If you are a freelancer or run a home-based business there are compelling reasons to do your own bookkeeping. Many small business owners would rather outsource to an accountant. Often, they believe bookkeeping/accounting is too complex and time-consuming. Beyond having up-to-date, organized and compliant records of business finances, bookkeeping can give you insight you need to plan for growth. One thing is certain, if you do your own bookkeeping, you’ll really understand your business’s bottom line.
Following are 6 reasons you may want to consider doing bookkeeping yourself.
1) Bookkeeping is Easier Than You Think
Bookkeeping (and accounting) are not as difficult as you may think. Although accountants and bookkeepers are highly skilled, the advent of online bookkeeping software (like Flare) has made the process much easier for non-accountant and non-bookkeepers. As you go about the business of creating invoices, recording bills and payments, and categorizing expenses, the “accounting” happens in the background. With Flare, you can get started right away with little effort and no experience. Your accountant is better served, too. If you need them to step in at tax time or to help with complex bookkeeping issues, you can invite them to use your account. That way, your accountant will be able to more easily give advice or prepare your taxes. Furthermore, if you are not paying an accountant to do “data entry” you can then afford to use their higher value services, such as advising or financial planning.
2) It Saves Money
If you do your own bookkeeping you save money in several ways. First, if you use an all-in-one accounting system, it’s like using several applications at a time. You can ditch your invoicing software, budgeting and financial spreadsheets because they are part of the online bookkeeping system. Additionally, you pay less for bookkeeping services because you’ll do the bulk of it yourself. Finally, you’ll probably pay less for tax preparation services because your books are organized and in order and it will take your accountant or bookkeeper less time. Just give your accountant or bookkeeper access to Flare or print reports for them and you are done.
3) It Puts You in Control
Because you have a hands-on view of your business finances, you can take action in the present to prevent financial problems and plan for profit growth. If your accounting system has a financial dashboard, budgeting feature and reports, you can monitor your business’s financial performance in real-time. This is what we at Flare often call “financial visibility”. You can only fix problems if you can see them! When someone else does your bookkeeping for you, your business finances are a “black box”. Often, you only see inside that box at tax time and by then, it’s too late. When you do your own bookkeeping, the black box is opened. You can see your business’s financial position at a glance…any time you want.
4) You Become More Knowledgeable About Your Business Finances
By creating invoices, entering expenses and payments, and viewing financial metrics, you’ll quickly increase your understanding of your business’s finances. You’ll see income and expenses, cash flow, revenue peaks and valleys over the year, client value and more. The more you know about the details of your business, the easier it will become to operate efficiently or budget for financial growth.
5) You’ll Have to Do Some Anyway
If you are a micro-business owner, home-business operator or freelancer, it’s very likely you’ll have to do some financial tasks anyway. Typically, these include creating estimates, invoices, and tracking income and expenses. If you use accounting or bookkeeping software for small business, all of these frequent tasks are part of the package. The best thing that when you use these features, most of the bookkeeping happens automatically in the background.
6) You’ll Be Glad at Tax Time
At tax time, you’ll be very glad you did your own bookkeeping. You can rest assured that your business is tax compliant, records are accurate and complete, and all expenses are recorded so you can take maximum advantage of deductions.
Why do your own bookkeeping? Let us know in the comments below.