S7E6: Do You Really Need a Bookkeeper or Software? | Simple Business Cash Solutions with Pam Prior

⚠️ Disclaimer: This podcast is for informational purposes only. It is not financial, legal, or tax advice. Always consult with a qualified professional before making financial decisions.

Struggling to figure out if you actually need bookkeeping software or a bookkeeper for your business? You’re not alone—these are the exact questions entrepreneurs ask every day.

In this episode of Cash Flow, Pam breaks down the difference between software and human bookkeepers, why both can matter, and how to know what’s right for your stage of business.

👉 Here’s what you’ll learn:

Do you really need bookkeeping software if you already use a bank account and credit card?

What bookkeeping software actually does (and what it doesn’t).

When it makes sense to hire a bookkeeper.

How to keep finances simple without overcomplicating your systems.

💡 If you’ve ever wondered whether QuickBooks, Xero, or even Excel is enough—or if it’s time to bring in a pro—this episode gives you the clarity you need.

Transcript

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Foreign and welcome back to the Cash Flow Podcast. I am Cam Pryor, president of the Keep it Simple Squad and we're taking entrepreneurs questions and giving KISS answers to them. And right now we're going to jump on top of what we started the last episode. Last episode our questions were do I need a business bank account? Do I need to set up a business? And then finally, do I need a bookkeeping software? If you missed that episode, hop on back to that. Or it might be on a screen somewhere here that you can click on. But for now, we're going to jump into the next set of questions that are related to those. Do I need a bookkeeping software? We covered that in the last episode. We covered some quick tricks for how to use AI to avoid having to get a bookkeeping software and pay that bill. But today I want to talk about why should I maybe get a bookkeeping software? Because that becomes the follow on question. And what I'll tell you about about bookkeeping software right now is it's not really expensive. There are some products out there like FreshBooks, Xero, QuickBooks, I think Fresh Start Fresh, I don't know. Anyway, there are a bunch out there. If you just Google up what are the available softwares for a starting entrepreneur, you'll find them and they all have the basics of what you need. Before you do that, though, I just want to tell you what does a bookkeeping software do? Because you're like, I have my checking account, I have my credit card. Why do I need it? And the answer, luckily, really is simple. All a bookkeeping software does, literally the only thing it does is it takes all those transactions that are in your checking and credit card account and it runs them through a machine and spits them out so that it clearly shows you how much you've spent on what things and when you've spent it and how much money you've made and when you've made it. And if you've watched me for any period of time, you know that I will often say that there's no set of numbers that's of any meaning to you. If it's not in some sort of context, and if it doesn't tell the story of your business. And if you look at a bank statement or you look at a series of entries from a bank bank that you've downloaded from a bank account, there's no story in that. That's just a dump of data. It's no good to you. Now, if you're an Excel expert, sure, you can play around with it, pivot it, bi it, whatever you want. I do that for fun on the weekends. But most humans don't find that entertaining. So the bookkeeping software literally pulls in all the transactions automatically from your bank, sorts them around and drops them into what's called your financial statements, those very simple profit and loss statement and a balance sheet. The one most entrepreneurs pay attention to is a profit and loss statement. And it tells you, here's how much money I made every month, here's how much money I spent every month, and here's what I spent it on. And once you know that, spent it on, Good Lord, I don't know what happened there. Spent, spent it on. Once you know that, it's now letting you go, oh, that's what happened in my business. I can see it on a piece of paper. So that's the benefit of getting a bookkeeping software and just kind of to tell you what the second and third steps are, once you choose which one you want to get. Most entrepreneurs Nowadays are using QuickBooks. Intuit is taking over the world. So you may or may not decide that that's who you want to work with. But all of the other candidates are very good for beginning bookkeeping. Xero, which starts with an X. X, I think it's called Fresh Books. They're all good, but once you get any of them, you literally connect your bank to it, your bank account to it. There's a very easy couple buttons you push to connect your bank and it'll automatically, every time you spend some money or you make some money, it'll bring it into that bookkeeping system and put it in the right place. So that whenever you want to look and see, how am I doing? You run a report and it's all there for you. The other thing it does makes it really easy for your tax accountant, so you get a much cheaper or much better return on what you're paying your tax accountant, because they don't have to spend the time doing that for you. The bookkeeping system's already done it in