DIY Bookkeeping—What Could Possibly Go Wrong?
By Erline R
Many business owners and entrepreneurs start out doing their books themselves. The business may not seem that complicated in the early days, finances are not that difficult to keep track of, and there simply may not be any funding available to hire a bookkeeper, so it makes a certain amount of sense. However, it may surprise you to find out that as soon as you can, even before you start paying yourself, you should hire and pay for a part time bookkeeper. Here’s why.
Research shows that about 58% of business owners view bookkeeping as a chore with many ranking it as their least favorite task. The more hours they work at it, the more draining it becomes, and the more likely the business owner is to commit errors. One of the major pitfalls of DIY bookkeeping is that it creates blind spots. Line items, such as expenses, often get miscategorized, income is incorrectly or inconsistently entered, and owners often make decisions based on the financial information they have on hand that may be incomplete or inaccurate. So, what’s the harm in a few inconsistencies? They can lead to leaving money on the table through missed deductions, cash-flow confusion and a lot of stress in getting your books ready for your accountant or if you are doing your taxes yourself.
Why would business owners subject themselves to all this mental torture? A short while ago I was speaking at a technology organization event and was introduced to a young entrepreneur I’ll call Ron. Ron was very proud that he was handling all his books himself while running a fledgling AI technology company. I told him that he must really love working on his books to spend so much time on them. Not surprisingly he told me he hated doing his books, but he didn’t want to give up control of his finances, plus money spent on a bookkeeper could be used to continue to grow his business. My response was something Ron never expected. “It’s great that you hate doing your books,” I said. “Your passion is AI. Would you hire an AI expert to do your books?” “Of course not,” he replied. “Well, that’s exactly what you did by doing the work yourself. Hiring an expert bookkeeper doesn’t mean losing control, it means getting the clarity you need to run your business with confidence. If you really want to grow your business, think of a bookkeeper not as an expense but as an investment in future growth, one that frees you up to do what you love.” Ron was stunned. “I’never thought about it like that before,” he admitted.
Because many owners think of bookkeeping as a “cost” rather than “investment” and as part of the burden of ownership, they continue to DIY, losing out on the benefits of gaining clarity from confusion, and possibly hindering their companies from experiencing greater growth. At the same time, they are preventing themselves from doing more of what they enjoy—what led them to start their businesses in the first place.
DIY bookkeeping is not for the faint of heart. It can result in any or all of the following that can create roadblocks to growth or even cause bankruptcies:
- Non-compliance with changing IRA regulations you didn’t know about resulting in regulatory penalties
- Miscategorized expenses, commingling personal and business finances, unreconciled accounts and missed discrepancies, any of which can trigger an audit
- Difficulty proving deductions due to missing receipts which can increase your tax burden
- Inconsistent records that can be interpreted as fraud in an audit
Other common DIY bookkeeping errors include:
- Guessing classifications and tax deductions
- Overlooking tax deductions
- Missing filing deadlines
DIY can lead to books that are not up to date, which can lead to more errors over time, extensive, high priced accountant tax reconciliation, potential audits and the possible loss of hundreds of thousands of dollars falling through the cracks.
Bookkeeping is like a road map of your business. The most qualified person to interpret it is your bookkeeper. At Rize Advisory our Profit First Bookkeepers will make certain you know where your money is today, and where it needs to be tomorrow. Our services include:
- Bookkeeping
- Reconciliations
- Payroll coordination
- Tax-ready reports
- QuickBooks Online Setup & Cleanup
- Monthly Reconciliations & Transactional Reviews
- Accounts Receivable & Payable Oversight
- Payroll & 1099/W-2 Management Support
- Monthly Financial Reports and Insights
You’ll have clean, accurate, and timely books delivered every month. And we’re virtual, so we can be anywhere that you are. If you’re tired of spending too much time doing something you really don’t like and getting results that you’re not 100% confident in, stop DIY and start getting information you can rely on. Turn confusion into clarity and save more money every month. At Rize Advisory we say, Do What You Love, Outsource the Rest and Rise!
For a Free Consultation, Call 855-683-2002.
Or email at: info@rizeadvisory.com
