Most business tycoons will agree that accounting is one of the challenging aspects of their businesses. Small business owners often have to combine the tasks of serving customers and keeping track of their accounting processes.
Being a sole entrepreneur means understanding that managing expenses will help reduce costs to the barest minimum in order to maximize ROI. However, work pressure can easily overwhelm the one-man business owner. When you have the Midas touch, and your business starts to lift off, you may realize that you’re not equipped to handle bookkeeping.
This article takes you on a tour through the business world, in an attempt to understand when a ‘solopreneur’ or one-man-band business should outsource accounting.
Do you have a financial background?
Before you wait in vain for the opportune time to outsource your one-person business, you may want to consider your financial background.
- Are you an accounting expert?
- How much do you know about bookkeeping, tax returns, and accounting, in general?
These are some unavoidable questions that a solopreneur should strive to answer with utmost honesty.
Accounting is about developing and using systems to record and analyze the financial transactions and the financial status of a business or an organization.
The bottom line is that if you are unsure of your financial literacy, don’t run your business using your own instincts, as they may not always lead you to the right conclusion.
When you outsource the accounting department of your business to high-profile accounting firms, their financial advisory assistance can help you to make well-informed decisions that will guide your business to grow.
Do you have the money to pay an accountant?
Since accountants’ jobs involve analyzing financial transactions, they take pretty good paychecks. In fact, research studies have shown that the average monthly salary for accountants who work on outsourced bookkeeping projects vary between $500–$2500. This price depends on the volume of transactions an accountant will handle, and the complexity of the job.
Consider your revenue strengths and the number of employees on your payroll. Can you afford to hire an accountant for $500 per month or even higher? Your answer to that question may be a big no if your one-person business is still at its early growth cycle and doesn’t rake in significant profits.
Do you have time to do the accounting?
Among the factors discussed above, the availability of time on your side can tell you when you should outsource your accounting
When the growth cycle of your business reaches a point where its day-to-day bookkeeping becomes a daunting task for you, outsourcing your accounting is a wise idea. It will reduce the burdens on the day-to-day running of your small business and also free up some time for you to focus on other parts of your business.
To wrap things up, you have the responsibility as a solopreneur, to consider your financial skills, the revenue potential of your business, and the availability of time on your side. When consideration of these factors reveals a high need for expert accounting services, web administrators, and IT support, among other essential tasks, then that’s the right time to outsource your company.