DIY Bookkeeping vs Hiring a Professional: Pros and Cons

If you’ve reached that stage in your business where you can no longer keep wearing all the hats and grow your business, one of the first things you should outsource is your bookkeeping.

While some people are more than happy to hand their bookkeeping off to a professional, others tend to be more hesitant. After all, money is the lifeblood of your business. You can’t hand that off to just anyone.

It might help to think of it like healthcare. If you have a run-of-the-mill cold or flu, you can deal with that on your own.

But a more serious illness, such as diabetes or cancer, requires professional help.

Bookkeeping is similar in that it’s easy for small business owners to handle on their own in the early days of their business when bookkeeping is simple and straightforward.

But the more your business grows, the more complicated your bookkeeping gets, not to mention the additional demands on your time required to grow your business.

Nevertheless, there are pros and cons to DIY bookkeeping and hiring a professional. So if you’re considering hiring outside help for your books, here are some of the things you should consider.

Pros of DIY Bookkeeping

It’s Free

Since money is our business, there’s no point in beating around the bush as to the most common reason people do their own bookkeeping: it doesn’t cost anything.

This is the kind of thing people talk about when they talk about “bootstrapping” their business. Until you build enough capital to start outsourcing certain services, you have to wear all the hats in your business.

You Get Up Close and Personal with Your Money

Because your finances are the lifeblood of your business, you need to know where your money is coming from and where it’s going.

While a bookkeeper can (and should) keep you in the loop on those things, there’s something to be said for digging into the weeds of your own finances. Getting up close and personal with your money is a great way to get a very clear idea of, not only whether you’re in the red or the black, but where your revenue is coming from and what you’re spending that money on.

This is especially helpful in the early days of building your business when you’re still learning what works, what doesn’t, and which steps you can take to help your business grow.

Cons of DIY Bookkeeping

Time

The biggest and most obvious drawback to doing your own bookkeeping is that it’s time you could be spending on other aspects of your business.

You can’t grow your business if you’re wearing all the hats. Eventually, you’ll reach a point where you need to start delegating certain tasks to other people, and your bookkeeping should be one of the first things you delegate.

Mistakes Will Be Made

As valuable as it can be to learn the ins and outs of your own finances, unless you are a professional bookkeeper, the chances you’ll make mistakes in your own bookkeeping are high.

This is because the certification process for bookkeepers involves learning much more than just how to enter numbers into a spreadsheet or bookkeeping software.

We learn how to analyze those numbers to figure out what they’re trying to tell us. Then we translate that into what that means for the business, and use that to figure out which steps should be taken to help the business grow faster.

Cons of Professional Bookkeeping

It’ll Cost You

Yes, you have to pay a bookkeeper to keep an eye on your company’s finances, but if you choose the right bookkeeper, their fees should more than pay for themselves over time.

Not only does handing the books off to someone else free up your time to spend on growing your business, but a good bookkeeper should be able to alert you the moment your numbers are off.

Whether it’s because an investment isn’t paying off, you forgot about subscriptions you thought you had already canceled, or someone you trusted is funneling money out of your business and into their own pocket, a bookkeeper can keep a close eye on your numbers for you and alert you the moment they notice a red flag.

People who do their own books rarely know which red flags to be on the alert for. They also don’t do their books as often as they should, which gives those problems an opportunity to grow from small problems to very large problems that threaten the viability of the business.

Pros of Professional Bookkeeping

Time

The most obvious benefit of hiring a professional bookkeeper is that it saves you all the time you would spend doing your own bookkeeping.

While getting time back in your day is nothing to sneeze at, it’s just the beginning of what a professional bookkeeper has to offer your business.

Your Money Deserves a Dedicated Professional

When you’re trying to do your own books in addition to all the other things that go along with running a business, let’s face it, it doesn’t always get done on time.

There are only so many hours in the day, and when you’re the one trying to do it all (not to mention eat and sleep once in a while) things are bound to fall through the cracks, especially as your business starts to take off.

When it comes to your bookkeeping, that could mean your books don’t get balanced as often as they should. Certain transactions don’t get recorded, or mistakenly get recorded twice.

When you have a dedicated professional working on your company’s books, you never have to worry about them suffering from neglect. Your books will always be well cared for, which means your money will always be well cared for.

Growing with Your Business

While entering revenue and expenses on a spreadsheet works for startups, the bigger your company gets, the more sophisticated your bookkeeping will need to be, and that’s when you are likely to get overwhelmed if you’re still going with DIY bookkeeping.

Once your business starts accumulating assets and investments, your books will require more time, attention, and skill to track the more complicated aspects of your business, in addition to the day-to-day cash flow.

If you’ve been thinking of hiring a professional bookkeeper, but you’re not sure your business is there yet, I’d love to talk to you about your needs. You can start the process by filling out this form.