The Pros and Cons of DIY Small Business Accounting

DIY, “Do it yourself,” accounting occurs when a small business’ designated individual manages all accounting tasks, like filing tax returns and recording expenditures, internally.

Accounting entails many responsibilities, so you may evaluate whether to spare your time and resources for these demanding duties as a small business owner. Review the following list to help you make an informed decision.

Pros of DIY Accounting

DIY accounting could yield these benefits:

  • Increases financial autonomy: Full control over your financial data helps you restrict access to private information for security purposes. Equally, you can back data up to a shape of your choice, such as physical copies, external hard drives, or BaaS (Backup-as-a-Service). 
  • Supports decision-making: Handling your finances improves awareness of cash flow, accounts payable, and accounts receivable. This information helps you form financial forecasts, plan future investments, and allocate resources throughout your small business.
  • Gain Flexibility: Customising your management style allows you to work with accounting software that aligns with your unique needs, such as a SaaS (Software-as-a-Service) like Xero. For example, structures of sole traders, partnerships, and companies handle different taxes, such as gods and services tax.

Cons of DIY Accounting

DIY accounting could pose these risks:

  • Takes considerable time: Managing accounts is an ongoing task, as recording expenses and income in real time ensures accuracy. Research suggests small businesses spend approximately 15 hours per week on financial admin. 
  • Requires technical skill: Besides advanced financial skills, accountancy relies on a deep understanding of tax requirements, payroll, compliance and deductions. Accumulating additional time understanding submission processes and financial jargon could cause stress.
  • Maximises the risk of errors: Without a dedicated accountant, you may face distractions when bookkeeping increasing the risk of errors. Inaccuracy reports could have legal implications like penalties and fines.

Find Efficient Small Business Accounting Solutions

Managing your finances doesn’t have to become a source of stress. Outsourcing relieves the pressure of maintaining an in-house accounting team while allowing you to focus on productivity and business development.

We specialise in professional small business accounting solutions that save you valuable time and resources. Contact Accounting Tax Solutions to learn how we can help.