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Why taking on your own bookkeeping can be a bad idea

Many new business owners start off thinking that they can save money by doing their own bookkeeping and, while this is undoubtedly true in the short term, in the long run there are many things that could go wrong.

The results of someone who is not an expert taking control of a company’s books could end up costing more money than is saved. If a business was to go under due to financial problems that could have been spotted and dealt with earlier had the books been managed by a professional, then it certainly would have made sense to invest in proper bookkeeping in the first place, rather than trying to go along the cheap and (not so) cheerful route.

A little knowledge can be a dangerous thing

Many business owners have the idea that, while they do not have a professional bookkeeping qualification, they know enough about the subject to manage their own books. This may well be true up to a point but, because there are lots of aspects of bookkeeping that they do not know about, these business owners will not be aware of a lot of the potential problems that may be passing them by.

A qualified professional is more likely to notice any possible tax issues. They are also more likely to spot discrepancies regarding invoicing and supplier costs which, if left unresolved, could cause headaches in the future. There are also positive aspects to bookkeeping which can be very useful for a firm. For instance, professional bookkeepers will understand a business’ cashflow, and will be able to advise regarding the best times to make large purchases, such as important items of equipment. They will also be able to make cashflow forecasts so that a business is prepared for any financial changes several months in advance.

Your time is precious

Some business owners feel that bookkeeping does not take up too much time so they might as well handle it themselves but, often, they fail to add up just how much time they are really wasting. While it is easy to keep on top of your firm’s books when they are done regularly, when you are also running the business it is always the apparently non-essential tasks – such as this week’s bookkeeping – that end up being put off in favour of those which are non-negotiable. Even worse, when a mistake is noticed or a customer hasn’t paid, it can take an extremely long time to sort out, and this time would be much better spent on the job that you are an expert at – running your business.

Even handing the bookkeeping over to a member of staff is not necessarily a wise move, if that person has no bookkeeping qualifications. Having to supervise that employee and help with any troubleshooting, should mistakes be made, could well end up taking as much time as doing the books by yourself. It makes much more sense to outsource your business’ bookkeeping to a trained professional who will be able to carry out the work to the highest standard, leaving you free to run your company.

Posted by Peter
May 30, 2014

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