. Business owners can miss out on deductions, disqualify themselves as a compliant business, and face IRS auditing through improper tax filing. Having simply taken an accounting class in college is no substitute for the wealth of knowledge an accountant brings to the table.
Even if you feel confident enough in your accounting, there is no more precious commodity than time. Any business owner will tell you, that as they’re business takes off—they find themselves being stretched in a million different directions. Knowing what your skill set is, and how best to add value is key. Bookkeeping is a time consuming task—business owners need to ask if reconciling transactions is the best use of their time.
The "Fully Automated” Method: Software as a Service
The third and final option (which no suprise, we’re big proponents of), is SaaS (software as a service). This hybrid option provides the best of both worlds, giving users access to customized software as well as a dedicated bookkeeper. Instead of having to reconcile your own transactions, a bookkeeper (accountant) will do it for you. Some of these services like Bookly, offer unlimited consultation at no hourly cost. Instead they prefer the more modern “Netflix” model of a monthly flat-rate fee. This means business owners can ask away without fear of being billed.
This option will not be for everyone, for example—extremely large and complicated corporations or accounting firms. However for the other 90% of business owners—this bookkeeping framework is likely to be the most inclusive and cost effective. It offers all of the all of the aforementioned benefits without the bad, providing transparency, updated analytics, and a high tech solution with a human touch, not to mention it’s extremely cost and time effective.
If you’re interested in starting on your free trial with Bookly, or you just want to ask some questions—setup a consultation with one of their onboarding specialists today.