In my previous blog post, I emphasized the vital role of bookkeeping in every business. If you missed it, check out that post to read about the importance of bookkeeping.
DIY bookkeeping. What is it, and is it right for you?
Many small business owners take on multiple roles and responsibilities. If something seems doable, we tend to do it ourselves. Why hire someone else to do it, right? Simply put, DIY bookkeeping means performing the bookkeeping tasks for your business yourself instead of hiring a bookkeeper.
But is it wise to do your bookkeeping yourself? Let’s discuss the pros and cons.
Advantages
You can save on bookkeeping costs.
One of the main reasons small business owners choose to do their books is to save money. If you have a knack for numbers and enjoy solving problems, doing your own books can save you a few hundred dollars a month.
You have total control.
Are you a control freak? Handling your own financial records lets you organize each transaction exactly how you want when you want. There’s also no need to wait for someone before things are recorded or reports are generated.
You get to engage with your financial data.
Keeping track of your accounts forces you to understand your business’s financial side. Since you get to see your business’s income, expenses, and cash flow up close, you can immediately see their impact on your business, which will help you make informed decisions.
Disadvantages
It’s time-consuming.
Recording all those receipts, bills, and invoices can be a total time suck, especially if there are a ton of them. If you decide to DIY bookkeeping, you might find yourself spending so much time on bookkeeping that you don’t have time for other areas of your business.
There is a learning curve.
Bookkeeping is more than just writing down all the money coming in and going out. The next step, categorizing, can start to get confusing and is where people usually make mistakes. It’s best to get some form of training before attempting to do it to make sure you’re doing it correctly.
It might cost you more.
Wait, what? I thought you said I could save money…
You can—if you know what you’re doing. However, if you’re unfamiliar with basic accounting and are not adept at using your chosen accounting software, you might make costly mistakes.
For example, in some bookkeeping systems, it’s easy to make the mistake of recording the same income twice, which can increase reported revenue and taxable income. Also, if you misclassify expenses, you could incur tax penalties if any tax regulations have been violated.
Should I DIY my books?
Bookkeeping is an essential part of running a business, and as the business owner, the decision to do DIY bookkeeping or not is up to you. Consider time and budget constraints, as well as your bookkeeping knowledge or willingness to learn it, to ensure that you make the best choice when it comes to managing your finances.
If you’d rather outsource bookkeeping tasks to avoid costly mistakes and have more time to focus on your business, let’s talk!
