Accounting is an essential duty to consider when running a business. Many owners of medium-to-large businesses hire/outsource someone to do it for them. However, a lot of small business owners choose to handle accounting themselves. Is this a good idea? Or is it better to delegate this task to a professional? This post explores the pros and cons of doing your own accounting.
Pro: It’s cheaper
The most obvious benefit of doing your own accounting is that you save money by not having to hire/outsource an accountant. For small companies on a tight budget, it can make more financial sense to stick to DIY accounting. Hiring or outsourcing an accountant may only become affordable as you grow.
Con: It’s more time-consuming
Having to look after your own accounts is more time-consuming. Although accounting software can automate a lot of tasks, you may still have to do certain tasks manually like submitting tax returns, recording expenses and confirming transactions. Therefore doing your own accounting is not recommended if you are a busy business owner with little spare time to dedicate to admin.
Pro: It has security benefits
When you do your own accounting, you don’t have to share any potentially sensitive financial information with anyone else. You can make sure that only you know how much is in your accounts and that only you know what financial decisions are being made.
Con: An accountant could be more thorough/accurate
Professional accountants are trained to be organised and meticulous. Doing your own accounting with no experience of bookkeeping could lead to careless errors and oversights. A professional accountant can make sure that all information is clear and accurate, so that if tax investigations are carried out you can be certain that there are no penalties.
Pro: It forces you to be more financially aware
Doing your own accounting does force you to keep track of what’s going in and out of your accounts. It could even make you more careful of your spending, plus it could make you more interested in exploring tax incentives and discounts. All in all, it could make you keep a better budget and force you to financially educate yourself more thoroughly.
Con: You get no third-party financial advice
A benefit of hiring/outsourcing an accountant is that they can offer advice – such as ways to better organise your finances or ways to lower your tax. When you do your own accounting, it is up to you to do all your own homework. There could be some tax laws and tax incentives that are difficult to grasp – without an accountant to help fill you in, you could risk making the wrong tax decisions.
Conclusion
Doing your own accounting is recommended if you’re a small business owner on a tight budget who wants to keep complete control over your finances.
Hiring/outsourcing an accountant is recommended if you are a larger company or if your company is quite financially complex (anything too financially complex could be hard to grasp without some accounting know-how).
