Five Problems With DIY Accounting

25 May Five Problems With DIY Accounting

Posted at 08:00h in

Bookkeeping & Accounting

by Becky Brown  •  0 Comments

Five-Problems-With-DIY-Accounting.jpgAs a business owner – especially of a “small” business – the natural inclination is to handle everything yourself. After all, this is your business, and that personal stake means you fret about all the details.

But one of the oldest management tips is that you must learn to delegate. If you try to bear every burden alone, you’ll never have time for innovation, creation or exploration of business opportunities. You really won’t have time for much of anything.

And of all the burdens facing the business owner, the most complex is accounting. Keeping track of every dollar that comes in or out of the business is a tall order. Are you that familiar with the tax code? How long has it been since you took a math class?

We’ve actually got a list of problems with DIY accounting. Here are the top five:

Lack of expertise

You need to use the right person for each job, and that includes accounting. Honestly, how confident are you in your financial knowledge? Would you bet on it? That leads us into the next reason…

Possible tax penalties

Hey, even the notorious Al Capone couldn’t escape the tax man. If you make mistakes on your taxes, rest assured that someone will notice. You might escape it once, twice, even a few times – but all it takes is one audit, and suddenly your entire financial history is under scrutiny. And you’re going to get hit hard for every mistake.

Unsettled cash amounts

When your accounting is subpar, it’s easy to lose track of cash flow. Especially if you aren’t prompt with every paperwork filing. And when you don’t know how much cash is on hand, you’re abilities are limited. How do you expect to grow the company if you aren’t sure how much capital is available?

Human error

Let’s not kid ourselves: people make mistakes. Our memories can be faulty, or even flat-out made up. But let’s keep it simple. What if your finger slips as you’re manually entering a series of dollar amounts on the keypad? You turn a 6 into a 9 and you’ve now made a $3,000 swing in one direction. What happens if you fail to notice the mistake? And this is just a simple, minor goof – what if your mistake ends up being far more drastic?

Loss of free time

There’s a reason that large businesses have entire accounting departments: the tax code is complicated. Numbers can be overwhelming. And if you want to avoid problems, your numbers need to be checked and possibly double-checked. Do you have the time to handle all of this? Do you want to invest that much time in accounting, when there are far better solutions available?

 

Topics: Bookkeeping & Accounting