When you’re starting out as a business owner, you’ve got to be scrappy. There’s no shame in trying to save a few dollars by managing multiple aspects of your business yourself. However, as your business grows, you’ll find that an endless list of “to-dos” makes it hard to do it all. You may find yourself dropping balls that shouldn’t be dropped.
The accounting side of your business is easy to fumble—especially if your mind is on a million other things. If you don’t have the time to devote or you don’t know what to look for, you could be making mistakes that drastically impact your business.
Risks of Being Your Own Accountant
Incorrect Data Entry:
When you’re busy, rushed, or distracted, it’s easy to enter incorrect data into your books.
Missed Deductions:
Because you’re a business owner and probably not an accountant, you may not know all the things you can deduct. Missing deductions costs your business money.
Missing Revenue:
Incorrect books can cause you to have revenue that is unaccounted for and you may never know.
Unpaid Invoices:
When your books are not in order, you may not notice an unpaid invoice—by you or someone who owes you.
Underestimate Tax Bill:
When it comes to paying taxes, no one likes to be surprised by a larger number than what they were expecting. Incorrect books can cause a miscalculation and underestimation of your tax bill.
Reporting is Unreliable:
How can you make business decisions with incorrect data? When your books are wrong, your reports will be too.
There are potential risks of DIY-ing your accounting, so how can you determine when the risk of being your own accountant becomes too much? When do you know it’s time to hire an accountant?
When you have no time.
When your schedule becomes too full to handle, you may find the need to delegate tasks to others to lighten your load. By investing in accounting services, you’ll be able to hand off the detailed job of bookkeeping to someone who can focus on it and get it done quickly and correctly. This way, you can spend your time worrying about other important things—like growing your business.
When you don’t know what to do.
You may have tried being your own accountant, but question after question kept coming up. When you feel as though you don’t have as much knowledge on bookkeeping or business taxes to confidently manage your business’ books, you have two options: learn it or delegate it. By hiring an accountant, you’ll be able to benefit from their in depth knowledge and know that your books are being taken care of.
When your books are messy.
If your books are unorganized, you could be making costly mistakes for your business. Things like missing revenue, unpaid invoices, and tax deductions all directly impact your business’ revenue. Having well kept books also ensures that you can pull correct reports—which help you to make data driven decisions about your business.
The decision to hire an accountant depends on where you are in your business, but remember—accountants exist to help you keep track of (and save) your business’ money. If you feel like you’re in over your head, it may be time to hire someone to tackle your bookkeeping for you.
FAQs:
1. What risks come with being your own accountant?
Common risks include incorrect data entry, missed deductions, overlooked revenue, unpaid invoices, and underestimating tax bills.
2. How does having incorrect books impact a business?
Incorrect books can lead to unreliable reporting, hindering your ability to make informed business decisions based on accurate data.
3. When is it time to hire an accountant?
Consider hiring an accountant when you lack time to manage your books, feel uncertain about bookkeeping tasks, or find your business’s financial records are messy and disorganized.
4. Why should I delegate bookkeeping tasks to an accountant?
Delegating to an accountant ensures that detailed bookkeeping is handled quickly and correctly, freeing up your time to focus on essential aspects of growing your business.
5. How can an accountant help if I don’t have much knowledge about bookkeeping or taxes?
An accountant brings in-depth knowledge to manage your books effectively, providing expertise in navigating complex aspects of business taxes and bookkeeping.
