Accounting is critical to your business’ success. Timely, accurate accounting keeps your business organized and tax compliant. Additionally, it allows you to plan for current and future needs.
Managing your own accounting needs can be tempting, especially as a small business owner. Often, it’s difficult to justify putting a large (or any) amount of money towards something you can do yourself—especially in the early days of a business. Odds are, unless you have a background in accounting or finance, you aren’t properly tending to your books.
Luckily, you have options! Here’s how DIY accounting is wasting your resources, and how you can find the perfect solution for your business:
Accounting (Really) Requires Expertise
Accounting is very technical. There are many rules and processes associated with accounting, and they vary from business to business. There are federal, state and local requirements to also consider. Understanding your accounting, tax and finance requirements is essential to keep your business healthy, tax compliant and growing.
For many people, navigating these rules and regulations can quickly become overwhelming. These technical requirements are very important, but it’s easy to overlook or minimize them if you aren’t a financial expert. Worst of all, these mistakes can be exceptionally costly for your business in the long run by way of fines and cash flow issues.
Common problems business owners experience when they attempt to do accounting tasks themselves:
- Missed Expenses
- Late Filing
- No Receipt Tracking
- Payroll Mistakes
- Late Invoicing
- Lack of Visibility
As a motivated self-starter, you may think doing it yourself is the right choice. However, if you find yourself facing any or all of the issues above, it’s time to enlist an expert to take care of your business’ accounting.
Your Time Is Valuable
As an entrepreneur, your attention is pulled in different directions 24/7. At the end of the day, you aren’t doing yourself any favors by devoting some of this precious time towards managing the books. How many hours do you spend on accounting tasks per month? Now, imagine what you could be doing with those hours instead—engaging with customers, designing new products or spending time with family and friends.
Your time is difficult to delegate. It’s natural for tasks to fall to the back-burner when your time is stretched and you’re attention is continuously pulled in different directions. Bookkeeping should never be one of those things. If you are not able to schedule and stick to your accounting tasks consistently, you’re going to fall behind which will be quite problematic for your business. Doing it yourself is not worth missing deadlines or feeling out of control.
Your time isn’t free, even if it seems like it. It can be difficult to recognize costs associated with your own time, especially when you can’t directly see the impact on your bank account. Your hours are very valuable to your business and there is a cost associated with how you spend them, so spend them doing what you’re best at!
Small Business Accounting Solutions
So, you want to save your time and money and have top notch books. How do you do it?
Hire an Expert. The first, and perhaps most obvious, option is to hire an expert. A financial expert, such as a CPA, can manage your monthly accounting needs, take care of your tax requirements and assist with cash flow and financial planning, if necessary. Additionally, an expert can save you money by identifying cost saving opportunities.
Utilize cloud accounting. Perhaps hiring an expert is still too costly. Cloud accounting solutions, such as Xero and QuickBooks Online, are affordable and scalable, making them great small business solutions. Cloud software offers pay-as-you-go plans and allows you to save time and streamline processes to increase overall efficiency. Smart accounting solutions work with cloud accounting software to manage tasks for you, such as expense categorization, instantly.
At the end of the day, unless you have a firm understanding of accounting and finance, DIY accounting is costly and demands a large amount of your time. Finding your accounting solution depends on your business structure and needs. Take some time to assess your current situation. How many hours do you spend on your books per week or month? Can you put an hourly rate on your time? Are there accounting solutions that cost less than your hourly rate? No matter what solution you choose, make sure it fits your business!
Editor’s Note: This post was originally posted on June 13, 2017 and has been completely updated for accuracy and comprehensiveness.