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Control Your Accounting and Bookkeeping Costs
WHY HIRE AN ACCOUNT ASSISTANT?
When you first started your business, you probably did your own accounting; and that worked out fine. You were short on spendable capital and doing most of the necessary chores yourself was the only way to get started. But eventually, you got to a point where you really needed to concentrate on the income-producing aspects of your business and hire others to tend to the details.
Recognizing when this point occurs is the first major challenge for the entrepreneur. Many will pass it right by, believing the only way to keep track of their company is by doing all the accounting for it themselves. This is an easy trap to which almost everyone is susceptible. Don’t feel bad if it happened to you, just rectify it!
Think about what your time is worth. For example, as a lawyer, you could command in excess of $300 per hour. Does it really make sense for you to do your own accounting, when it could be done just as well, maybe even better, by someone you could pay $25 per hour? Of course not! You can still keep a close eye on your business accounting without doing it yourself. It just takes discipline and a good idea of what reports you need to see and how often. Then assign the detail work to someone else!
ACCOUNTING ASSISTANT’S DUTIES
So once you’ve come to this decision, you need to decide between hiring an employee to keep the books or outsourcing the job to an accounting or bookkeeping firm. Let’s look first at what you expect the accounting assistant to do. This may include some or all of the following:
1. Keep up-to-date and accurate record of all the company’s financial transactions into physical journals and ledgers or a computer-based system.
2. Periodically, usually monthly, they balance the books and create financial statements and other management reports.
3. Receive record, deposit cash and pay the company’s bills. They balance bank statements regularly, investigating and correcting any discrepancies.
4. Calculate payroll and issue payroll checks. They may oversee this function with an outsource payroll company.
5. Keep inventory records and calculate product costs.
6. Purchase supplies
7. Prepare purchase orders
You may also want someone who will make schedules, file bills, sort documents, fill in at the switchboard and other duties that would require someone in-house. You need to take this into consideration.
HIRE AN EMPLOYEE
The kind of job described above can be called different things in different companies. Some typical titles are bookkeeper, accounts payable or receivable clerk or billing clerk. To maintain consistency, we’ll call it an accounting assistant.
To hire a competent accounting assistant for your firm you can expect to pay between $15 and $25 per hour, depending on experience. Add to this the additional costs of employees – paid vacations, sick leave, insurance, bonuses, retirement, profit sharing plans, etc. You’ll probably find someone who wants to work 40 hours per week more easily than a part-timer, but that’s not impossible. At any rate, you’ll be locked in to paying for a certain minimum amount of hours no matter how much work there actually is.
The advantages, though, are also quite convincing. An employee will be more loyal to your company. He will also be more likely to take a permanent interest and perhaps make a career with you. He will learn more about your business and therefore be better able to make profitable recommendations for your company.
On the other hand, you can outsource your daily accounting duties. There are several cost savings advantages to taking this route.
You won’t be paying for employer payroll tax expense, employee benefits and liability insurance. These costs will, of course, be built into the consultant’s fee, so it’s a wash at best. But you still save money, because you have no recruiting and interviewing costs and no training costs. And should you be unsatisfied with the service, there will be no additional recruiting, interviewing and training costs to replace your accounting assistant.
You will not have to worry about employee lawsuits. You can release an outsourced accounting assistant without raising your unemployment rates.
Most professional accounting assistants will have their own office space and will not need their own office or cubicle at your office, saving you the space and cost of desk, computer, software, office supplies, etc. If you require the convenience of having your computerized accounting records onsite for your review, a small cost can connect your system to theirs.
And one of the best parts is that you completely control the amount of money you spend on your bookkeeping. The amount you are charged by the outsourcing firm will be for the amount of time they worked on your accounting records. It will not include answering the phone, dealing with drop-ins, chatting with other employees, etc. You can adjust the amount of hours they work for you month by month. Some months you may wish to give them additional work, some months let them work bare bones hours. You can’t do this with an employee. You’re tied in.
Always remember, “You get what you pay for”. Whether you decide to hire or outsource, the accounting records are the core of your business. Without excellent bookkeeping, your business will have a hard time succeeding.