MBA1529 When Should You Hire A Bookkeeper?

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Hey O. Welcome to the Hunter because your business needs you at your best. That's why we deliver daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the $100 MBA, a complete business training and community online. And in today's episode you will learn. When do you need to hire a bookkeeper? A bookkeeper can be a lifesaver in your business. It also could be a lifesaver for your sanity book. But when is the best time to hire one? At what point when your business is growing, do you say, you know what? I need to get one to help me with all my duties? What are those duties? Well, we'll talk about that in today's episode. We'll also talk about the difference between an accountant and a bookkeeper. What a bookkeeper can do for you and what they can't do for you. And of course, at what point is it time to invest and get them on your payroll? We got lots to cover, so let's get into it. Let's get down to business. Most businesses hire a bookkeeper too late, meaning they hire them months, maybe even years after they should have hired them. When it's overwhelming, when it's too much, what I want to do for you today is explain when you should hire one so you do not hire them too late. So you hire them so you can maximize your time and your efforts on other things to grow your business. Now, I'm speaking out of experience. I hired a bookkeeper too late in my business. And I really just had a lot to do with the fact that I wasn't sure what a bookkeeper would do for me. Once I realized, wow, a bookkeeper is going to do all that for me. I should have hired them yesterday, right? And that's what I want to give you today. I want to give you that gift of clarity. I also want to explain why you would need a bookkeeper versus an accountant. What are the things they can do? What are the things they cannot do? So the first thing is that a bookkeeper is not an accountant. Now, sometimes accountants will do bookkeeping services, but often bookkeepers, they do just the books. We'll talk about what that means. An accountant really focuses on things like your taxes, filing for grants with the government, doing your P and ls, things like that. An accountant really has the legal right to file your taxes is really what it's all about. Your taxes for your business as well, your personal income tax. They also have the legal ability to do things like superannuation or 401, depending on where you are in the world. There's some sort of retirement planning that you would do for your business or contributions to retirement that is kind of intertwined with the government. So an accountant will kind of set things up and make sure that's all done. Now, bookkeeping is a different role. Bookkeeping is more like the day to day tasks of reconciling your accounting. The things that are going on in your business, the charges that you're charging on your credit card, your services, the payments you're making through your bank account, payroll, all that kind of stuff. So if you look at your business, there are a lot of things that are going out and coming in. So going out meaning all your bills and coming in meaning all the money that you're making through your products and services. That needs to be reconciled, that needs to be organized, that needs to be sort of accounted for. All right? And most bookkeepers will use some software like Xero, this is what we use, or QuickBooks or something like that. And really a bookkeeper is just keeping track and making sure that the books say, hey, this charge is for this, this payment is for this. So things are in order. This is very important to be on top of. A lot of people do Their books, you know, not as frequent as they should. Maybe they'll do them every quarter. And they're a little bit backlogged. Really, you should be doing them every month. This allows you to understand how much money is coming out. This is how much is coming in. You can do a profit loss sheet, you can understand where your expenses are so you can find out where to save money. It just allows you to see your financials easier when you reconcile with all your, your numbers and all your expenses and all your revenue. So that's one of the main reasons why a bookkeeper is very useful. They can generate a report at the end of the month to say, hey, this is how much money you're spending on software. This is how much money you're spending on employees. This is how much you're spending on rent. This is how much you're spending on perks or let's say, parties or dinners. It gives you a snapshot, just like on your credit card statement of where your money is going. So you can say, you know what, we need to cut costs, let's cut costs here. We're spending too much money here. No, we need to maybe spend a little bit more here or the other side as well. They'll tell you where you're making your money, what's working, what's not. A bookkeeper really put your eyes on the right numbers in your business. The financials, the boring stuff that we don't wanna deal with because we wanna work on product and sales and marketing. But this person is useful cause they're gonna give it to you on a silver platter. This is what I love about a bookkeeper. Now the next big thing a bookkeeper does is take care of your payroll. Now as your