The Truth About DIY Bookkeeping: Is It Saving or Costing You Money?
If you’re running a business, you understand the pivotal role of managing finances. Money serves as the determining factor of your business’s trajectory from the start to where it moves forward.
Yet, ensuring your money is effectively managed hinges on meticulous tracking—a task where bookkeeping proves invaluable.
You might be thinking,
“Tracking can’t be that complex. Surely, there are apps that handle everything?”
That’s where you’re wrong. Bookkeeping extends far beyond mere tracking. It plays a multifaceted role in shaping your business’s financial health. So, should you handle your own bookkeeping? Let’s dive into answering that question in this blog!
Understanding Bookkeeping Basics
If you’re a business owner, you know that bookkeeping is a must. Bookkeeping is like keeping a detailed record of your business finances. It involves tracking every dollar that comes in and goes out, helping you see exactly where your money flows.
Why is this so important? Well, accurate bookkeeping is essential for your financial health. It gives you a clear picture of how your business is doing financially. You can see if you’re making a profit or if there are areas where you’re spending too much. This information is crucial for making smart decisions about budgeting, taxes, and investments.
Basically, good bookkeeping isn’t just about staying organized—it’s about knowing your numbers so you can run your business better. Whether you’re just starting out or have been in business for years, keeping your books in order means you’re always in control of your money and can confidently plan for the future.
What Happens If I Handle My Own Bookkeeping?
Although bookkeeping seems like a straightforward process, it’s still a specialized task that not many people are well-versed in. Let’s put it into context to give you an idea of just how complex it can get.
Let’s say you’ve decided to do your bookkeeping yourself. What are the pros of this decision?
It Puts You at Ease
Nobody knows your business like you do. Finding the right person to fit your business can be tough, so managing your bookkeeping might seem like a good idea. When you handle your financial records yourself, you feel like you’re getting to know your business inside and out.
This control might give you peace of mind. Being the one who manages your finances means you have a direct line to your company’s financial health. You understand every transaction, expense, and dollar earned because you’re hands-on with it all. This insight might feel invaluable.
It’s Cost-Efficient
Doing your bookkeeping might seem like a cost-saving option. You avoid hiring, training, or paying someone else to do it the way you want. This decision might seem like it saves your business time and money. Plus, with so much information available online, many people think, “It only takes a few hours a month, so how hard could it be?”
It’s a Safer Option
Bookkeeping is at the heart of your business operations, which means there are security risks involved. By handling it yourself, you think you can keep your financial data private and avoid sharing sensitive information with strangers. Managing your finances might seem like it ensures you know everything that’s going on, making it feel like a safer way to protect your business’s financial information.
But wait…
The Downside of DIY Bookkeeping
If bookkeeping is perceived as “easy,” why do professionals like bookkeepers undergo training and gain expertise? Because DIY bookkeeping can come at a cost. Here’s what can happen.
You’ll Waste Precious Time
Many people mistake bookkeeping as an easy task that only takes a few hours when the truth is — it’s not! Bookkeeping might seem simple, but it’s time-consuming and requires much attention to detail. As a business owner, your time is incredibly valuable. Every hour you spend on bookkeeping is an hour you could be using to grow your business, innovate new ideas, or connect with customers.
You’ll Waste Your Money and Resources
Aside from time, you’ll also be wasting your money and resources by doing your bookkeeping yourself. Bookkeeping involves more than just tracking numbers—it requires a solid understanding of accounting principles, tax laws, and financial regulations. Without this expertise, mistakes can easily happen. Errors in your books can lead to costly consequences, like fines or missed opportunities for tax deductions.
You’ll Be Overwhelmed With Tasks, Putting a Strain on Your Business
Doing bookkeeping by yourself can also put a strain rather than improve your business’s operations. When you handle bookkeeping independently, you can quickly become overwhelmed with tasks. Managing your finances requires continuous tracking of transactions and staying updated with ever-changing tax laws and financial regulations. And for a business owner who always has to wear different hats all the time, this can be incredibly time-consuming and mentally exhausting.
As a business owner, you have many responsibilities, from managing your team to developing new products or services and engaging with customers. Adding the complex bookkeeping task to your plate can spread you too thin. This overload can lead to burnout, reducing your overall productivity and effectiveness. Instead of focusing on strategic growth and innovation, you might find yourself bogged down in the minutiae of financial records.
