Many business owners are choosing to hire an accountant instead of doing their own books. This can be for several reasons. But should you hire someone or handle it on your own? The answer often depends on what kind of business you’re in and how much work you’re willing to put into it. Factors like the size of your business, the number of employees, and the complexity of internal logistics might all affect your decision to either take on bookkeeping yourself or hire it out to a professional. Let’s look more closely at the pros and cons of each one and equip you with the information you need to make the right choice.
Should you hire an accountant or do your own books?
This decision is unique to each individual and involves several factors. How big is your business? How many employees do you have? Are you already finding it difficult to keep track of your books or does it come naturally? Are you comfortable with accounting software or do you feel that a real set of trained eyes would help you make better financial decisions? Is spending time on accounting worth it to you, if you even have the time? Or would you rather use that time to focus on other parts of your business?
Why people hire accountants
The main reason companies hire accountants is because they want to avoid doing their own books. Some business owners are too busy with other tasks like marketing, sales, and operations to do their own bookkeeping, so they hire someone else to take care of it for them—promoting efficiency and accuracy in the process.
Another reason many owners hire an accountant is that the accountant will make sure that your books are up-to-date and account for all the financial aspects of your business. They’ll help reduce errors by working closely with you throughout the bookkeeping process—helping you develop a better understanding of your company’s finances and accounting systems. Accountants keep your taxes clean and up to date, spot opportunities for better resource management, and free you up to focus on expansion, customer satisfaction, and product development.
If you’re a business with a growing number of employees, or you’re managing a lot of resources, hiring an accountant can help you keep your finances organized. Still, there is sometimes a fine line here. If you have less than 10 employees, there may not be much work for your accountant to do. However, even if you are a smaller company, you may not enjoy handling your own books, feel overwhelmed, or simply want to focus that energy on something else. In this case, why not hire a professional if you can afford it?
Pros and cons of hiring an accountant
Partnering with an accountant is often a great option for many businesses. They will handle all the books for your company, uncover problems early on, and help you pursue new opportunities. Their expertise includes taxes, regulatory reporting, financial statements, internal ledgers, and more. Bookkeeping programs help you with some of this, but having a fully engaged individual to watch over these key financial areas can often make the difference between consistent success and just getting by.
Another benefit of hiring an expert is that they’ll likely have a broader scope of knowledge to explore. Accountants have years of experience dealing with a multitude of businesses. They understand the hidden rules of taxes, know how to pick out seemingly insignificant details buried within financial reports, and help you put together a more focused plan for the weeks and months to come.
The primary drawback is that hiring someone requires a financial investment. Professional services like those offered by CPAs are worth it, but can sometimes be more than small business owners can afford early on.
Why some people choose to do their own books
Doing your own books is a great way to save money. It’s also a wonderful opportunity to learn a new skill, gain a better understanding of your business and get used to using accounting programs. If your business consists only of you or perhaps a couple of employees, learning how to maintain your books can be a significant step toward taking more control over your success.
Some people just like having the control within their own hands. Certain business owners simply prefer to manage most of what they do, including their bookkeeping. This is fine as long as you do your research, get the right tools, keep up with it daily, study your reports, keep detailed records, and ensure you are complying thoroughly with all tax laws and business fees.
Why sole proprietors often do their own books
Many sole proprietors agree that it’s worth it to do their own books and deal with the hassle simply because they have the time and want the control.
If they are diligent, sole proprietors can keep track of every dollar they make and spend and know exactly what’s going on in their business. When your business model is relatively straight-forward, and doesn’t involve complicated financial management, multiple overlapping departments, or employee payroll and benefits, doing the books yourself makes sense. Plus, this will allow you to see how much time it takes to handle your own books. This will help you better determine whether continuing on this path or pursuing professional accounting help is the best choice going forward.
Some difficulties with handling your own books
Mistakes: If your bookkeeping isn’t handled correctly, it could cause a financial blow to your business.
Time and Confusion: It could be more of a hassle than you originally thought, eating up time you could be using on other tasks. You may also not enjoy it enough to take it seriously and begin to miss key details within your reports.
Tax Penalties: You could miss paying taxes on time or do so incorrectly.
Energy and Focus: With everything on your plate, you may not have the energy left to spot mistakes or glean vital information from financial reports to make more strategic decisions about the growth of your business.
If you are going to manage your own accounting, make sure you have the right tools in place. Subscribe to a quality program like QuickBooks Online or Xero, or one of several others. Learn all its features and study your reports daily. Even if you;re doing it yourself, if problems arise or things get too confusing, reach out for professional help.
Conclusion
There are pros and cons to each choice. Learning how to do your own books is an important skill to master. It helps you be a more engaged and focused business owner, with an eye on the details and a better handle on what goes on behind the scenes and beneath the surface.
Hiring an accountant, whether they be in-house or outsourced, can free you up to focus on other things. They can spot errors early on, help you understand trends and patterns that either affect you negatively, or open doors toward growth, help you pay your taxes, keep you accountable to your own budget, and give you peace of mind knowing you have a partner who is looking out for you and your business.
Sound Accounts helps business owners manage their books with confidence and ease. We offer a range of accounting services to meet the varying needs of any business, letting you relax, breathe deep, and focus your attention on everything else.
For answers to accounting questions, see our frequently asked questions below.
FAQ
Why is doing the books important for me as a business owner?
Keeping up with your accounting each day is the only way for you to be successful in the long run. You’ll see where your resources are going, where you’re realizing the most profit, and which areas are leaking money. You’ll spot trends and have a clear view of where to go next. Not to mention paying your taxes correctly and on time.
Should I hire a professional or do my own books
This decision is different for each business owner. It depends on the size and complexity of your business, the number of employees you have, how comfortable you are with accounting software and spreadsheets, whether you have or can make the time each day to update financial data and study your reports, and other reasons. If you understand the importance of keeping up with your books, can navigate the software, have few employees, and are fully committed, you can manage your own books.
However, if you have a more complex business model, more employees, several accounts or departments, each with their own resources and expenditures, deal with a lot of vendors or partners, or simply don’t have the time, energy or patience to do your books, hiring a bookkeeper or accountant is the right choice. They will take the stress and worry off your plate, handle all accounting matters, spot troubled areas and trends and help you make more informed and strategic financial decisions.
As a sole proprietor, should I hire an accountant?
It isn’t always necessary to hire someone. You may well be able to handle your own bookkeeping if you have the time and desire to learn how to do it well. If your business is relatively straight-forward and you want to oversee your accounting, you can use quality software to help you manage it effectively. However, even if you are a sole proprietor, professional accounting services can often be a great choice for you. If it is an expenditure that you can afford and it saves you time and helps you stay current and make better choices, it may be worth outsourcing part-time for monthly help keeping your books.
What accounting program should I use?
QuickBooks Online is often the right choice for any business. With robust options, a range of features, well-organized reports, and solid customer support, they’ve been doing this for years and continue to improve. Other great options include Xero, Freshbooks, Netsuite, Sage and countless others. Each carries different features and varying levels of support. It is important to do your research first, and find the program that you’re comfortable with and provides everything you need.
