Small business bookkeeping is sometimes a contentious subject, with business owners digging in hard to set up camp on their own chosen side. Some swear by staff help, others love the ease of contracting with an outside service. Still, there are those who only want to handle it themselves. 

There are definite pros and cons for each. And within each one, a range of responsibilities, inherent to that particular approach. Whatever your chosen bookkeeping path, it’s clear that great bookkeeping is essential for professional success. It’s also clear there is a great deal of misunderstanding surrounding the subject. Let’s look at 5 small business bookkeeping myths that often trip up business owners and how to approach them instead. 

Myth #1 Bookkeeping is Just Data Entry

To be sure, there is a fair amount of data entry involved in the bookkeeping process. If you’re doing it the old-fashioned way, with ledgers and notebooks, you’ll be writing down a lot of information each day. If you’re using software, it will save you a lot of time but still require you to enter certain information and go over your reports regularly. 

But bookkeeping isn’t just entering information, it’s a lot more. It involves keeping track of and reconciling bank accounts, organizing and filing receipts and invoices, tracking expenses and payroll, understanding cash flow, credit and debt, following up with customers, partners and vendors to go over payments, verifying costs, fixing accounting errors, preparing you for business taxes, understanding capital, preparing you for an audit if necessary, and doing an analysis of detailed financial statements and reports to ensure overall financial health.. 

Proper bookkeeping can mean the difference between a business that loses money, is prone to audits, and wanders aimlessly and one with a clear vision, well-managed finances, and a structured path toward growth. 

Myth #2 Bookkeeping is Expensive

Another myth that often keeps business owners frantically trying to manage their own bookkeeping is the idea that bookkeepers are expensive. With an annual average between $30,000 and $60,000 for in-house bookkeepers, the truth is more reasonable. Beyond this, many small businesses, especially when starting out, don’t need full-time bookkeepers and would do just fine with part-time help. 

When it comes to outsourcing, you get to pay for exactly the services or time you need. Bookkeeping service providers usually offer a range of options to meet the varying needs and budgets of their clients. So you get top-notch industry experience and the support you need without having to go through the hiring process or setting up an office. 

Myth #3 I’m Giving Up Too Much Control

A common belief is that outsourcing to a professional bookkeeping service means losing control of your business and finances. This couldn’t be further from the truth. Professional bookkeeping firms stake the success of their business in being trustworthy, consistent, organized, transparent, and good communicators. 

They take data safety seriously and use a host of technologies and best practices to ensure your company’s info is protected. Bookkeeping service providers work with you to make the most of your financial management, helping you make more informed decisions and allowing you to focus on core management activities instead of using up time on bookkeeping activities. If anything, bookkeepers enable and empower you to gain greater control with more time, a clear vision, and more focused financial choices that lead to business success.

Myth #4 You Only Need Bookkeeping Help During Tax Time

It’s true that bookkeepers can be lifesavers during tax season, especially for small business owners who already have a lot to deal with. But if you neglect taking advantage of the organization, expertise, analysis, and advice provided by great bookkeepers throughout the year, tax time is likely to be fraught with problems, missing paperwork and records, and a lot of stress. 

Having a bookkeeper throughout the year means your books are maintained accurately every single day. Your records are always in order. Accounting mistakes are caught early and fixed quickly, and you ensure that taxes are paid accurately and on time. Bookkeepers also help you find the maximum deductions so you end up saving money. 

Additionally, gearing your financial focus simply around tax season is a bad idea. Your bookkeeper’s knowledge is invaluable. You’ll be able to partner with them to put your financial reports to better use, helping you streamline spending, hire more strategically, reorganize under-performing departments, and invest with greater clarity. 

Myth #5: Bookkeeping is Simple Work; I Can Handle it Myself

It is occasionally true that there are business owners with bookkeeping training who successfully manage their own books. But this is rare and also applies mainly to companies where the business owners themselves are the only employee, or one of only a few staff members. 

Most of the time, business owners find that bookkeeping takes more time and focus than they’d like to be spending. They find that their attention is pulled away from management tasks toward bookkeeping needs. They also discover that bookkeeping is a lot more than data entry and keeping a box of receipts. It involves consistent follow-through, good organization, analytical skills, a grasp of tax laws and details, and a desire to understand the nuances of financial data. 

Contracting a bookkeeper means you get to lead your company instead of being stuck catching up on the books. It means you won’t miss a beat, not only during tax time, but every day. They’ll help you avoid repeat audits and use your financial data to grow your business. Bookkeepers are partners in helping you develop your dream further. While bookkeeping might seem dry and boring to you. To them, it’s an opportunity to help business owners achieve more of their goals. 

Sound Accounts is your ideal bookkeeping specialist. We help businesses reach the next level of their development with comprehensive bookkeeping support. Contact us today to get started.

For quick answers to bookkeeping questions, check out our FAQs below. 

FAQ

Why is bookkeeping so important for small businesses?

Bookkeeping ensures organized records, prepares you for taxes, helps you avoid mistakes and penalties, enables you to make better financial decisions, gives you a clear view of performance and all aspects of your business, and equips you with the knowledge you need to move forward more objectively. 

Is hiring a professional bookkeeper right for me?

Most of the time, yes. Professional bookkeepers take care of managing your books and financial reports, allowing you to focus on management and leadership concerns. This lowers your stress, frees up time, helps you avoid costly mistakes and keeps you informed on performance and areas of opportunity. 

Which is better for me, an in-house or outsourced bookkeeper?

There are several things to consider: the amount of work needed, your budget, your ability to outfit a new office and pay benefits, the desire to have someone down the hall or across town and much more. 

In-house bookkeepers can be great, but outsourcing is often the right move. You get all the upsides of a dedicated and experienced bookkeeper without having to pay a full salary, benefits or preparing an office with all its expenses. Bookkeeping service providers already have their own equipment and technology and establish their reputation on providing consistent service and a trustworthy relationship.