Mistakes happen, but some are more costly than others. In business in particular, the impact can be severe. Whether it is a missing or additional zero, or mistaking a one for a seven, miscalculations are just some of the risks you run with managing your own accounting.
Losses take many forms, not just as miscalculations and typos. That’s why this article explores the hidden cost of taking a Do-It-Yourself approach to accounting.
DIY Accounting is Better than No Accounting
Having some form of accounting in your business is better than no accounting at all. It isn’t to say that doing your own bookkeeping is bad, but for someone without the necessary knowledge of financial recordkeeping and reporting, there are some drawbacks that you might not be aware of.
Loss of Time
Initially, it might make sense to handle bookkeeping yourself, especially when you are starting your business and cannot afford an accountant. But what is the real cost of your time?
When you consider whether or not to use an accountancy firm to help you keep your financial records in check, calculate the “cost” of your time that will be dedicated to these tasks, versus the price you will pay for such a service.
These tasks take you away from managing your business, making sales, or even spending valuable family time working on your financial records.
Human Error
In accounting, errors are not limited to calculation errors. These human errors also include transactions being recorded under the wrong account or being completely missed due to a lack of accounting expertise.
There is also an opportunity to miss out on important filing dates, simply because it isn’t your area of expertise.
Accounting software does help prevent certain mistakes, but it isn’t foolproof, and you might still need some guidance on how to track expenses accurately. Financial records are so much more than just a cash flow statement. There are many different statements that show different dates.
Relevant Legislation
Professional accountants remain up to date with regulatory changes or legislative requirements – it’s part of the job. Not only do they have access to networks that help them remain aware of these changes, but actively seek them out.
Accountants also have the knowledge and background to accurately interpret legislation and apply it effectively. Whether it is tax codes, reporting strategies or falling into a new business category, professionals can help you make sense of all the jargon and remain compliant.
Furthermore, professional accountants can help you interpret data from various statements and help you strategise for the future.
Lack of Guidance
Although accounting software can help keep track of your expenses, it is unable to advise on the right way to record expenses for new business owners. Professional accountants are able to guide the correct filing of items. More than just conducting checks and balances, they provide insight into the best way to record various types of transactions.
What’s more, they are available to offer insight that is tailored to your business and your financial standing
Affordable Accounting
As mentioned above, doing accounting yourself is better than having no financial records at all. And yes, it might be more affordable to manage your own financial records. For that, you can use accounting software to help stay on top of your business.
Here are some of our recommendations:
Sage
Sage is a user-friendly cloud accounting software with bank-level security. It offers three plans, which all include the tools you need to manage your finances, including invoicing, cash flow management, VAT tracking, online payments and more. This means that you can choose anything that fits your pocket. Plans include:
- Sage Business Cloud Accounting Start
- Sage Business Cloud Accounting Standard
- Sage Business Cloud Payroll
Not only can you access this system from any device – PC, tablet or phone – you can change, cancel or upgrade your plan at any time.
SMEgo from Old Mutual
SMEgo is an all-in-one digital channel aimed at helping SMEs with managing revenue, accessing funding, and business insurance. The platform is free to use and available on the Web, Android and iOS.
The plans include:
- Basic plan – Free
- Premium plan – R99,99 p/m
- Premium Plus plan – R299,99 p/m
- All Business Bundle – R999
Xero Accounting
Xero accounting software allows its customers to connect with 800+ smart business apps, including third-party apps like Stripe and Vend. All Xero plans include bank connections, inventory, reporting, accepting payments, purchase orders, files, contacts and smartlists, and VAT returns.
The plans consist of:
- Starter package
- Standard package features
- Premium package features
