Around 60% of small-business owners feel they are not familiar with accounting and yet self-managed bookkeeping is becoming more common. This is likely because hiring someone else to do accounting management can be expensive. It might also be because people are not comfortable with sharing financial information with a stranger.
However, some hidden expenses often come along with switching to self-managed accounting. Here are some common examples of these expenses that need to be considered before deciding if the switch is worth the investment.
If you are self-managing your company’s finances, then you need to be knowledgeable about the process and the systems to do it correctly. If you’re not at all familiar with how to properly manage business finances, you may have to invest both time and money in classes.
Additionally, you can also find yourself using accounting software like QuickBooks which can be another learning barrier that may require you to pay for software/application training. If you’re just starting and have limited funding, this extra expense can hit you hard financially.
Managing company finances properly and accurately often requires you to invest in accounting software or tools. This involves either purchasing the accounting application or signing up for a subscription service.
For example, if you’re interested in trying out other accounting software like FreshBooks, you will need to sign up for a subscription and pay a monthly fee to use it. This is one of the primary reasons many businesses outsource their bookkeeping. With outsourced accounting, you no longer have to deal with paying for accounting tools.
Once you start managing your company’s finances yourself, you might find that there are additional expenses that’ll sprout from time to time. For example, you might discover that the books didn’t balance and had some errors in them.
This means that it is going to cost you money to get these fixed by someone internally or externally. Worse, you might not notice these accounting mistakes, and your company funding will slowly bleed out and cause your finances to redline.
If you don’t know anything about accounting yet or want help along the way, then you are going to have to hire someone to do it for you.
This means that the money you’re saving on not paying an outsider will eventually end up being used to pay an in-house accountant or bookkeeper. Depending on the skills and qualifications of your new bookkeeper, the price can be pretty expensive.
For some people, this might be fine, but for others, this added expense could be a deal-breaker.
Once you self-manage your bookkeeping, there is a chance that you might need to expand the system to meet new needs as your business grows. This could mean adding more services or features.
When this happens, you’ll need more money for those upgrades. Are you willing to pay extra costs as your business grows to keep the books balanced? Not only that, you may find yourself spending more time working on balancing the books than running the business and projects that are vital to your company’s success.
Self-managed bookkeeping may save you money for a while, but some hidden expenses come along with it. Whether that’s paying to learn the system or investing in accounting tools, be sure to carefully consider these expenses to make sure your company doesn’t suffer in the long run.
However, if self-managed accounting is not for you, there are always alternatives you can also consider. Quadrant Advisory is a leading provider of accounting management solutions that enables business owners to run their company with the confidence their finances are in order.
If you’re looking to outsource your bookkeeping, contact us today. Our team would be happy to find the perfect solution for your business needs.