When Outsourcing Bookkeeping Makes Sense
Clearly, you’ll end up losing more than gaining if you decide not to hire a bookkeeper for your business. Outsourcing bookkeepers is especially beneficial for growing businesses with complex financial transactions. As your business expands, managing finances becomes more complicated, with numerous transactions to track, categorize, and reconcile. A professional bookkeeper can handle this complexity with ease, ensuring that your financial records are accurate and up-to-date.
Moreover, having an expert on your team who can handle tasks efficiently is a significant advantage. For example, fixing imported transactions in a bank feed that didn’t import properly might take a less-experienced bookkeeper a day, but a seasoned professional can resolve it in an hour. This efficiency saves time and ensures that your financial data remains accurate without unnecessary delays.
Outsourcing bookkeepers is also great because they stay knowledgeable about the latest software and applications, which are constantly evolving. Keeping up with these changes requires time and expertise. A professional bookkeeper is well-versed in the latest tools and can leverage them to streamline your financial processes, providing you with the most efficient and accurate service.
Additionally, the time-saving benefits of outsourcing bookkeeping allow your team to focus on business growth and strategy. Instead of getting bogged down with financial management, you and your team can concentrate on what you do best—driving your business forward. This focus on core activities can lead to increased productivity and more strategic decision-making, ultimately contributing to your business’s success.
Tips for Effective Integration of an Outsourced Bookkeeper
If one of the reasons you feel unsure about outsourcing your business’s bookkeeping needs is because you worry about onboarding a new team member or working with an outsourced bookkeeping company, don’t worry. Here are some tips to help make that transition easier:
Choose the Right Partner
Do your research to find a bookkeeping company that aligns with your business needs and values. Look for companies with positive reviews, strong references, and a track record of working with businesses similar to yours.
Detailed Onboarding Process
Create a thorough onboarding process for the bookkeeper. Provide them with all the necessary information about your business, including financial history, the accounting software you use, and any specific procedures you follow. This will help them understand your operations better and integrate more smoothly.
Use Technology to Your Advantage
Leverage technology to facilitate a smooth transition. Cloud-based accounting software allows both you and your bookkeeper to access financial data in real time. Tools like Slack or Trello can also help manage communication and task tracking efficiently.
Start with a Trial Period
Consider starting with a trial period to see how well the outsourced bookkeeper integrates with your team and processes. This can help you assess their capabilities and ensure a good fit before making a long-term commitment.
Provide Access to Key Resources
Ensure the outsourced bookkeeper has access to all the necessary documents, systems, and contacts within your organization. This includes bank statements, invoices, receipts, and any relevant financial data. The more prepared they are, the smoother the transition will be.
Set Clear Expectations
Define clear expectations regarding the scope of work, deadlines, and deliverables. Make sure both parties understand what is expected and hold each other accountable. This clarity will help avoid misunderstandings and ensure a productive working relationship.
Maintain Regular Communication
Keep lines of communication open. Regularly update your bookkeeper on any changes in your business that might affect your finances. Similarly, expect regular updates from them about your financial status and any issues that arise.
Evaluate and Adjust
After the initial transition period, evaluate the process and the working relationship. Gather feedback from your team and the bookkeeper to identify any areas for improvement. Make necessary adjustments to optimize the collaboration.
Adding a new team member or working with an outsourced company shouldn’t bar you from getting the help your business needs. The only way to let that happen is if you allow yourself to be open to changes and if you’re prepared with a plan to help make the transition and adjustment for all parties easier.
Closing Thought
As a business owner, your time is valuable. In most cases, outsourcing your bookkeeping to a professional bookkeeper is a smart move. It frees up your time so you can focus on other important tasks like selling new services, training new staff, or even taking a well-deserved vacation.
With applications and software becoming increasingly complex, it’s getting harder for business owners who wear all the hats to manage everything without professional help. Many new applications have product and service launches each quarter that require a significant time investment to learn and master—something you may not have the time for due to your busy schedule.
So, if you’re still doubtful about hiring trained bookkeepers, take this as your sign to do it. Remember, to provide your customers with the best level of service, you’ll need an expert who can help you stay on top of and up-to-date with the constantly changing financial industry. Hiring a bookkeeper is the best way to make that happen.
Want to know how our bookkeeping company can help? Get in touch with us to find out!
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