The Dangers of DIY Accounting for your Small Business
Because you are talented and confident enough, you can take on challenges others won't accept or are incapable of conquering.
Ironically, what got you to this point as a small business owner is also what gets you in trouble and hinders your business' growth.
We can't scale up and build an empire by ourselves. It is impossible to grow without delegating tasks and finding skilled people to help us. Businesses that want more people to serve need more capacity. While you don't need to delegate all the work, you should consider delegating the more challenging parts.
Bookkeeping is one of the essential tasks; small business owners must decide whether they should do it themselves or hire someone to do it. Before considering the risks, here are the six greatest dangers to doing your bookkeeping and accounting.
1. Clerical Errors
Audit is a scary word. If you don't have your ducks in order, you have every reason to be afraid. Many business owners think an audit won't go through if they haven't committed any crime or done anything ethically wrong. Simple clerical errors may look like fraud. It won't be easy to prove otherwise if you don't have the proper records and enough knowledge to provide everything the IRS requires.
2. Poor Scheduling
What is a schedule?
Our time is often spent putting out a fire that needs our immediate attention as our business expands. Even if we try to plan to prevent fires from happening, tasks are often moved to the next hour or day, week, month, or even year. As a result, we're often left without the time or energy to do something basic, such as bookkeeping.
You risk not being able to plan and keep to your bookkeeping tasks. This can lead to a lack of record keeping and poor business management.
3. There is no available time
You've heard of "making time," but what happens when there is no time? This problem goes beyond poor scheduling and procrastination. How can you expect to make time for bookkeeping if you don't have enough time for other essential business functions?
4. Cost
It doesn't necessarily mean that you don't have to pay for it. Each hour of your time should be valued. You should be able to assign a value to this time to determine if a task can best be done by you or someone else. For example, you spend approximately $1,000 monthly on bookkeeping and accounting if your time is valued at $75 an hour. This cost should be considered, and you need to understand that a virtual or professional team will likely be more proficient in accounting, efficient, and cheaper. Don't forget your costs when deciding whether to do your bookkeeping yourself. You should consider the cost of mistakes and how expensive they might be.
5. Expertise
Math and accounting are two of the most challenging subjects at colleges. To perfect their craft, accountants and bookkeepers work for many years. You will need to know the accounting basics to do your accounting.
6. Software Learning Curve
There are many unique features to each type of accounting software, whether you use a spreadsheet or a cloud-based one like Xero and Quickbooks Online (Basis 365 uses Xero). In addition, Basis 365 requires all its accountants to take and pass a Xero training course to assist businesses with their bookkeeping. Therefore, you should consider learning the software in depth if you are a qualified accountant or bookkeeper.
Whether you decide to DIY or outsource, or maybe you’re somewhere stuck in the middle, Basis 365 can explore your options with you and help you make the right decision. Contact today to schedule a call with a Basis 365 expert.
