This is part of a series of the Top 10 Bookkeeping Mistakes Small Businesses make. To read the others, click here.
There are a number of reasons you might decide to do your own bookkeeping. Based on our experience, and the problems many business owners face, we encourage you to at least consider outsourcing your bookkeeping, rather than simply doing it yourself.
If you’re just starting out in business, this is a good time to make the correct decision right from the beginning; if you’ve been going for some time, you’re probably aware of how much time and effort this is taking, and may be a little frustrated! So now’s the time to make a few slight changes that could relieve you in a big way.
Here are some of the reasons we see business owners doing their own bookkeeping – and presuming that is the way it has to be:
I can’t afford it. Naturally, getting your bookkeeping done by someone else sounds like one more expense that you can’t afford right now. You may consider bookkeeping to be an ‘optional’ expense, as opposed to getting your tax return done, which is a legal requirement, or paying suppliers, which you had better do or you will not have suppliers for very long. But consider the costs you haven’t considered before you make that presumption. The very low cost of having someone else take care of your bookkeeping could very well save your business life.
I know what I need to about bookkeeping. What you don’t know about bookkeeping could cost you in a big way. It’s amazing to us that so many small businesses leap into what they’re good at (serving coffee, building furniture, taking photos, repairing pipes), but are just thrown into the world of invoicing, expenses, bank statements, tax liability, and more. When we take care of a business’ bookkeeping, we are alert to:
– Potential tax issues
– The best times to purchase new equipment or assets
– Predicting cash flow issues several months ahead, so you’re prepared
– Discrepancies with invoice numbering
– Differences in supplier costs
– Discrepancies in invoicing customers
– And much more.
Getting even one of these things wrong could have major (negative) repercussions for your business, and getting them right could have a very positive effect in terms of profits and cash for you!
There’s not that much to do, really. This is another misconception small business owners have. You figure, what is there to outsource to someone else anyway? A few invoices, checking the bank statements every once in a while, making sure there’s enough money for the employees and expenses, and a little extra for yourself. But it all adds up. Yes, you might get it done in a few hours each week if you sat right down and got it all done in one fell swoop – but does it ever happen like that? More likely you finish a project and have to prepare an invoice, send it to the client, and perhaps talk to them about how they will make payment. Or you get a supplier invoice and suddenly need to challenge one of the line items you thought was all agreed earlier. Or you realize that cash is a bit tight, and suddenly it’s time to call a few customers whose bill isn’t paid. And before you know it, the ‘hour or two’ has become a half a day, or longer.
It’s just part of owning a small business. Yes, it is. But does it have to be your part? Think about what it is that you, as the business owner, does best:
- Coming up with new ideas
- Talking to customers
- Converting potential clients
- Drafting unique proposals and quotes
- Finding the best materials to work with
- …and much more.
The more time you spend on bookkeeping, the less time you have for these things, which right now possibly only you can do!
I don’t do the bookkeeping – someone else in my business does. Ah, here’s the big one. Many business owners have wisely given the bookkeeping to someone else – but it’s all too easy to just pick someone in the company who isn’t too busy, or hand it off to your daughter who is thinking about majoring in accounting, or get the receptionist to take care of it.
But what do they really know about bookkeeping? Are they going to recognize when something is a bit off? Or make the correct adjustments when the tax laws change? And what about the time that you still have to spend supervising, answering questions, and sorting out problems? Your delegation could still cost you in time and effort.
I’ll worry about it later. Well, we all know how well that works out. We do this in so many areas of our lives, and it’s not a good philosophy. Waiting to back up your computer, get house insurance, make that major new purchase while the sale is on, are all pretty bad ideas – and sadly we often only realize this when it’s too late. Rather than getting your bookkeeping sorted out when you are swamped, exhausted, late with payments, and possibly struggling with your business, why not look at it now?
So, doesn’t it make sense to look into outsourcing your bookkeeping to professionals who have years of training and experience. Isn’t your time better spent doing what you love to do and taking care of your customers? Do you really want to manage a bookkeeper?
You can request a quote quickly and easily online, or call us at the office. We’d be happy to see how we could help, and if after talking to us you decide to keep your bookkeeping in-house, that’s okay too!
For Bookkeeping Mistake #2, read on.