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Should I Do Bookkeeping Myself for My Business?

May 13, 2024
Should I Do Bookkeeping Myself for My Business?

Some business owners dedicate very low budgets to accounting and related supporting activities in pursuit of lowering the total cost of running their companies. This decision may cause them to attempt to do business bookkeeping on their own to reduce expenses. While, initially, this may make good fiscal sense, there are many drawbacks that owners forget to consider.

Why is bookkeeping important?

Bookkeeping is essential because it keeps accurate records of business financial performance. While it may sound simple, bookkeeping is a complex and tedious job requiring meticulous attention to detail and extensive knowledge of accounting rules and tax regulations. At the end of the day, company’s financial records are the backbone of corporate tax filings and overall decision-making.

It involves more than entering numbers into an Excel spreadsheet or online record-keeping platforms, such as Wave. In fact, the bookkeeping entails the following tasks:

  1. Reconciles all company’s active accounts at the end of the month: Reconciled accounts are when everything is current for spending analysis. It tells the owner where their finances are being allocated and can indicate areas where spending can be reduced or needs to be increased. Importantly, however, you can rest assured that reconciled accounts have the correct balances as they are matched to the externally-sourced documents.
  2. Records and pays bills: Bookkeepers are familiar with cash flow management. They record and pay bills only when due and ensure they are correctly classified, paid on time, and marked as paid.
  3. Generates and sends invoices: Bookkeepers generate invoices to those owing money, follow up on receivables, and record payments when they are received. This task is valuable because it ensures your business receives outstanding funds, and your revenues are current.
  4. Oversees cash balances: Bookkeepers create detailed records of your business’s cash balance. This is critical knowledge for every business owner, as it shows if the business has enough cash to maintain operations.
  5. Processes and reconciles payroll: This area involves following government regulations, calculating remittances, facilitating expense reimbursements, and managing health benefits and other labor-related costs.
  6. Tracks, files, and pays sales tax: This ensures that sales tax returns are accurate and that a business does not pay too much (or too little) in GST, HST, PST, or QST. Sales taxes could be a major source of financial risk to organizations if they are calculated or remitted incorrectly, and the CRA is extremely strict about the rules.
  7. Generates reports: Bookkeeping provides valuable and timely information on financial performance, cash flow, ability to pay obligations, and generate profit. Incorrectly compiled financial data could result in suboptimal or even detrimental business decisions.

Bookkeeping services assist businesses with tracking vast amounts of financial information, remaining current, and anticipating future expenses. While it is tempting to tackle this area yourself as a business owner, there are several important technical factors to consider.

As a rule of thumb, you can ask yourself a question: did you want to start a business as a bookkeeper, or would you rather outsource bookkeeping to somebody who actually enjoys doing it while you can focus on what you enjoy doing more? You also must be mindful of what happens when you experience growth and how you will keep up with these ever-increasing tasks.

Is it a good idea to do my company’s bookkeeping?

Sometimes, delegating a task makes more sense than doing it yourself. Owners must consider the time it will take to run a business and contrast it to the details and time it takes to do the bookkeeping, especially to do it right. Business owners can quickly become overwhelmed with the steep learning curve associated with bookkeeping responsibilities. Still, there might be some merit in doing it yourself, or DIY, when it comes to bookkeeping.

Who Might Consider DIY Bookkeeping?

There are some reasons for business owners to do their own bookkeeping. The following are some of the rationalizations we observed when clients came to ask seeking our help as they couldn’t handle the workload anymore:

