As a business owner, your decisions can mean the difference between financial success or stress and failure. In the past few years – especially since the onset of the COVID-19 pandemic – there have been two major trends growing for small and medium businesses: outsourcing services and DIY with online software. But which one is right for you?
DIY Accounting
Do-it-yourself accounting tools like QuickBooks and Xero have been around for years. With more businesses going online and many physical offices being closed, it makes sense to DIY, so you don’t have to worry about the outside world. But can you get the information you need from DIY accounting?
Accounting software loves to market how easy it is to use. It seems your 7-year-old can keep the books, create financial statements, and file your income taxes if they have the right software. Unfortunately, it’s not always that simple.
An application like QuickBooks Online is a whole lot of programming laid over the top of some fundamental accounting rules. This allows you to fill in the blanks and have your numbers put into categories. The problem often comes in when there’s a grey area or a more complicated transaction.
Remember the old adage “garbage in, garbage out”? If you’re not sure how a transaction should be entered, it’s very easy to put it in the wrong place. When that happens, the software has no choice but to trust you and put those numbers where they don’t belong. The same is true if you enter the wrong number by mistake. And, while wrong numbers may not sound scary, they can lead to bounced checks, bank fees, IRS audits, and a whole lot of misinformed decisions that damage your business.
Outsourcing
Another big trend is outsourcing professional services to an expert or a team of experts. When you hire an outside firm to handle your bookkeeping and accounting, you free yourself to focus on what you do best. It’s a very economical way to buy back your time so you can build your business without the stress and struggle of figuring out your own finances.
Of course, working with an accounting professional is about much more than time savings. Accounting is a complex subject, and it takes an expert to do it right. While the simplest bookkeeping tasks can be done easily enough by a do-it-yourselfer, a professional accountant will ensure that all transactions are recorded correctly and can provide you with deep insights into your financial situation. They can help you understand the impact of your decisions, track cash flow, and maximize your profitability.
Think back to the last time you were feeling under the weather. If it was something small, you might have just waited it out. If you were really sick, you may have looked up your symptoms on the internet, but how far did that get you? It probably gave you a few ideas of what could be wrong and at least one terrifying illness you were sure you’d contracted, right? To find the real answer, you needed to go to the doctor and have them check you out for real.
Working with an accounting firm is the best way to keep your business financially healthy. It helps you make financially healthy choices and provides you with regular “check-ups” from someone who knows the ins and outs of business financials.
The Right Choice For Your Company
There are a time and a place for DIY and professional accounting. You need to choose the right solution for your unique needs.
If you have a very small business as a solopreneur or freelancer, a DIY solution may be a good option. Apps like QuickBooks Online or even Wave may be sufficient for you to handle your own bookkeeping and accounting, especially if you have minimal transactions per month and a simple business model.
As your business grows in size and complexity, however, working with a professional accounting firm becomes a no-brainer. You’ll have peace of mind knowing that your accounting is done right, and you’ll free your time so you can focus on your business and enjoy the fruits of your labor instead of pulling nights and weekends crunching numbers and shuffling receipts.
Even if your business is still small, it can pay off to work with an accounting firm. This is especially true if you keep inventory, work in multiple states (even online), or run payroll for yourself or your employees. All of these situations can cause a lot of trouble if you’re not 100% sure of what you’re doing.
Are You Missing Out?
If you’re doing your own accounting and should be working with a professional firm, you’re missing out on a lot of opportunities. The time you’re spending on your books could be used to generate more new income than you think you’re saving by going the DIY route. It’s taking up not only your time but also your mental space. This opportunity cost is often overlooked when business owners weigh their options.
What if all those accounting app ads make you feel like you’re missing out on the wonders of technology? Not to worry. You can still benefit from tech tools. At Pooley Accounting Services, we use QuickBooks Online to manage our client’s books so we can handle the accounting on our end, and they can access everything they need on theirs. We also help them set up and use apps to do things like track business mileage, capture receipts, etc. which makes it much easier for them to get us all the info we need to handle their accounting efficiently.
Ready to see how you’d benefit from working with a professional accounting firm? Reach out today and schedule your free consultation call. We’ll discuss the details of your business and help you find the perfect solution. Give us a call today at (314)-260-7808.