team grows, this becomes more and more of a challenge. When it's just you and maybe an executive assistant and maybe even one or two employees, it's not that hard. It'll take you five minutes to go ahead and send some payments via bank wire or PayPal or whatever you do to pay your staff. Especially if these are contractors, they're not like full time employees. Then it's pretty straightforward. But once your team starts growing past a certain number, I would say five, six, seven, eight employees, you're going to need to get somebody to handle that for you, okay? To be on top of that, to make sure they're paying your staff members on time in an automated fashion. Sometimes you can't automate it and you need to do it manually like a bank wire or do a PayPal. Payment or whatever it is, you need to make sure that you have somebody taking care of that. That's a lot of time on your hands, a lot of pressure that you don't need. Having a bookkeeper frees you up. That means you can go on vacation no matter what time of the month and your team is going to get paid. Depending on your team and where they're located, sometimes you're going to have to make payments or pay them in different ways. Maybe some people are through a bank wire, maybe some of them are through transfer wise, maybe some through our PayPal, maybe some are in a different way. The point here is, is that the more complicated, the more your team grows, the more and more you're going to need somebody to take care of payroll. Of course paying yourself this needs to get done automatically as well. And somebody needs to be on top of it. A bookkeeper can also help you with other things. Like if you run an affiliate program, say for example, you have an affiliate program, you gotta pay out your affiliates commission every single month. And most of the time in the system this is a manual process that you have to kind of approve things. You gotta go through and pay each affiliate a payment. And every single month you gotta do this. Now you can get an executive assistant to take care of that, but it's better to get somebody who is in touch with all your financials to handle that for you taking care of a big headache like paying affiliates with somebody who's knowledgeable in this area and they can really make it happen. Now the final thing I want to mention about the pluses of a bookkeeper is the big one and it's they have an overview of all your financials, they understand how much money you're making, how much money is coming in, when payments are due from vendors, when payments are due from suppliers, whatever it is. And they can manage your cash flow in a smart way. They can make sure that you're paying people in a certain, you know, timing or pattern so that you're constantly have the cash flow you need to pay your payments and pay payroll on time and all that kind of stuff. A lot of people, they think, man, I never have enough money at the end of the month because for some reason they just don't have a good management of their cash flow. And a good bookkeeper can do this for you. They could say, okay, here are all your expenses for the month, here's all your income. But by the way, you get a big chunk of income because of an account that you have or something. Like that at a certain time of the month so they can manage your cash flow. So that way that that income comes in and then you do the payments versus the opposite. This is just a simplistic example, but the point here is that they understand when your money is coming in and they know when it's coming out. And they can negotiate with different vendors, with different suppliers to change your billing dates to suit your cash flow and increase your cash flow to make sure everybody gets paid. And it's kind of a stagger approach. They can actually give you some great insights like I talked about in the, in the profit loss sheet. They can also take a look at, you know, your cash flow as well as your cash reserves and say, hey, X amount of money is in your cash reserves. You may want to invest in this idea, maybe buy maybe some servers for the whole year on Amazon and save yourself 30%. In the long run, that might be a good investment to save money overall. Or you might tell your bookkeeper, hey, let me know when we have X amount of money left in cash reserves. Because maybe I like to take my team on a retreat or maybe I want to buy myself a laptop. The point is, is that you need to know where you stand. And it's really hard to do that by just glancing at your bank account every day. Your bookkeeper can actually have some sort of predictions, sort of projections and say, hey, at this rate, by this month you'll have this much money in cash reserves. Maybe it's time for a new hire. Maybe it's time for you to invest in your company at that point. So the golden question, when do you hire a bookkeeper? In my personal opinion, I think a bookkeeper needs to be part of your team when these things all are true. Number one, your business is your full time thing. This is not a side hustle. This is not something that you're doing on the side to earn some extra money. This means your business hasn't matured to the point where it's making enough revenue, have, you know, maybe product market fit yet. It's not really your full time thing. You don't need a bookkeeper yet because you