The True Cost of DIY Accounting for Small Business Owners

Written by: Colby Faust, Staff Accountant

• Many business owners attempt to handle their own bookkeeping, which can lead to stress, costly mistakes, and the wasting of valuable time that could be spent on core business tasks like sales or product development.
• Common accounting errors made by DIYers include mixing personal and business transactions, failing to track expenses like mileage or depreciation, and missing tax deadlines.
• Hiring a professional accountant can provide benefits beyond convenience, such as discovering new deductions, improving cash flow, and ensuring accurate and compliant financial reporting, which can ultimately be more cost-effective than managing it oneself.

The Risks of DIY Accounting for Small Businesses

You didn’t start your business to be a bookkeeper, so why are you attempting to be one? Most small business owners didn’t launch their company to spend hours booking expenses and tracking revenues. Many rely heavily on bookkeeping software, searching for simplicity, but often find themselves burdened by added stress and costly mistakes. If you’re a business owner who frequently pushes off accounting tasks, feels confused by bookkeeping, or is unsure of your business’s finances inside and out, then this post is for you. This article explores the true cost of DIY accounting for small businesses and why self-managed books can be more expensive than hiring a professional. 

Accounting platforms and automated tools may seem like a money-saver, but hiding beneath the surface lies hours of wasted time and confusion. Most business owners wear many different hats: visionary, salesperson, marketer, human resource rep, or even product developer. With so many roles to juggle, bookkeeping often becomes a distraction from what truly matters. Many DIYers assume their books are accurate, but without a true system of checks and balances, how would they even know? This underscores the true cost of self-managed accounting: blind decision making, lost time, and avoidable risks. 

Here are a few common DIY accounting pitfalls: 

• Mixing personal and business transactions
• Forgetting to track mileage and other travel expenses
• Misclassifying expenses and revenues
• Ignoring depreciation expense on vehicles and equipment 
• Not tracking customer receivables or vendor payables
• Forgetting payroll or sales tax deadlines 
• Neglecting to set aside money for quarterly estimated tax payments

Hire an Accountant to Manage Your Books in Lehigh Valley

These small business accounting mistakes pile up quickly, leading to serious, unknown consequences. Outsourcing bookkeeping may potentially bring peace of mind, but that doesn’t nearly scratch the surface of the benefits of hiring a professional accountant. Many of the financial surprises that pop up throughout the year can be negated with proper planning and expert insight. In the ever-changing world of tax and accounting laws, small business owners find themselves struggling to keep up, while a full-time accountant does this naturally. A professional may discover new deductions you didn’t previously know existed, improve cash flow by identifying unnecessary expenses, or provide assurance that your reporting is accurate and compliant. No more headaches at the bank or come tax time, scrambling to dig up financial documents. Imagine simply calling your accountant, requesting your documentation instead of spending hours or even days preparing the paperwork yourself. Hiring a professional isn’t just convenient, it’s a smart business decision. 

Now, ask yourself these questions to see if you might fall into any of these DIY accounting traps:

1. Do you perform monthly bank and credit card reconciliations to ensure the book balances align with the bank statements?
2. Can you easily present your financials to a lender or investor? 
3. Do you track depreciation on your assets? 
4. Do you record income when invoiced or when the payment is received?
5. Have you ever felt stressed to meet tax deadlines, or even received an IRS notice for noncompliance? 
6. Do you spend more time on bookkeeping than on other business tasks? 

Contact Molinari Oswald for Business Bookkeeping Services

If any of these questions sparked a concern about how you’re currently managing your bookkeeping, reach out to our team! We have professionals on staff ready to oversee your company’s bookkeeping and reporting, ensuring you stay compliant with the utmost accuracy throughout the year.