Bookkeepers vs Bookkeeping Software

Written By Karrissa Jyles

Should you hire a bookkeeper or do it yourself with bookkeeping software? Here are the pros and cons of both so you can make the best decision for your small business.

Money makes the world go ‘round, or so the old saying goes. As a team of Financial Planners, we’d certainly agree that knowing how to manage your money makes your world go ‘round easier, especially if you run a small business.

One of the most important decisions for small business owners is if they should create space in their spending plan to hire a bookkeeper to keep their finances in order, or if they should take the time to learn how to do it themselves with bookkeeping software.

In this article, we’ll break down the pros and cons of working with a bookkeeper or DIYing with bookkeeping software. Keep reading to learn which option better suits your small business. 

What do bookkeepers do?

Bookkeepers handle simple, day-to-day finances, such as managing payroll or preparing balance sheets. They aren’t the same as accountants or CPAs so they can’t do your business taxes, but they can help with the financial tasks that you don’t have the time or desire to do.

Pros and cons of hiring a bookkeeper

Pro #1: Bookkeepers expertly organize your finances

The biggest pro about hiring a bookkeeper is adding a financial professional to your team to get a handle on your finances. They keep track of your cash flow statements, payroll, etc. with accuracy so you’ll never have to worry about your business’s financial health.

Pro #2: They help you understand your small business’s finances

If you aren’t keen on investing your time to get familiar with your business’s financial operations (and we’re not judging because it can be pretty dense!), working with a bookkeeper will make learning the ins and outs of your money easy. They’ll be able to show you exactly what areas in your business’s finances could use improvement or how well they’re performing.

Pro #3: They give you more of your valuable time back

Because managing your own small business finances can get intense, hiring a bookkeeper to do it for you frees your time so you can get back to doing more of what you enjoy about your business.

Con #1: They can’t tackle taxes and larger financial tasks

While bookkeepers are capable of taking a lot of financial duties off your plate, they can’t do it all. They aren’t qualified to prepare your small business taxes, estate planning, or investment portfolio. You’ll need to find a Financial Planner or CPA that you trust for those hefty financial projects.

Con #2: Bookkeepers cost money to hire

Like any job you rather not complete yourself, working with a bookkeeper will require you to pay for their services. You’ll need to review your spending and savings plan to ensure it’s a smart money decision to hire one.

Con #3: You might need to get used to a new way of managing your money

Bookkeepers are financial experts whose job is to develop the best strategy to organize your finances. If you had a previous system you were used to, they might switch it up for things to flow more smoothly.

What does bookkeeping software do?

Bookkeeping, or accounting, software, like QuickBooks or FreshBooks, takes the guesswork out of DIYing your business’s money by automating your financial process. It does what bookkeepers do, like managing payroll, balance sheets, etc., except you’re the one in charge of inputting the data.

Pros and cons of using bookkeeping software

Pro #1: Bookkeeping software paints a clear picture of your business’s financial landscape

Once you add your business’s financial data to the software, it shows you the full scope of your financial standing, as well as helping you account for errors, such as reconciling your check and balance system.

Pro #2: It easily automates your business finance process

One of the greatest benefits of bookkeeping software is how it effortlessly connects all your financial tasks together to make preparing your books a breeze. With most softwares, you can integrate them with other applications, such as your payment processor, cash flow statements, etc.

Pro #3: Less expensive than a bookkeeper

If you want to keep an eye on your spending, you may find installing bookkeeping software versus hiring a bookkeeper to be a better investment.

Con #1: Bookkeeping software can have a steep learning curve

If you aren’t well-versed in handling financial operations, it might be challenging to learn how to use each tool of your software and organize your finances appropriately.

Con #2: Expect occasional updates or other maintenance issues

Because bookkeeping software is online, it’s common for its developers to schedule updates (which renders the site unusable for a short period of time) to fix bugs that otherwise interfere with your work. 

Con #3: It may not have the features you need for your business

Searching for reputable bookkeeping software that incorporates each tool you need can be a job in itself. While we think the best bookkeeping software for small business owners is QuickBooks, it could still be missing features that are essential to your specific financial operations.


Sources:

Karrissa Jyles
Previous

How Does Cryptocurrency Impact Investing?
Next

5 Questions to Ask a Financial Planner Before Working Together