DIY Small Business Accounting Creates Many Challenges
Are you a small business owner who has been handling their own accounting? If so, you know exactly how stressful the responsibility can be. When you’re not well-versed on the subject matter, it leaves room for error – too many errors, which is bad for business. Improper accounting practices can impact everything from your operational costs to inventory and profits. It can essentially stunt your company’s growth and leave you with a boatload of debt to recuperate from. Below is a closer look at the uphill battle of DIY accounting for small businesses.
It’s Time Consuming
If you haven’t learned by now, you’ll soon find out that small business bookkeeping is an ongoing responsibility. It isn’t something you can put on autopilot and take a look at whenever you get the time. Entrepreneurs who are responsible for their own accounting waste hours of pertinent time trying to learn new systems and processes, update their records, and keep track of the finances.
Don’t believe you’re wasting your time? If you were to charge a client an hourly rate, how much would that be? Now multiply that hourly rate by the amount of time you spend a week working on accounting. How much are you losing? Chances are it’s a lot more than what it would cost to outsource your accounting to a professional.
Messing up with your personal budget might mean you have to eliminate your takeout budget for a week until things balance out again. However, messing up in business accounting is a lot more difficult to bounce back from. Mistakes are bound to happen, and this likelihood is increased based on your lack of experience. A mistake might be something small like the inability to balance your books, but it could also be something excessive like failing to pay payroll taxes and having the IRS knocking down your door.
You Lose Money
Here’s another reason that DIY business accounting is challenging, it could cause you to miss out on opportunities to save money. Take for instance your taxes. Are you familiar with all the deductions you can apply? Do you have any idea about small business tax credits you can take advantage of? Failing to list all qualifiable deductions or to capitalize on tax credits causes you to miss out on hundreds, if not thousands of dollars each year during tax season. Money that could have been put back into your business.
You Miss Out on Sound Advice
More than just balancing the books and handling the taxes, your small business accountant is an invaluable tool at your disposal. They are trained to not only manage finances, but help entrepreneurs to recognize patterns that need to be changed, make informed purchasing and hiring decisions, cut back and save money, and seize opportunities for growth. This third party advice can help you stay out of trouble, boost profits, and grow your business.
Other Areas of Business Fail
If you’re spending hours each week trying to get a handle on accounting matters, how much time can you dedicate to other areas of your company? As the business owner, you should be focused on the core development and growth of your company. You are the face of the brand and vision, and therefore, need to be doing things like meeting with clients, making purchasing decisions, managing staff, and improving your products or services.
Yes, sometimes it is necessary for entrepreneurs to wear more than one hat to get their business off the ground. However, if you have no idea how to create a balance sheet, manage payroll, or set up invoicing systems, you’re setting yourself up for failure. A small business accountant or bookkeeper can take the stress out of managing finances. With affordable solutions like outsourcing, getting someone on board to handle such a high-risk task is well worth the investment.