How to know when your business needs more than bookkeeping (and what to do about it)

Entrepreneurs are a bit like pilots. They long to fly higher, but that’s where the turbulence is worst. So, they adapt by using better tools.

As your business starts to soar, it will hit turbulence, like tax complexities, that can’t be properly handled without advanced resources.

So, if your business is reaching new heights but experiencing bumpy weather, it may be time to abandon your old bookkeeping strategy and adopt a better one.  

Today, we’ll identify seven signs that bookkeeping isn’t getting the job done and what to do about it.  

Let’s go!

Sign #1: Your financial transactions are getting more complex

If your business is dealing with things like mergers, acquisitions, expansion, or complex investments, bookkeeping won’t cut it.

These require a team of professionals, including a business lawyer, a CPA, and a financial advisor.

Even if the transaction seems small and simple, there are probably legal and tax ramifications you don’t know or haven’t considered. And those details are holes in the side of a ship.

One or two won’t sink it, but several small ones will.

Sign #2: Your business needs a strategy

This one is characterized by decision fatigue and missed opportunities due to a lack of coordination and alignment between departments.

Navigating this morass with a bookkeeping system will only compound the problem.

You’ll need a CPA.

A CPA can provide all the bookkeeping tools needed to keep your business rolling as you adjust to changes.

More importantly, a CPA can provide business advice and procedures, such as a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis, so you can move forward with confidence.

Sign #3: Your taxes are getting more complicated

When your business starts operating in multiple states or even internationally, things can get sticky quickly.

Throw in tax credits and incentives, and your bookkeeping system starts to feel like a bike with a flat tire.

It’s usable but less than ideal.

Here, a business attorney and CPA can team up to help with the regulatory and tax issues associated with the aforementioned items.

Sign #4: Audits arise

Any number of things can spark an IRS audit. For example, if you run a cash-heavy business or have a high income as a sole proprietorship, the potential for an audit goes up.

And while your bookkeeping system won’t hurt you during an audit, it won’t help as much as having a CPA. 

Working with a CPA can help you prepare for an audit in various ways, including conducting an internal one as a precaution.

That kind of practice is invaluable and something a bookkeeping system can’t offer.

Sign #5: Your bookkeeping system is running you

You can’t work on your business if you’re working in it. That may be a cliché, but it’s true when it comes to finances. It’s hard to think strategically when you’re bogged down in the books.

So, outsourcing your accounting functions can free up time and bring invaluable expertise to help you meet your business goals.

That brings us to the last sign.

Sign #6: You want to grow your business

Bookkeeping can provide valuable financial insight, but if you don’t have the time or full knowledge to exploit it, then it’s time to move on.

Trying to interpret numbers, build a strategy, gain tax insights, and make wise financial decisions by yourself will, at best, limit your business prospects.

At worst, it can ruin them.

Bring in a CPA and a financial advisor to provide analysis and advice to help meet your growth objectives. Their collective wisdom and experience can help you exploit unseen opportunities and avoid minefields that can blow a hole in your plans.

The Bottom Line

You don’t have to see all six signs to realize it’s time to trade in your bookkeeping system for some deep professional help.

In fact, one may be all it takes, depending on your business goals. If you see at least one, consider putting a team together to help you make sense of the changes that come with a business starting to take off.