most of these. You literally just give access to your tax accountant and he gets in there and gets what he needs. She gets in there, gets what she needs. They get in there, get what they need, and you don't even need to talk to them. They've got everything they need. So two big reasons. One, it lets you see the story of your business whenever you want to see that story. Two, helps the tax accountant out. And let me give you a third one that's a real perk if you're really starting to move along in your business. And you're like, huh, I need to borrow some money to really grow this business. When you want to do that, I promise you, any bank you're going to borrow from that's going to give you reasonable interest rates is going to want to see what we call your financial reports. And you want to be able to just push a button and get those. And if you have bookkeeping software, you can do that. So there's my tip. Yeah, that's what bookkeeping software does. Do you have to have it? Absolutely not. Check the last episode out again and you'll see an easy way to get around having a bookkeeping system. But there's a lot of benefits to having one. So along the lines of, I need bookkeeping software, I want to answer a third question. I know I'm only on the second. I want to answer a third question that is, do I need a bookkeeper? So in between that, I want to say, what does a bookkeeper do? Okay, I basically told you. If you have bookkeeping software, relatively small business, 10, 20, 30 transactions a month, you know, meaning you. You pay 10, 20 bills, you have credit card charges, 10 or 20 of them, and you have maybe, you know, 10 clients paying you, then you want a bookkeeping system because it'll keep track of it for you. So what is it a bookkeeper does? Right. So a couple things. There are some very important things that a bookkeeper does as your business starts to grow. The first one is they know and understand what they have to do so that you can rely on the statements that are coming out of your bookkeeping system. And the biggest thing is what's called a reconciliation. They do what's called a reconciliation. What that does is if they've done that and they've put their check mark on it and said it's done, then you know that the reports you're getting out of that system are correct, that your profit and loss statement is accurate and that your balance sheet is accurate. And those are the two reports, quite frankly, that a bank's going to want to see if you want to borrow money or that you want to see to see how your business is doing. So they have an extra skill set. It's like, you know, can I film myself here for the podcast? Sure. Is there somebody who can do it a lot better? Absolutely. And you sitting behind the camera. Okay. So that's sort of the thing with the bookkeeper, only with the bookkeeper. As you get bigger and bigger and bigger, there become more Business risks, right there become more risks that your financials are correct or incorrect. You could make bad decisions if they're incorrect. You could be providing false information to a banker if they're incorrect. A bookkeeper has a set of skills and a set of tasks that they do that lets them make sure that whatever you're looking at is valid. The other thing it does, frankly, is it puts the accountability for that on their plate. So not only can you rely on it, but it's their responsibility to make sure it's accurate and that you can rely on it. So that's really what a bookkeeper does. And I guess I kind of answered the third question at the same time. Why should I have a bookkeeper? And I think if it's just a few transactions, if you're not needing to borrow money, if you kind of know in your head and your heart exactly what's happening in your business, and if you have a bookkeeping software and when you print the reports, they make sense, no need to have a bookkeeper. But as you start to grow and you're taking more risks and you're spending more money and you might have more than one account, maybe you have. Like a lot of entrepreneurs, if this happens to you, I really recommend a bookkeeper. But like a lot of entrepreneurs, two things can happen. One is you get a whole bunch of credit cards because we would roll our credit card balances from one zero interest credit card to another one to another one to another one, and you end up with like 10 credit cards. I see this all the time. It's not uncommon. And by the way, nothing to be ashamed of. I often talk about how all of us entrepreneurs are embarrassed about our financial stories, but we all share the same stories whether we talk about them or not, right? So once you start to get multiple accounts, you really want to make sure somebody's minding the shop there. And if you're not somebody who really likes watching over this stuff, get an expert to do it, get a bookkeeper to do it, just because that helps you out. So what we've covered here is once we've decided you have your bookkeeping software, which we did last week, I think, do you need a bookkeeper and why? And it's part of that. What is it that they do? So hopefully you got that out of this episode. If you have any questions, drop them in the chat and the dogs or I will answer them for you. Meanwhile, we'll see you on the next episode of Keep It Simple. Be sure to stick with us. Share this with any of your friends who might get benefit from this, please hit a like and subscribe so that we can keep bringing this to you. Take care.