You’re where you are today because you’re talented and confident enough to take on challenges that others either won’t or simply aren’t capable of overcoming.
The irony is that what’s gotten you here; what helped you succeed as an entrepreneur up to this point, is what also gets you into trouble and stunts your business’ growth.
As hard as we try to scale and build around ourselves, we simply can’t grow an empire without delegating and finding other skilled people to join our mission. Businesses that want to serve more people need additional capacity to do so. You don’t have to delegate everything, but you certainly can’t do everything either.
One of the tasks that entrepreneurs have to determine whether to do themselves or outsource/hire for is bookkeeping. This article looks at the six biggest dangers of doing your own accounting and bookkeeping, which many business owners do before considering the risks.
1. Clerical Errors
“Audit” is a very scary word, and if you don’t have all of your ducks in a row, you definitely have reason to be scared. Many business owners believe that if they haven’t done something ethically wrong or committed a crime, an audit will go off without a hitch. However, simple clerical errors can look like fraud, and it won’t be easy to prove it’s not unless you have well organized records and enough know-how to give the IRS or agency everything they’re looking for.
2. Poor Scheduling
Schedule, what’s a schedule?
As our business grows, our time often goes to putting out the fire that requires our immediate attention. Even when we do try to schedule to prevent fires, tasks quickly get moved to the next hour, day, week, or even month. Before we know it, we’ve gone a couple of months without doing something simple that keeps getting pushed off – LIKE BOOKKEEPING!
If you aren’t able to schedule and stick to doing bookkeeping tasks religiously, you’re at risk of falling behind on recording and reconciling, which can quickly stack up and cause big problems for your business.
3. No Available Time
We’ve all heard the term “making time” for something, but what happens when there literally is no available time? This problem is much deeper than just poor scheduling or having a tendency to procrastinate. If you already don’t have enough time to dedicate to important parts of your business, how do you expect to “make time” for bookkeeping?
Just because you’re doing it yourself doesn’t mean there’s not a cost involved. Every hour of your time is valuable, and you should be able to attach a value to that time to help determine whether a task is better done yourself or delegated. If your time is worth $75/hour and you spend 40 minutes a day (5 days a week) on accounting and bookkeeping, you’re spending roughly $1,000 a month on bookkeeping. You need to be aware of this cost and understand that a professional or virtual team is likely to be more skilled in accounting, more efficient, and less expensive. Don’t forget about your own costs when deciding if you want to do your own bookkeeping. It’s not always inexpensive, and the likelihood of making mistakes should also be part of your decision.
Accounting and math are two of the most failed subjects in colleges for a reason – they’re hard! Bookkeepers and accountants study for years to hone their craft.
To do your own accounting, you need to have a firm grasp on accounting and how it needs to be done for your specific business.
6. Software Learning Curve
Whether you’re using a spreadsheet or a cloud accounting software like Xero or Quickbooks Online (Kahuna Accounting uses Xero), there are unique aspects of each. At Kahuna Accounting, each of our accountants have to take and pass a Xero certification course in order to help businesses with their bookkeeping on the platform. If trained bookkeepers and accountants need training to learn bookkeeping software — which they do, you need to consider diving deep into the software in order to use it properly.
Whether you decide to DIY or outsource, or maybe you’re somewhere stuck in the middle, Kahuna can explore your options with you and help you make the right decision. Contact us today to schedule a call with a Kahuna Accounting representative.