Many small business owners start out doing their own bookkeeping.
At first, that may make sense. There may only be a handful of transactions each month, no employees, and one bank account to manage. But as the business grows, bookkeeping often becomes more complicated and much easier to fall behind on.
So, when should you hire a bookkeeper for your small business?
The answer is usually sooner than most business owners think.
You do not need to wait until your books are a complete mess. In fact, hiring a bookkeeper before problems pile up can save you time, reduce stress, and make tax preparation much easier.
You Are Spending Too Much Time on Bookkeeping
One of the clearest signs that you should hire a bookkeeper is that bookkeeping is taking time away from running your business.
If you are spending nights or weekends categorizing transactions, reconciling bank accounts, entering bills, or trying to fix QuickBooks, that time may be better spent serving customers, managing employees, or generating new business.
Your time has value.
Even if you are capable of handling the bookkeeping yourself, it may no longer be the best use of your time.
A good rule of thumb is to consider outsourcing when bookkeeping becomes a regular burden instead of a simple administrative task.
Your Books Are Falling Behind
If your bookkeeping is several weeks or several months behind, it may be time to hire help.
Falling behind makes it difficult to know:
How much money your business is making
Which customers owe you money
What bills are coming due
Whether expenses are increasing
How much cash is available
What you may owe in taxes
Behind books also create problems at tax time. Your accountant may have to spend additional time cleaning up the records before the tax return can even be prepared.
That cleanup work can be more expensive than maintaining the books correctly throughout the year.
You Do Not Trust Your Financial Reports
Your profit and loss statement may show a profit, but your bank account may tell a different story.
Your balance sheet may contain negative loan balances, old accounts receivable, duplicate accounts, or amounts that have not changed in years.
If you are not confident that your financial reports are accurate, hiring a bookkeeper can help.
Reliable bookkeeping should allow you to look at your reports and understand what is happening in the business. You should not have to wonder whether the numbers are correct.
Tax Season Is Always Stressful
Tax season should not require you to spend several days searching for receipts, reviewing twelve months of bank transactions, or trying to remember what purchases were for.
If every tax season feels like an emergency, your bookkeeping process probably needs improvement.
A bookkeeper can help keep your records organized throughout the year so that your accountant receives accurate, complete information.
Working with a St. Louis business CPA that also provides bookkeeping services can be especially helpful because the books can be maintained with tax preparation in mind.
That may reduce year-end adjustments, prevent missed deductions, and make the tax return process more efficient.
You Have Started Hiring Employees
Payroll adds another level of complexity to your accounting.
Once you have employees, you may need to account for:
Gross wages
Payroll taxes
Employee withholdings
Employer tax expense
Retirement contributions
Health insurance deductions
Reimbursements
Payroll liabilities
Even when payroll is processed through a third-party provider, the activity still needs to be recorded and reconciled correctly in your accounting system.
If payroll accounts are not maintained properly, your balance sheet can quickly become inaccurate.
You Have Multiple Bank Accounts or Credit Cards
A business with one checking account and a few monthly expenses may be relatively easy to manage.
A business with multiple checking accounts, savings accounts, credit cards, loans, payment processors, and financing arrangements is much more complicated.
Each account should be reconciled regularly.
If you are using platforms such as PayPal, Stripe, Square, Shopify, or other merchant processors, the deposits may include fees, refunds, chargebacks, and timing differences that need to be recorded correctly.
As the number of accounts increases, the need for professional bookkeeping usually increases as well.
Your Business Is Growing
Growth is a good problem to have, but it often exposes weaknesses in the accounting process.
As revenue grows, you may have:
More monthly transactions
More customers
More unpaid invoices
More vendors
More employees
More equipment purchases
More debt
More complicated tax obligations
A bookkeeping system that worked when the business was small may no longer provide the information you need.
A qualified St. Louis small business accountant can help determine whether your current system is keeping pace with the growth of the company.
You Need Better Information to Make Decisions
Bookkeeping is not only about preparing a tax return.
Accurate financial records can help you answer important business questions, such as:
Can I afford to hire another employee?
Is it time to purchase equipment?
Which services are the most profitable?
Are labor costs getting too high?
Can I increase owner distributions?
Do I have enough cash for taxes?
Is the business improving compared with last year?
Without current bookkeeping, many business decisions are based on the bank account balance rather than reliable financial information.
A strong bookkeeping process gives you a clearer picture of the business.
You Are Applying for Financing
Banks and lenders often request current financial statements before approving a business loan, line of credit, equipment loan, or commercial mortgage.
If your books are incomplete or inaccurate, the financing process can be delayed.
Lenders may request:
Year-to-date profit and loss statements
Balance sheets
Accounts receivable reports
Debt schedules
Prior-year financial statements
Tax returns
Hiring a bookkeeper before you need financing can help ensure this information is available when requested.
