If you are like many small business owners that do their own bookkeeping, then you may never have considered the hidden costs that come with it. Bookkeeping is often seen as a “necessary evil” and something that can be easily outsourced to an expert.

Certainly, there are times when handling your own books or having a dedicated staff member to do so makes sense, especially if you only have a few employees, if it’s just you or you have plenty of time to focus on it and feel comfortable with accounting software and financial analysis. However, if your business is growing or you have several factors to consider, like more employees, several departments, or you need greater clarity and understanding from your financial reports so you can make more informed decisions, you may want to consider outsourcing to an experienced accountant. Here are 7 costs business owners sometimes forget to factor in when deciding to keep their small business bookkeeping in-house. 

4 Costs of Handling it Yourself

Time & Freedom

These two go hand in hand, time and freedom. One leads to the other. If you’re taking care of your business bookkeeping on your own, this is especially true. You work hard to manage your resources, your people, and your products and services, and of course, your customer interactions.

This often throws accounting to the back burner, the end of the day, or pieced out here and there between other things. This means that one of the most vital processes to your long-term success is never given the attention it deserves. Active, consistent accounting not only keeps your finances in order, but helps you make better decisions for the future of your company. And don’t forget, more time spent on accounting for you means less time for every other part of your business.

Also, if you are pouring a lot of time into it, that not only means less time for other management activities, but less personal freedom. Having to fit in accounting on top of everything else can cut into meal times, take you away from family gatherings and events, and steal opportunities for engaging in the activities you love.

Accuracy

Accuracy is important in every aspect of your business, but especially in your finances. Maintaining proper records of all expenses, handling payroll, and paying your taxes on time and properly, is something that can’t be taken lightly.

If you’re new to bookkeeping, aren’t comfortable with it, or too tired to fully engage with it, mistakes become more common. Errors in finances lead to missed tax savings, audits, missed opportunities for growth and investment, and poor resource management.

Software

Accounting software is phenomenal these days. With time-tested favorites like QuickBooks or newer ones like Xero, there are several programs offering comprehensive accounting management and a range of tools that cater to every kind of business. These programs enable you to manage cash flow, business expenses, payroll taxes, balance sheets, and other accounting tasks required of you as the business owner. 

It’s important, though, that you take both your business finances and learning your accounting software seriously. Make time to learn your program completely and familiarize yourself with every feature that might save you time and money, and allow you greater organization. Accounting programs make life a lot easier, but only if you dedicate yourself to becoming a pro with them. Software can help you run your business better, but it takes time to learn and money to purchase.

Stress

If you’re incredibly busy already, or don’t possess a natural affinity for bookkeeping, the next ingredient in the pot may be more stress, a lot more. Managing your finances and reports can be frustrating and confusing, especially when it’s just you taking it on.

Added stress means more accounting mistakes, less patience with employees, customers and family members. Stress bleeds into home life, decreases overall health, disrupts sleep and diminishes creative thought.

3 Costs of Hiring an Employee to Handle Bookkeeping

Wages & Benefits

Hiring a full-time staff member to manage your bookkeeping can bring you peace of mind as they can solve many problems for you. Still, this means that you must consider the cost of wages, either full or part-time and benefits.

Keeping a staff member, or a few of them, to take care of accounting often means offering a solid annual salary and benefits for them and their family. As you know, the cost of benefits adds up quickly.

Overhead: Equipment & Space

Keeping a bookkeeper in-house means dedicating a space for them. This means either carving out space in an existing room, renovating, or adding onto your structures. Your accountant needs a quiet, solitary space, where they can focus on making sense of your finances, organizing and analyzing reports, and keep vital documents and data safe from intrusion and theft. Creating this space is a must. But it will take an investment of both money and proper planning.

Whether you’re doing the books on your own or hiring an employee for it, you’ll need equipment like fast computers, network hardware, copiers, fax machines, phones, printers, and software and cloud-based applications to manage everything with relative ease. All these items take a financial investment, sometimes a considerable one.

Training

Bookkeeping is not a simple task, especially for small business owners. After all, most of us didn’t go to school to learn how. That’s why it’s important to train your staff, yourself, or hire someone who is familiar with the process. One hidden cost of doing your own bookkeeping is this training.

If you’re new to bookkeeping, you’ll need to learn the basics of accounting and keep up on changes in tax laws. You or your bookkeeper needs to take advantage of continuing education courses to stay updated on current developments in the field. Education courses and in-house training can be expensive and take time away from other business matters.

Conclusion

Doing your own accounting might be a good idea for tiny businesses, those needing to save money up front, and those who enjoy learning new skills and are fully committed to remaining consistent with their financial management. But handling these things yourself or hiring an employee means a considerable investment of time, money, and focus. This can steal from other leadership and personal opportunities and cost more than you might think.

Often, a great solution to this is outsourcing your accounting and bookkeeping work to an outside accountant or bookkeeping service. Professional accountants have years of experience, know tax code inside and out, can navigate and decipher complex reports, and work with you to make more strategic financial decisions.

Outsourcing your bookkeeping is an investment. But you won’t have to carve out space in your building, purchase new equipment, or pay for training and benefits. You’ll get a top-notch financial professional to watch over your books so you can relax and focus on everything else that matters to you.

Sound Accounts is your one-stop small business bookkeeping shop. We help business owners from every sector succeed by managing their books, making sense of their budget and reports, and presenting them with ways to improve their already strong business. Contact us today to get started.

For answers to bookkeeping questions, see our FAQs below.

FAQ

Is handling my bookkeeping in-house a good idea?

It is sometimes. If it’s just you or you only have a couple of employees, taking care of the books yourself can save you time and help you learn a valuable skill. It also forces you to focus on key financial drivers you may have been missing. However, it is an investment that is often remedied by contracting a professional accountant.

What are some costs of in-house bookkeeping?

Depending on whether you do it yourself or hire an employee, these costs include the time it takes to learn accounting programs, employee training, renovations or building a dedicated office, new equipment and software, employee wages and benefits and the sacrifice of your personal time and freedom.

When is it a good idea to outsource my bookkeeping?

If your business is growing or you have more than enough in your budget to pay for the service, outsourcing your bookkeeping work gives you a dedicated professional with years of experience, who will manage every aspect of your books, taxes, and help you make sense of your financial reports.

It is a good idea anytime you want to free up your time to focus on other aspects of business management, find that your business and finances are becoming more complex, or simply want someone who knows accounting inside and out to handle things for you so you don’t have to worry.