Accounting For Your Small Business: DIY
Posted On: 29/06/21 - 0

Thinking Of Doing Your Own Accounting For Your Small Business?

Accounting and bookkeeping, plays a critical role in the success of any business. Timely and accurate accounting keeps your business organized and tax compliant. Managing your business accounts on your own can be tempting for small business owners, especially in the earlier stages of a start-up when the cashflow is lean. But it isn’t advised as you may make mistakes that could cost you a lot of money in interest and penalties when it comes to the CRA. Plus, there could be additional mistakes made because you really are not aware of the financial health of your business when you make purchasing/expansion decisions that can have a negative impact on your business.  Here are some pros and cons of doing your own accounting for your small business.

If you are keen to look after your own bookkeeping and accounting for your small business, compare the pros and cons of each (DIY or hiring a pro). But before you weigh the pros and cons of doing your accounting, here are some questions that you need to ask yourself.

  • What is the growth forecast of your business?
  • How complex are your finances?
  • What can your business afford?
  • Are you knowledgeable and competent in this field to handle the books of accounts?
  • Do you have the right accounting tools?

Pros

Aware of Your Financial Status

When you do your own accounting, you are face-to-face with your business-related numbers all the time. You always remain ‘in the know’ about your financial status. Also, you can always make the necessary changes quickly and efficiently, at any given point, to improve your business’s bottom line. It is true that an experienced and knowledgeable accountant can provide you with better reports about your business’s financial status. But, it won’t be the same as you are with your numbers on a daily basis. This being said it is our experience that small business owners are too busy working in their business wearing many hats daily.  Often it is impossible to allow the necessary time it takes to properly analyze this important data on a daily or even a monthly basis.

Make Well-Informed Decisions

You will be able to make sound judgments and decisions because you always know where you stand financially. At any given time, you know who owes you money and the specific bills that you need to pay. Your books can reveal the areas that you have to improve to remain profitable before it becomes a huge problem and they also will confirm what is absolutely working in your business. Accordingly, you can make the right business decisions considering all the aspects for a better future in your business.

Act In A Time Efficient Manner When There Is an Error

When you are looking after your books, you don’t have to rely on your accountant’s availability. If your supplier or vendor ever makes a mistake, you can act on it immediately instead of waiting until the bookkeeper/accountant brings it to your attention at the end of the week or month. This can save you from huge losses.

Cons

Can Be a Distraction

Doing your own accounting can be a real distraction in the long run. It takes your valuable time away from the important business functions that can improve your business. You can instead use this time to make your products or services better, grow your customer base, and run your business more efficiently.

Lack of Knowledge 

If you do not know the basic rules of accounting and bookkeeping, you can end up making huge and costly mistakes. You can surely learn the rules and techniques of accounting and bookkeeping, but it can unnecessarily consume your time.

Accounting is very technical and consists of many rules, laws and processes.  This also varies from industry to industry. Understanding your accounting, tax, and financial requirements are essential to keep your business healthy, tax compliant, and also ensures growth. Eventually, the decision will be determined by how valuable your time is to you. Try focusing your time and energy on the areas of the business that you are truly passionate about.

If bookkeeping and accounting is not part of your passion, you can always hire a services provider that is passionate about accounting for your small business. Searching for  the best accountant in Edmonton? Then contact Padgett Business Services N.W. for your free consultation.

12203-107 Avenue.
Edmonton, Alberta.
T5M 1Y9

Call us:
780.482.7297