Customers Are Paying Late
If customer invoices are not being sent promptly or unpaid balances are not being reviewed, cash flow can suffer.
A bookkeeper may help with:
Creating and sending invoices
Recording customer payments
Reviewing unpaid balances
Preparing accounts receivable reports
Following up on overdue invoices
Identifying customers who consistently pay late
You may be earning a profit on paper while still struggling with cash flow because customers are not paying on time.
Better bookkeeping can help you identify and address the problem.
Bills and Vendor Payments Are Becoming Difficult to Manage
As a business grows, managing vendor bills can become time-consuming.
You may have recurring subscriptions, inventory purchases, contractor payments, equipment loans, insurance payments, and other obligations.
A bookkeeper can help organize bills, monitor due dates, record payments, and maintain accurate accounts payable records.
This can reduce late fees, duplicate payments, and missed obligations.
You Are Mixing Business and Personal Expenses
Business and personal activity should generally be kept separate.
If personal expenses are being paid from the business account or business expenses are being paid personally, your records may become difficult to understand.
This can also create confusion regarding owner contributions, distributions, shareholder loans, and deductible expenses.
A bookkeeper can help properly categorize these transactions and establish a cleaner process going forward.
Your Accountant Regularly Has to Correct Your Books
If your CPA regularly sends a long list of questions or makes significant year-end adjustments, your bookkeeping may need more attention during the year.
Common issues include:
Loan payments recorded entirely as expenses
Credit card payments recorded as expenses
Duplicate income
Negative asset balances
Payroll recorded incorrectly
Personal expenses deducted as business expenses
Owner contributions recorded as income
Owner distributions recorded as expenses
Unreconciled bank accounts
These issues may not seem significant when they occur, but they can materially affect financial statements and tax returns.
You Are Unsure How Much You Owe in Taxes
One of the biggest advantages of accurate bookkeeping is better tax planning.
If the books are current, your CPA can estimate income, review deductions, calculate estimated payments, and identify planning opportunities before the end of the year.
If the books are not current, tax planning becomes much more difficult.
A St. Louis business CPA can provide better guidance when the underlying financial information is accurate and up to date.
What Does a Bookkeeper Do?
A bookkeeper may assist with:
Categorizing income and expenses
Reconciling bank and credit card accounts
Recording loan activity
Maintaining accounts receivable
Maintaining accounts payable
Recording payroll
Preparing financial statements
Organizing supporting documents
Identifying missing or unusual transactions
Preparing records for tax filings
The exact services will depend on the needs of the business.
Some bookkeepers focus primarily on transaction entry. Others provide more comprehensive accounting support, reporting, and coordination with the business owner’s CPA.
Should I Hire an Employee or Outsource Bookkeeping?
Whether you should hire an internal employee or outsource depends on the amount of work involved.
A full-time employee may make sense if the business needs daily invoicing, bill payment, payroll support, customer collections, and other administrative assistance.
Outsourced bookkeeping may be a better fit if you only need a few hours of support each week or monthly accounting services.
Outsourcing can provide access to experienced professionals without the cost of hiring a full-time employee.
It may also provide continuity when someone is sick, on vacation, or leaves the company.
How Often Should Bookkeeping Be Completed?
For most businesses, bookkeeping should be completed monthly at a minimum.
Some businesses may need weekly or even daily attention, particularly if they have significant transaction volume, inventory, payroll, or cash flow concerns.
Waiting until the end of the year is usually not a good bookkeeping strategy.
By then, transactions may be difficult to remember, errors may have accumulated, and planning opportunities may have been missed.
When Is the Best Time to Hire a Bookkeeper?
The best time to hire a bookkeeper is before you are overwhelmed.
You may be ready if:
You are falling behind
You do not trust your financial reports
Tax season is consistently stressful
Your business is growing
You have employees
You have multiple accounts or loans
You need better cash flow information
You are preparing to apply for financing
Bookkeeping is taking time away from the business
Your CPA is regularly correcting your records
You do not need to wait until there is a serious problem.
A good bookkeeper can help establish a reliable process and prevent small accounting issues from becoming expensive cleanup projects.
Looking for a Bookkeeper in St. Louis?
If you are looking for a St. Louis small business accountant or a St. Louis business CPA, Hottenrott & Associates can help evaluate your current bookkeeping system and determine what level of support makes sense for your business.
Whether you need monthly bookkeeping, QuickBooks cleanup, payroll support, financial reporting, or tax planning, the goal should be the same: accurate financial information that helps you run your business with confidence.
Hiring a bookkeeper is not simply about getting transactions entered into accounting software. It is about having dependable records, better information, and fewer surprises.