What is a Bookkeeper?
A bookkeeper is hired to record a company’s daily financial transactions. For example, a company buys different raw materials for production, which must be listed in the expense section. Similarly, the money that flows into the company by making sales must be recorded. Accurate recording of financial data enables the company to assess its financial standing and make decisions accordingly. A bookkeeper records data and presents it to create financial statements such as profit and loss, balance sheets, and income statements.
This article explores the advantages and disadvantages of hiring a bookkeeper.
Advantages of Hiring a Bookkeeper
Unbiased recording
If one of the team members and entrepreneurs is doing the job of a bookkeeper, he may become biased and show an excellent company financial position. For example, if you are an entrepreneur running a venture, you may want to ignore some daily expenses and show higher profits to the investors. However, hiring a bookkeeper will ensure unbiased data reporting, giving real insights into the company’s financial performance.
Ensures transparency
One of the key advantages of hiring a bookkeeper is that it makes data available for customers, suppliers, investors, shareholders, and other stakeholders. Anyone can look at the company’s records if required, enabling transparency and accountability. If needed, the authorized people may look into the records, which will develop a sense of trust in the business partners. Also, the company can invite potential investors to look at the historical patterns of performance in the company and decide accordingly.
Ensures accuracy in recording
A person with a proper understanding of bookkeeping will do the job well. One of the essential aspects of bookkeeping is the categorization of expenses, which leads to the calculation of tax payments and other legal formalities. Hiring a bookkeeper will ensure the data is properly recorded and the costs are accurately categorized. Hence, the taxes will be paid correctly, and the company will have the right data on expenses and revenues. Also, a bookkeeper will make minimum recording errors, while someone unrelated to accounting will make several errors.
The advantages mentioned above emphasize the importance of hiring a bookkeeper. However, knowing the consequences of hiring a bookkeeper to make an intelligent decision is essential.
Disadvantages of Hiring a Bookkeeper
Extra salary and wages
Entrepreneurs and small businesses want to keep the costs minimum and do not want to hire a large team to save themselves from paying high salaries. Therefore, hiring a bookkeeper may prove to be a burden on the company. Also, bookkeeping is believed to be a mere recording of financial transactions that happen daily in the business and does not require a professional hand. It will keep the company from generously rewarding the bookkeeper, and an apparent reluctance to hire one will be witnessed.
Consumes more time
A bookkeeper may not always stay in the company and collect receipts at the end of the day or week, which may delay the bookkeeping process and lead to inaccuracy in the financial recording. Research ledger, tracking errors, and collecting financial records can be tiring and troublesome for the bookkeeper. Also, an external bookkeeper may be less interested and inclined to work tirelessly for the company. It is also believed that entrepreneurs and small businesses do not have many financial transactions, and the bookkeeper may be spending much time wandering around due to a lack of work.
Conclusion
After analyzing the advantages and disadvantages of hiring a bookkeeper, it is concluded that the advantages outweigh the disadvantages, and a bookkeeper must be employed. A bookkeeper will ensure that all the data is accurately recorded so the company does not end up paying higher taxes or interest. A bookkeeper’s salary and other expenses are still lower than the potential costs likely to be incurred because of inaccurate recording.
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