When you’re starting out as a small business owner, the temptation is to go DIY with your accounting. Hiring a professional accountant or tax adviser costs money and that’s an overhead that you can remove by doing all the financial management yourself, right?
But is DIY accounting the most sensible option for your business? And why might partnering with an experienced accountant be a valuable investment in your future?
The 5 Big Challenges of Managing Your Own Accounts
At the initial stages of founding your business, you might think that raising a few invoices, paying a few supplier bills and making sure there’s cash in the bank is well within your abilities.
However, as the business grows, and you take on more customers and employees, your finances are likely to get far more complicated – not to mention far more time-consuming. So, should you still be managing your accounts solo at this important stage of your growth?
Here are five of the common challenges of going down the DIY accounting route:
1. The Knowledge Gap
Grasping the finer points of accounting principles and tax regulations is complex. If you try to navigate these financial complexities without the right knowledge and experience, you greatly increase the risk of errors, missed deductions, poor record-keeping and non-compliance with company tax law for your territory.
2. The Drain On Your Time
Managing bookkeeping, payroll, day-to-day accounting, and tax filings takes a lot of time out of your week. For example, recent stats show that Aussie business owners spend an average of 6 hours and 19 minutes per week on financial administration. If you’re spending a large chunk of your week working on finance admin, that’s time you’re NOT spending on growing the business. As an ambitious owner, you should be concentrating on business development and the other strategic tasks that will push your growth – not doing the books!
3. Staying Up to Date with the Regulations
Company tax laws and accounting regulations change frequently. If you’re not on the ball with the latest regulatory changes, there’s every chance that you’ll fail to meet your compliance duties. And, you may also miss out on the latest government incentives and tax reliefs too – financial perks that could well be the key to funding the next stage in your business expansion plans.
4. Anxiety About a Company Audit
Going through a company audit from an external auditor can be stressful. Depending on the status of your business, you may well have to comply with the rules for regular auditing. But with no accountant, your record-keeping may be haphazard, making the job more difficult, time-consuming and disruptive.
5. A lack of Strategic Insight
If you’ve never run a business before, it’s likely you’ll lack the awareness of how good financial management drives your strategic insight. The better your accounts, the higher the quality of your finance data, reporting, and management information. This data and reporting can be a goldmine of information when making big strategic decisions, setting budgets forecasting cashflow, etc.