really can't afford to have somebody to do that month in and month out. And you're really not gonna have that many expenses and that many, you know, that much revenue to really justify that kind of need. But once you're starting to, you know, making enough money to support yourself full time, you're, you know, making about 5, 10, $20,000 a month. That needs to be True. Second thing is that most of the heavy lifting is going to be in the reconciling in your payroll in the day to day financing. So if you get to the point where you have more than 10 expenses and more than 10 deposits of revenue, I think it's time to consider a bookkeeper. Now when I say deposits of revenue like 10 payments. Now say, for example, you do a product launch of some sort and you get a great big. But then you don't get many payments later on. Maybe you have one or two later on in the month, don't really need it because it's just one lump sum happening. But if you're getting constant payments, constant dumps into your bank account, 10 or more, 10 is kind of like the threshold of okay, now I'm starting to really make money. I'm starting to really make constant payments. Now I'm assuming that your payment processor or whatever that is transferring money to your bank account is holding the money to. So it's at a certain amount like you know, $2,000, and then it puts it into the bank account. So if you're getting more than 10 deposits and more than 10, you know, expenses like, you know, your server costs, like a vendor cost, like different software platforms, like other expenses that you have for your business, whether it's rent or whether it's anything else, 10 or more. Now you're, you know, you're seeing a lot of activity in your accounting software. So the next thing that needs to be true is you need, in my opinion, more than five employees after five employees. So I would say a team of six or more. So you and five employees. That's when it's time to think about outsourcing your payroll and all that kind of stuff. It's just too much for you to handle all that every single month and focus on all the other things you need to do in the business. Lead the team, manage, grow it, all that kind of stuff. To me, that's kind of where you should start really actively trying to find a bookkeeper. Bookkeepers are really, really great.

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So you're convinced you need a bookkeeper or you will need a bookkeeper very soon. How much does a bookkeeper cost? Well, bookkeepers in general cost between $500 to $800 a month. Very reasonable. Understand, your bookkeeper is not just doing your books all day long. It's something they will do a few hours a week. They'll take care of your payroll, things like that. They're not putting in 40 hours. They're doing other people's books as well. So this is why it's very reasonable to find a bookkeeper to work in your business. Of course, you could pay more. I'm talking about starting would be between 500 and 800. There's bookkeepers that can go over 1,000. But it's definitely an expense that I feel is worth it. The way I equate it is I say, hey, if I pay $800 a month, am I going to save any time off my plate? How many hours will I save? I look at the payroll I was doing. I look at the bookkeeping, the reconciling in zero, the tedious, tedious task of reconciling. I look at the affiliate payments, I look at everything that I was doing that the bookkeeper is going to take off my plate. Now I add it up and it's hours. It's like 20 hours a month. Let's say I can bring it down to 10 hours a month because I'm being super productive. Is $800 worth 10 hours of my time? Of course it is. If you're the leader of the business, you should be able to bring in $800 of business reoccurring business month over month in one hour or two hours. The decisions you make on the day to day as a leader of your business can generate tens of thousands of dollars a month. So this is why it's important as your team grows, as your business grows, as you scale to start adding these important pieces to the puzzle. One, being a bookkeeper. Guys, I hope you enjoyed today's lesson. I hope you find it useful if you did Let us know in an iTunes rating and review. We would love to hear what you think of the show. It's also a way for you to show us some love and tell other people why you subscribe and listen to the podcast. And while you're at it, don't forget to hit subscribe. By hitting subscribe, you get our next episode automatically once it's ready. Before I go, I want to leave you with this. One of the things I really believe as an entrepreneur is that anything you don't enjoy doing that, you cringe at that, you roll your eyes at that, you just feel like, what a boring task. You need to outsource that as soon as possible. You need to get it off your plate. You need to be inspired. You need to feel ready to start the day and ready to take on new challenges and take your whole team to another level. That's the kind of energy you need. You don't need things that bog you down. So I say it's a good investment to take anything that's not that off your plate and give it to an expert like a bookkeeper. Thank you so much for listening and I'll check you in tomorrow's episode Q and A Wednesday. I'll see you then. Take care.

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