In Pursuit of Profit
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It is not a secret that many professionals have side hustles doing what they do for their day job (whether their employers know about it or not). When employees had a reasonable level of job security and still felt fulfilled going into the office every day, these side hustles remained just that – on the side.
However, in the current economic recession, a lot of side hustle jobs are serving as interim primary jobs. They will likely transition toward becoming full-time jobs over the next year. Labor experts say the country is poised for an unprecedented shift in the employment landscape across myriad industries.
While many professionals use some form of free online accounting software to keep track of their side business finances, this type of solution often cannot scale when your side hustle grows. Just using QuickBooks is not enough either. You should hire a bookkeeper any time your business experiences significant growth, is looking for funding, starts hiring, when time is constrained, or if knowledge gaps limit the quality of work you can put into it yourself.
The most common time to hire an accounting company is when your side hustle is going through considerable growth, especially when this growth is being driven by launching new products/services, selling across new channels, or expansion into new sales markets.
Brick and mortar stores are transitioning to an online presence in the face of uncertainty, but they are not the only ones. Side businesses that were once face-to-face and more relational are now moving online too. This adds another level of complexity to keep the books for your side hustle as elements like calculating sales tax on e-commerce transactions suddenly factor into the equation.
During rapid growth, an experienced bookkeeper or accountant can reconcile burgeoning bank and credit accounts as well as ensure timely payments are made to vendors. Furthermore, a financial professional will ensure customer invoices are being recorded correctly and can increase the likelihood that unpaid invoices are collected on by following up on outstanding accounts and sending them to collections agencies, when necessary.
If you are applying for a business loan or looking for a backer, an experienced bookkeeper or accountant can prepare the financial statements you will need to provide to get funding. While entrepreneurs and freelancers typically try to handle as much as possible, it pays to lean on someone with keen financial acumen and relevant experience – especially if you have previously been denied for a loan or have ever declared bankruptcy.
When your side hustle expands enough that you need to bring on additional employees or utilize third-party contractors, an experienced bookkeeper or accountant can manage payroll for you – paying employees as well as remitting and filing employment taxes. A financial professional can properly categorize employees as an exempt or non-exempt status to ensure their labor is being accounted for correctly, reducing your audit risk.
Some people choose to hire a bookkeeper so they can spend more time doing work that fuels their passion. Others make this choice to free up more time to spend with family. Still, others do it because they are just too busy with the day-to-day, customer-facing parts of the job.
Even if your side hustle is not going through a growth period or making any significant changes, you may be too busy to do your bookkeeping. Whether your time constraints are personal or professional, doing your bookkeeping should not take time away from engaging in fulfilling or revenue-driving activities. If it is, it’s time to hire a professional.
Similarly, if an important deadline is approaching that you cannot afford to miss (like a tax filing deadline), it may make sense to bring in a bookkeeper to ensure that you will not have too much on your plate to meet your deadline. Remember, a bookkeeper’s role can be an ongoing job, or it can be a short-term engagement to get your business through a tough spot or time crunch.
If financial topics are just not your strength, it is okay to ask for help simply because you do not want to do it or do not think you will do an effective job yourself. Find an experienced financial professional to oversee bookkeeping activities, so you do not have to stress about trying to manage every aspect of your side hustle business.
Can a bookkeeper perform all the financial duties you need for your side business? Or would an accountant fill the role better based on your short-term and long-term needs? Read our comprehensive guide, “Do I Need a Bookkeeper or Accountant?” or feel free to reach out to us for more customized advice.