When it comes to running your business finances, it might be difficult to pick between employing an accountant and doing the accounting yourself. As a small business proprietor in the U.S., you might wish to go DIY as nearly 30% of small business owners do their very own bookkeeping, based on a 2020 QuickBooks survey. But is this a good fit for your business? Let’s see if DIY accounting is better than employing an accountant. 

What Is DIY Accounting?

DIY accounting is when you deal with your business's finances yourself. Some business owners start off with DIY accounting since it seems simple when you first start out and there are lots of affordable accounting software which makes monitoring your funds easier.

However the financial tasks get more complex when your business grows. What was at one time an easy job could become a tiresome chore.

The Pros of DIY Accounting

Here are the pros of DIY accounting:

1. Cost Savings : Many small businesses choose DIY accounting due to the savings potential. When you are getting started, every dollar matters and having an experienced accountant come along is an unnecessary cost. By handling your finances yourself, you stay clear of paying an accountant's fee and lessen your overhead.

2. You have control of your Finances: When you perform your own accounting, you have complete control of your business' finances. This control may be comforting, particularly if you are just beginning with your business.

3. Accessibility of accounting software: Today, many Accounting Softwares are available that make DIY Accounting simple. Platforms like QuickBooks, Xero, and FreshBooks allow it to be simple for non-accountants to keep financial information in order. 

The Cons of DIY Accounting

Here are the cons of DIY accounting:

1. Time-Consuming: As your business expands, so will your finances. Bookkeeping, payroll, taxes, and financial reporting can quickly become a time-consuming task. A QuickBooks survey finds that typical small businesses in the U.S. spend ten hours per week in bookkeeping by itself. That's time you could be growing your company, managing clients or selling.

2. Danger of Errors: Unless you have got a history in accounting, you most likely will get some things wrong. Tiny mistakes in your financial records could result in bigger issues, like incorrect tax filings or even missed deductions, and penalties from the IRS.

3. Keeping Up With Changing Regulations: Tax laws and accounting regulations are continually changing. Keeping up with the most recent rules and complying with federal and state laws is essential to avoid financial and legal issues. But if you are doing everything yourself, tracking all of these changes could be tough. Missed tax deductions or even filing blunders can result in heavy fines or losses.

Reasons You Need an Accountant

Now consider the exact opposite side of the equation: getting an accountant. Though it might be an additional expense, having a professional handle your business finances can save you time, lessen stress, and also help your company grow with time.

The Benefits of Hiring an Accountant

Here are the pros of hiring an accountant:

1. Tax Efficiency: A professional accountant will help you to improve your tax filings and also make the most of credits and deductions you might not be aware of. They keep up with the changes in tax laws and will ensure your small business fulfills most regulations for optimum tax cost savings. This expertise can be really helpful to your business financially.

2. Lesser Stress: Managing your business finances is stressful, especially during tax season or in case you ever get an audit. An accountant on your side can easily take a big load from your shoulders. They'll handle the details, keep correct records and represent you if the IRS ever calls to request an audit.

3. Strategic Financial Guidance: Accountants do more than handle numbers. A good accountant is your financial advisor, assisting you to make sound business choices. They can establish financial forecasts, manage cash flow and help you develop profit making strategies. Such insight is invaluable as you develop your company and face financial hurdles.

When to Hire an Accountant

So when should you ditch DIY accounting and hire an accountant ? These are signs that it may be time to call a professional in:

• Your business is expanding fast.
• You are spending way too much time on bookkeeping.
• You have questions about tax laws & deductions.
• You worry about an audit.

Final Thoughts

Choosing between DIY accounting and employing an accountant depends on your business size, intricacy, and financial objectives. Although DIY accounting may work for small businesses initially, an accountant or outsourced accounting services become increasingly essential as your small business grows.

Partnering with a professional like The Fino Partners saves you time, offers professional support and lets you make better financial choices for your business.