  • Love for bookkeeping: Some owners simply love bookkeeping, especially those with an accounting background. They don’t mind spending time inputting receipts, reconciling credit card accounts, calculating amortization, and making adjustment entries. If you like what you do, you don’t feel like it’s work, and if you have time for it, then perhaps doing your own books is not such a bad idea. However, for most of our clients, even hearing the words’ Trial Balance’ increases their heart rates.
  • Need to know it all: Some people like to know everything in their business and must have a firm grip on every single nuance of running a business. Accounting records are not an exception to that rule. Such business owners might have a general difficulty delegating. However, very often, such clients discovered that their workload was becoming increasingly overwhelming due to the neverending stream of business tasks that needed attention. As a result, bookkeeping was taking the back seat, which resulted in a lot of stress and additional costs as catching up on the bookkeeping work is more difficult and time-consuming than keeping the books clean and current.
  • Cost saving: Having a bookkeeper costs your business money; there is no doubt about that. As such, hiring someone to do bookkeeping may not make sense if the funds are low. However, you must prepare yourself to allocate regular time to reconciling bank statements, paying expenses, and all other financial tasks associated with bookkeeping. That, in turn, will take your time away from much more valuable endeavors like serving clients, promoting your business, and developing your team. In the end, it is true that doing bookkeeping yourself might reduce the immediate fees, but at what cost?
  • Bookkeeping done your way: Some clients prefer classifying certain things a certain way because it is ‘easier for them to understand it.’ While there might be some logic to that, financial and tax reporting is perhaps one of the last places where business owners should be creative. Misclassifying assets as expenses or personal withdrawals as business costs, among other frequent issues, could have material consequences, both on the corporate and personal sides. At AZ Accounting, we understand the importance of clean and accurate regulatory disclosure, as well as reports that would add value to the business owners and offer both.

The Benefits of Hiring a Professional

While being in control of your business bookkeeping and saving money sounds appealing, it isn’t always practical and, in some cases, could even end up costing more. The reasons to bring in a professional to help you with your bookkeeping services include the following:

  • Saves time: Bookkeeping has a steep learning curve and takes time to do right. Those who take the DIY route, instead of being business owners, become business bookkeepers and neglect their companies. Assigning a professional bookkeeper to focus on bookkeeping frees the owner’s time for more critical business tasks.
  • Scalable bookkeeping: Bookkeepers grow as your business expands. At a business’s inception, you may only require a quarterly reconciliation of expenses and financial transactions. As you grow, so will your transactions and accounting complexity. Bookkeepers know what to anticipate, understand legal and governmental obligations, and can help you manage your expenses better.
  • Know where you are financially: Owners can see cloud-based bookkeeping at any time. You can view your company’s profitability, amounts owed, how much is in your bank account, expenses, and where your money is allocated almost in real-time.
  • Better organization: You will not have to contend with piles of paperwork since your bookkeeper will be handling all that for you. Furthermore, due to the modern processes and technology that we use at AZ Accounting, we completely eliminated paper from our work, which made our accounting procedures streamlined and convenient.
  • Have someone else handle the details: As mentioned, bookkeepers know all industry, government, and legal requirements when it comes to your financial reporting. In the meantime, business owners can be unaware of some regulations, and things can get missed. Furthermore, as business owners need to juggle several responsibilities on every given day, things can get overlooked. With our dedicated bookkeeping professional taking care of your books, your records will always be accurate and timely.
  • Ensures obligations are met: Bookkeepers are familiar with the various regulations. These regulations are continually changing, and it is challenging to keep up. Bookkeepers are knowledgeable in these areas, ensuring no financial errors exist and obligations are met.
  • Reduces errors and catches fraud: Owners may not have a lot of dedicated time to examine finances, especially in the great detail they deserve. Double charges or fraud can easily get overlooked, costing your company money. Bookkeepers provide detailed attention to your finances and can detect errors before they become major issues.
  • Assist with audits and compliance: Bookkeepers work diligently with auditors for internal and external audits, including CRA reviews. They must provide detailed, organized information and ensure your company remains fully compliant.

Are you looking for a professional business bookkeeper?

If you have decided that taking a DIY approach to bookkeeping isn’t for you, consider AZ Accounting to address your company’s needs. Our business bookkeepers provide flat-rate services tailored to your budget and can handle all your daily accounting tasks.

Our skilled professionals are experienced in helping businesses of all sizes, from early-stage startups to medium-sized businesses, always with a personal touch. We are well-designed for entrepreneurs who want to automate their accounting with the latest technology, large organizations looking for a scalable addition to their existing accounting or finance teams, and all businesses in between. Furthermore, all our bookkeepers work side by side with seasoned accountants who ensure that the books are done not only timely but also correctly and with taxes and financial reporting in mind.

AZ Accounting holds the strictest protocols when vetting our experts, which include assessment testing, strict HR protocols, technical account testing, reference checks, virtual meetings, continuous training, quality control, and credit and criminal background checks, thus ensuring our clients receive the highest level of service and information security.

As a virtual accounting firm, we are where you are. All our clients enjoy a personalized approach of working with a dedicated account manager who will tailor their communication and work styles to your unique business needs. If you are ready to take your business to the next level and leave your accounting to professionals, let’s connect here and discuss how we can help your business.

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