There are a few different bookkeeping options when managing your business’ finances. You can do it yourself (DIY), outsource it to a professional, or have an employee handle it in-house.
Each option has its advantages and disadvantages, depending on your business.
We’ll go over the pros and cons of each choice so that you can make the best decision for your business.
Doing it yourself (DIY) Bookkeeping
Pros of DIY Bookkeeping
Complete Control
You have complete control over your business finances when you handle your books in the house. You can choose how to set it up and what software to use, and you will have the information you need right at your fingertips.
Cost Effective
It’s usually the most cost-effective option since you don’t have to pay for someone else’s services. If you’re starting, this can be a significant advantage.
Flexible Schedule
You can do your bookkeeping whenever convenient since you’re not reliant on someone else’s schedule. If your business has a lot of ebbs and flows, then a flexible schedule can be helpful.
Cons of DIY accounting
Time Consuming
Even if you are an experienced accountant doing your books can be time-consuming. The time you spend recording journal entries or producing reports can take you away from essential tasks in your business.
Requires expertise
Unless you’re an experienced accountant, chances are you’ll make mistakes. One missed entry can have ripple effects throughout your financial statements. Things can quickly get out of hand if you’re not good with numbers or keeping track of details. Inaccurate books can lead to costly errors down the road.
When to consider doing it yourself (DIY) bookkeeping?
DIY bookkeeping is a good option, especially if you are a new business. If your business only has a few monthly transactions, you are comfortable with numbers and organized with your receipts and invoices, DIY bookkeeping can work for you. You will have complete control over your finances.
Outsourcing your bookkeeping to an accounting firm
Pros of outsourcing accounting
Free up your time
Outsourcing your accounting and bookkeeping needs can free up your time to focus on other aspects of your business. If you don’t have the resources or knowledge to do it yourself, the firm can provide you will find what services you need for your business.
Get expert advice
When you partner with a bookkeeping and accounting firm, you get access to their expertise and knowledge. Their expert knowledge can help ensure that your books are accurate and up-to-date. They can also offer advice on
Timely Reporting
When you outsource your bookkeeping, you can be confident that you will complete your financial statements promptly. As a result, you will have accurate information to make an informed decision about your business or provide it to lenders or investors when needed.
We can provide customized services for your needs.
When you outsource your bookkeeping, you can work with the service provider to tailor their services to exactly what you need. Their services can be customized and include anything from basic bookkeeping to more complex financial reporting.
Cons of outsourcing accounting
Can be expensive
One of the main drawbacks of outsourcing your accounting is that it can be expensive. Depending on your needs, you may not have the budget to hire a firm with the needed expertise.
Lack of control
When you outsource your bookkeeping, you lose control over your finances. You will have to rely on someone else to keep track of your income and expenses.
May need to change providers.
As your business grows, the service provider may be unable to keep up with your need. In addition, finding new providers can be time-consuming and disruptive to your business.
When to consider outsourcing your accounting?
Outsourcing your accounting is a good option if you don’t have the time or expertise to do it yourself. It can also be beneficial if you need timely financial statements or advice from an expert. However, it can be expensive, and you will lose control over your finances.
When to consider outsourcing your bookkeeping?
Outsourcing is a good option if you don’t have the expertise or time to do your bookkeeping. It’s beneficial if you have a complex financial situation or need help with tax preparation. Their services can grow and evolve as your needs change, keeping your budget flexible.
In-house bookkeeping
Pros of in-house accounting and bookkeeping
Dedicated staff
You can hire an in-house accountant or bookkeeper dedicated solely to your business’ finances. They can ensure that your books are always accurate and up-to-date.
Can build a system tailored to your business
When you have an in-house bookkeeping team, you can develop a system tailored to your business’s needs. For example, the way you structure the processes can make it easier and more efficient for you to track your income and expenses.
Can offer advice and insights
Your in-house bookkeeper or accountant can offer insights into your financial situation at all times. Then, depending on their experience, they can also provide advice on improving your bookkeeping system or making changes to save money.
Cons of in-house accounting and bookkeeping
Training and Onboarding costs
One of the main drawbacks of having an in-house bookkeeping team is the cost of training and onboarding. In addition, you need to invest time and resources into ensuring that your staff is up-to-date on the latest bookkeeping software and practices.
It can be disruptive if an employee leaves.
If your in-house bookkeeper leaves, it can be disruptive to your business. Finding a replacement and training them on your bookkeeping system can be costly and time-consuming.
Can be expensive
Another downside of having an in-house bookkeeping team is that it can be expensive. You will need to pay salaries and benefits for your staff, as well as the cost of bookkeeping software and other supplies. In addition, bookkeeping and accounting tasks typically happen at the beginning or end of the month. It may not be cost-effective for you to keep them on all month.
When to consider in-house accounting?
If you have a complex financial situation or need someone to be available at all times, having an in-house bookkeeper could be the right solution for you.
How to decide on the proper accounting structure for your business?
Your business is unique.
There is no one-size-fits-all solution for bookkeeping and accounting. The best way to structure your bookkeeping and accounting function for your business depends on your needs and preferences. DIY bookkeeping might be the way to go if you’re starting out. However, if you need more help, consider outsourcing to a professional or hiring an in-house bookkeeper. Whichever option you choose, ensure you’re comfortable with it and that it’s the best option for your business.
You might even consider a hybrid accounting function where you take care of some tasks in-house or yourself while you outsource other tasks that are time-consuming or more complex.
A trusted accounting partner can help you figure out a solution for your business.
Contact Edelkoort Smethurst CPAs LLP in Burlington for Expert Accounting Advice
A skilled accounting professional can help you find ways to save time and costs on your accounting needs. At Edelkoort Smethurst CPAs LLP, our financial and small business experts can provide services to support your accounting function, whether you need partial or complete support. In addition, we can provide you with recommendations on structure and streamline your accounting function to work best for your business. To learn more about how Edelkoort Smethurst CPAs LLP can provide you with the best accounting expertise, contact us online or by telephone at 905-517-2297.