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[Answered] When Should Freelancers Outsource Their Bookkeeping

Sep 13, 2019

[Answered] When Should Freelancers Outsource Their Bookkeeping

Being a freelancer means you probably love to do things yourself. It is in your nature to solve business issues and all other demanding tasks that come with it by yourself. This is one of the reasons why you may not be all that into outsourcing the bookkeeping when you think about it.

You may feel this way for so many reasons. Maybe you are just very good and disciplined at making time every day to update your financial transactions and reconcile your accounts. You probably do not need the help of an expert to get a clear picture of how well your business is doing financially. If this is you, well done because you are in charge and in control. If all that is not in your nature, you might have to consider hiring someone or a company to help you out. If you are still not sure if you need to hire some extra help, you can read these guidelines on how to make the decision and also learn about how you can hire the right person or company.

Do you have a small business that you have only just started?

Or you are still new to freelancing?

Or maybe you see your business or freelancing job as a side hustle?

Then hiring a bookkeeper at this moment is unnecessary because it is too early at this stage and you would not be putting your revenue or income into good use. This might apply to you if:

  1. 1-You are in the first year of a business freelance career
  2. 2-Your business is not yet incorporated
  3. 3-You are not selling yet. This could be because you are still in the process of developing your business offerings, or the service you are offering requires a long sales cycle.
  4. 4-You do not have a lot of financial activities. Your financial activities such as revenue and expenses (for example; office supplies, subscriptions, laptop payment, etc.) are not much at all.
  5. 5-You are using your personal bank account for your business’s financial operations as a result of not having a lot of financial transactions.

If your answer to any of these is positive, you are okay with handling your own bookkeeping for now. You can decide to hire a bookkeeper when your business takes off but now is not the right time to do that. Channel your income into other aspects of your business, instead.

On the other hand, if you are beginning to realize that some financial administrative tasks that used to be easy and easily manageable have suddenly become overwhelming tasks that include recordkeeping, tracking, and paperwork, you might need to start considering asking for help. Here are some signs you should look out for to let you know the right time to hire a bookkeeper.

You Are Rushing When Tax Time Is Around The Corner

Do you pull together your tax paperwork at the last minute? If this is the situation, well, you are not the only one in this boat. According to the entrepreneur mentorship organization, SCORE, 40% of small businesses say that accounting and bookkeeping are the things they dread most about running their business. An average person spends about 13 hours doing their taxes every year. For business filers (including freelancers) that number is almost twice more and that increases it to about 24 hours. If the amount of time you spend is more than that of an average person, you need to consider bringing in help. If you do not bring in help, you will end up spending more time away from the really important aspects of your business that can move it forward, like prospecting and sales development.

You Are Finding It Hard To Sort Out Your Financial Documents

The nature of your business may require you to record your financial activity on a monthly, weekly or even daily basis. A lot of freelancers let their receipts, statements, invoices, and bills pile up and this is very unwise and risky. This can make things get really ugly and cause some difficult and unfavorable issues in the future because you can easily lose track of very important transactions and then, you end up trying so hard to remember them from memory. To avoid this, you can hire a bookkeeper who will take up these tasks so that you can easily keep track of your transactions and your clients. Hiring a bookkeeper will also help you to notice cash flow issues before they get worse and also help you to not miss important payments.

Your Accountant Is Doing Important Bookwork

A lot of people tend to confuse the job of an accountant with that of a bookkeeper and they just assume that they do not need a bookkeeper as long as they have an accountant. This common conception is wrong because you need both. There are huge differences between accountants and bookkeepers and these include differences in cost. Unfortunately, a lot of freelancers ask their accountants to do the job of a bookkeeper when they are getting ready for tax season. If you go to your accountant’s office with a pile of receipts and statements, you will end up paying for them to reconcile your books before they begin filing your tax rates. A bookkeeper will make sure your books are reconciled before passing them to your accountant and they are more likely to charge you less.

You Are Not Sure How Your Business Is Doing

Do you know your revenue for the previous month or your operating costs? Hiring a bookkeeper will help you get accurate and updated books. This will help you to notice favorable and unfavorable trends and also help you to make the right changes. It will show you the clients that are bringing in money and the ones that are not.

You Just Paid A Lot In Taxes

Most freelancers that pay quarterly taxes usually get surprised when they find out that they are still owing at the end of the year. You can avoid this by taking up-to-date books to your accountant quarterly. With this, you can figure out how to mitigate your tax liability. Accurate and updated books will help your accountant identify opportunities for tax breaks and write-offs.

Nowadays, there are easy and affordable options that make it easy and affordable to outsource your bookkeeping hen your business needs it. Doing this will let you focus on other aspects of your business that need your attention and this can help make your business grow.

Now is the time for you to take action and get those books in order. For those who need to outsource bookkeeping, BooXkeeping is offering a free-trial and sign-up is free. They have a team of professionals that are ready to give you all the bookkeeping service you need.

Enjoy a free trial starting today.

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