Still deciding
When should a contractor hire a bookkeeper?
There is no revenue figure at which this becomes necessary, which is why waiting for one is the most common way to leave it too long.
Reviewed by Darren Lim, US CPALicence CPA.742536027 min read
There is no revenue number. People look for one — "at half a million you need a bookkeeper" — and it does not exist, because a one-truck operator with a hundred transactions a month and a three-truck operator with subs, retainage and a bonding requirement are different problems at similar revenue.
What does exist is a set of triggers. Most contractors cross two or three of them before they notice.
The triggers that actually mean it is time
You took on employees. The single clearest one. Payroll brings withholding, deposits on a schedule, quarterly filings and workers comp exposure — and the consequences of getting it wrong are no longer proportionate to the effort of getting it right. Missed payroll deposits can be assessed against you personally, which is not true of any other bill in the business.
You started using subcontractors. W-9s, 1099s, certificates of insurance, and two annual audits that both test the same records. Miss the certificates and the workers comp audit charges you their payroll at your rate. This one is expensive precisely because nothing goes wrong until the audit.
Somebody outside started asking for numbers. A lender, a surety, a landlord, a general contractor prequalifying you. The moment your books have an external audience, how they were kept stops being an internal matter.
Your CPA bills you for cleanup. If that email arrives every March, you are already buying bookkeeping — at professional rates, once a year, in their busiest weeks, and with no monthly information in return. This is the most common trigger and the most commonly ignored.
You cannot answer a question you should be able to answer. Which jobs made money last quarter. What you are owed and how old it is. Whether margin moved. If the answer is "I would have to work it out", the books are producing a tax return and nothing else.
You are more than a month behind, and the gap is growing. Not "a bit behind". Behind and losing ground. The trend matters more than the number.
You are about to make a decision with a nought on the end. Hiring a fourth tech, buying a truck, taking a job twice the size of anything you have done. Those decisions get made once and they get made on numbers.
The reasons people wait, and what they are worth
"I will sort it out at year end." Reconstructing eleven months in January costs more than doing twelve months as they happen, and it produces worse books — because nobody remembers what a supply house charge in April was for.
"It is not that expensive to do myself." The hours are not the cost. The cost is the decisions made on numbers that arrived two months late, and it grows with the size of the business, not with the number of transactions.
"I am not big enough yet." Growing is exactly when this bites. Every new job is materials and labour out before money in, so the fastest-growing contractors are the most likely to run short in a specific week while doing well over the year. That is invisible without books and obvious with them.
"My spouse does it." Extremely common and it works — until the volume outgrows the evenings, or until it is quietly costing your marriage. Worth being honest about which of those is happening.
"I do not want to hand over control." Reasonable, and it is an argument for the terms rather than against the arrangement. You own the file, you hold the logins, access is read-only. Control is a contractual matter, not a reason to keep doing the work.
The trigger people wrongly wait for
Being able to afford it comfortably. This one is backwards. The point at which the books are worst is usually the point at which cash is tightest, and the two are related — you cannot collect what you cannot see, and you cannot price what you have not costed.
Waiting until it is comfortable means waiting through exactly the period where the information would have changed the outcome.
What "time to get help" does not have to mean
Two assumptions worth dropping:
It does not have to be a hire. In-house against outsourced is a real decision with a real answer either way, and for most contractors at this stage the honest answer is not a full-time salary.
It does not have to start with the backlog. Catching up first is the assumption that stops people starting at all, because catch-up is the expensive, unpleasant part and it produces nothing you can use. Starting with the current month and dealing with history afterwards is a perfectly normal sequence, and it means you have current numbers within weeks instead of months.
How to check whether you are past the line
Score yourself against the triggers. If you have crossed two, it is worth a conversation. Three or more and the question is not whether but how quickly.
Or do it empirically: close last month yourself, properly, and see how long it takes and whether you would show the result to a bank. That answers it faster than any list.
Related
How we do this
We build this into your books. Starting with a month that costs you nothing.
We start with your most recent month rather than your history, so getting help does not begin with a catch-up project and a bill. If the timing is genuinely wrong for you, that first month costs you nothing to find out.
- Every transaction categorized, accounts reconciled, the month closed
- Reviewed and signed by Darren Lim, US CPA — licence CPA.74253602
- The Two-Day Guarantee: Your first month back in two days, or the next month is free.
Every trigger on this list gets more expensive the longer it runs, and none of them announces itself. One month done properly, free, tells you which of them you already have.