DOING YOUR OWN BOOKKEEPING
“Can I do my own bookkeeping?” is a question that many small businesses will ask – both of me and of themselves.
I understand that as a new or small business outsourcing anything can feel difficult, especially when costs are tight and money isn’t free flowing.
The quick answer is, therefore:
In this blog, let’s explore what doing your own bookkeeping means for you and what you should consider before making the decision to do it yourself or to get the support of a professional bookkeeper, accountant or other assistance.
7 things to think about
My first recommendation when considering whether to do your own bookkeeping is to think about it for a while.
I know that can get frustrating. But, it’s true.
When it comes to bookkeeping and accounts, no two businesses are exactly the same and, more importantly, there are no two business owners who the same. That means there is a lot to think about and to evaluate when considering if you should be doing your own bookkeeping.
I will work through some questions for you to think about, and hopefully at the end, you will be able to make your own decision. I am a strong believer that we all have a choice and it’s up to you to decide what is best. However, the important thing is to make that decision based on the knowledge, not the emotions and frustrations of running your own business.
1. What is your business?
If you are selling a service, such as offering consultancy, doing social media management or taking photographs, it’s most likely that you don’t have a high volume of sales, invoices or purchases, every month. This means it can be quite easy to research and learn how to do the bookkeeping yourself.
On the other hand, if you own an online shop, are running a coffee shop or have a bakery, then there could be hundreds of transactions, every month – both outgoing and incoming. In this case, you are probably better getting some help.
So consider, in light of your business, what different types and the amounts of transactions you will have to account for and stay on top of.
2. What do you feel when you think about bookkeeping?
You might not have any strong feelings and that’s ok. However, I have met quite a few business owners who are so scared of making mistakes and just a thought about bookkeeping makes them cringe.
If you have that strong visceral reaction to the idea of doing your own bookkeeping, then be assured you are not alone. Importantly, remember that ‘not liking numbers’, doesn’t make you a bad business owner or entrepreneur. We all have things we are good at and, importantly, love to do…and things we find challenging and loathe to do.
If you have negative feelings about doing your bookkeeping, then that is a sign. Doing it yourself may not be the best option. Negative feelings about any part of your business is not good. We want to create a business we love.
Consider, however, if the feelings you have might be just because it’s an area that is ‘unknown’. Finding out more about what is involved and how much learning or training you would have to do, could be all you need to feel ok about it all.
Most business owners are very resilient and curious people – so if the prospect of learning fills you with joy – then go for it.
3. Do you like admin, order and planning?
Unfortunately, bookkeeping is not a one-off job. It will need doing again and again. It will need doing regularly.
If you hate even the thought of it, you probably will struggle with it. Furthermore, if you leave it for any length of time, it will just pile up and it becomes an even bigger frustration.
So, if you hate admin, then it’s a good idea to have have a chat with an accountant or a bookkeeper to see if you can get help.
If you quite like numbers and are keen to do the admin side of things as well as loving the control and organisation, then on to the next consideration!
4. How much time have you got?
If you like the idea of taking on the admin tasks that bookkeeping involves, the next consideration is whether you have the time for bookkeeping after you have done what you need to do to actually keep your business running, as well as to look after your family, friends and yourself.
This is a very important consideration. Time is so often overlooked. We don’t value time enough.
Consider that if you didn’t have to do your own bookkeeping, what could you do instead? Also, consider, if you got busy or ‘life happened’, would you ensure your bookkeeping tasks remained a priority when dividing up your time?
5. How good are you with numbers?
Firstly, let me make it clear that I actually don’t think you have to be a ‘maths whizz’ or that amazing with numbers, in order to do your own bookkeeping. However, you need to be willing to learn. You also need to understand the value of ‘knowing your business numbers’.
Whether you do your own bookkeeping or get someone else to do it, I want you to learn to love your business numbers. It really is important to understand the basics and use the information to make business decisions. Without this information, you won’t be able to grow your business.
Before diving in, make sure you understand what needs to be done; what needs to be recorded; and what value you will gain by having accurate ‘business numbers’ to look at.
6. How much knowledge do you have about what is involved?
Whilst you may be willing or keen, learning what needs to be done can also take time in itself, let alone the actual business of doing the bookkeeping.
We’ve discussed time above, but remember, if you are already feeling short on time and need to grow your business – consider what is more important?
Bookkeeping is something that will get harder as you grow your business, so maybe it’s better someone else does it, while you concentrate on working on your business, and perhaps even investing in learning about other areas….we all know there are so many from marketing to HR to sales techniques.
On the other hand, if you think you have a business that will not grow enormously and you want to keep it all simple, then it could be a good area to learn about. Perhaps you have done a bit of bookkeeping in the past or feel you have a good grasp of the basics, then just refreshing your knowledge and attempting it yourself, especially whilst it is relatively simple, might be the best option for you too.
7. What are you willing to invest?
I thought about asking the question: ‘What can you afford?’, but deciding whether to do your bookkeeping yourself should never just be about ‘price’.
Obviously, as an accountant, I would want any business owner to ensure they can ‘afford’ to outsource their bookkeeping before doing so, but it can sometimes be quite a complex decision situation.
For example, if you are spending too much time and energy on doing your own bookkeeping which is affecting the output or running of your actual business, then it may be you can’t afford ‘not to outsource’ your bookkeeping, and it would actually bring in more money to do so.
However, if your bookkeeping is simple enough for you to do and remain on top of, plus your business is doing well, you enjoy doing it and you are using the ‘number information’ wisely, then for now, doing it yourself might be the right thing to do and investing in outsourcing is not necessary.
In terms of the amount to invest, there are also options. A bookkeeper is often a bit cheaper than a chartered accountant, for example. There is also a range of bookkeeping software, which involves a small investment, but could help you a lot with the admin of your bookkeeping and be enough for now (rather than using just a spreadsheet, for example).
You won’t really get to know both the price of outsourcing your bookkeeping or the full range of services without speaking to a range of bookkeepers and accountants, either. You need to do your homework.
I am always happy to have a discovery call and offer a quote so that you can make an informed decision about how much it could cost you. See also my post about the questions to ask an accountant. This means you’ll get a very accurate understanding of what your investment would offer you in return.
SHARE YOUR BOOKKEEPING STRUGGLES
Making the decision about doing your own bookkeeping is not easy. It is also not necessarily a ‘one-time decision’. Your business will grow or change, so what’s right for you now, might not be in 6 months or a few years’ time.
You may also feel generally confident, but be unsure about something or have the odd question from time to time. In this case, I would love to invite you to my new Facebook Group – Bookkeeping Struggles of a Business Owner – a group for small business owners who want to do their own bookkeeping, but are looking for space to share their struggles with like-minded people. In return, I also offer advice and suggestions to keep bookkeeping as simple as possible.
However you feel about doing your own bookkeeping, my last (and biggest!) piece of advice, is do not bury your head in the sand! Do not just ‘sit on the decision’.
Whilst I want you to take time to think, if your business is up and running then the bookkeeping needs to be done, and needs to be done regularly.
Want to chat through these questions with a professional? Want to ask more questions? Book a call today.
While this blog aims to provide helpful information, it’s important to remember that every business and person is unique. So, before making any decisions, we highly recommend seeking professional advice. We want to ensure that you have all the support you need to make the best choices for your situation!