Why You SHOULDN’T Do Your Own Bookkeeping
Running your own business is like being a one-person army. You’ve got to monitor your own inventory, do your own marketing, service customers on your own, and *gasp* do your own bookkeeping.
Here’s the thing, though. Unless you’ve got a solid background in bookkeeping, you should probably leave that last bit to seasoned professionals.
Sure, there are lots of bookkeeping software packages available online that might convince you otherwise. You know the sort. They all have the same marketing pitch: download our software and save time and money by doing your own bookkeeping!
Except that’s not exactly true for most people. Here are just a few pitfalls that come with DIY Bookkeeping.
The “Save Time” Fallacy
Unless you already know your way around bookkeeping software, navigating even the most popular one can be difficult from the beginning. First, you’d have to figure out which one suits your needs best. Then, you’d have to master its workings, which could take a while, they all have a steeper learning curve than you’d expect.
Do you really want to take the gamble on trial and error with BOOKKEEPING? Of course not. You could use that time to do what you do best – focusing on growing your business instead of letting the paperwork take up your time.
Tax Accuracy and Compliance Risks
Are you well-versed in the Tax Office’s business compliance requirements? Do you know how to check that the BAS is accurate? Have you got your ducks in a row for the next important tax deadline?
If you answered “yes” to all the above, good for you. (Also, what on Earth are you doing here, mate?) Otherwise, you would be in over your head if you insist on going your own way.
It’s important to realise that while most bookkeeping software packages will do a BAS report for you, it’s based on what you put into the system, so it’s not guaranteed to be correct. A good BAS Agent knows what to check for to make sure things are right before it gets lodged with the ATO.
There’s a reason why so many flunk their accounting subjects in uni. Accurate bookkeeping is hard, and Tax Office requirements can change at any time without prior notice. Furthermore, getting it wrong in the real world can lead to expensive consequences, which brings us to….
As a small business owner, you literally can’t afford to make mistakes with bookkeeping. It’s all too easy to pay too much tax, miscalculate your figures, or inadvertently leave out important information if you haven’t received proper training. Miscalculating your obligations can even end up hitting you in the pocket hard. Ouch.
Even the latest software package is no substitute for the knowledge required to avoid such costly errors. So, you wouldn’t really be saving money relying on that would you?
Generally, these errors will then be picked up by your tax agent when they do your tax return. But tax returns are only done once a year, and normally many months after the end of financial year so it’s harder to fix a lot of these mistakes. Finally, tax agents charge four to six times more than a bookkeeper per hour, so that mistake can cost much more than if you had hired a bookkeeper in the first place.
Granted, engaging a bookkeeper won’t come for free. But when you consider the benefits of having an expert on board to deal with all the complications of proper bookkeeping and reporting, NOT hiring one and going your own way might even be more expensive.
Besides, you can use all that extra time to get more customers, improve your product or service, or simply spend more time with your family.
We can help you see how to save both time and money with your bookkeeping (even if you want to do the day-to-day stuff yourself). CONTACT US today for a free 30min chat.