Accounting—it’s your small business’ speedometer, fuel gauge, and GPS, all rolled into one. It’s impossible to know where your company is headed and how far it will make it down the road without it. It’s safe to say that your growth and success depend on it.
In other words, it’s kind of a big deal.
But that doesn’t mean it should be YOUR big deal.
Many entrepreneurs spend hours and hours a week on spreadsheets and do-it-yourself accounting software. You’re not alone. I’ve been there.
Back when I first started my little book editing business, I quickly realized that some months would be really busy; other months, not so much. Though my expenses weren’t large or complicated, I needed a way to account for ongoing expenses as well as monthly fluctuations in income.
“I’m smart. I can figure this out,” I reasoned. So I downloaded an accounting template off the Internet. And proceeded to spend hours and hours every month populating this spreadsheet. Keep in mind, these were hours I could have spent editing books, ie, earning money.
So foolish.
Two things I wish I had known then: 1. I should have been using the accrual method of accounting to adjust for income fluctuations; 2. I shouldn’t have been spending time on something outside of my expertise (and that I found boring and frustrating) at the expense of making money. It’s a double-whammy of revenue suckage.
Learn from my mistakes!
Just like you wouldn’t (or shouldn’t) spend hours trying to replace your own timing belt or alternator on your car, here are five reasons why small business owners should stop wasting time on DIY accounting:
1. You’re not a small business accounting expert
Because if you were, you wouldn’t be reading this article. You are an expert—maybe on many subjects—but not on small business accounting. A roll-up-your-sleeves attitude is a big part of being an entrepreneur, and so is knowing when somebody else could do it better, for less money. And that brings us to point #2.
2. Your time is worth more
I used to think that paying somebody to do what I could do for free was a waste of my money. But my time isn’t actually free, and neither is yours. So, figure out an hourly rate for yourself. If you can hire somebody to do your small business accounting for less than that, it would be economically irrational for you to continue doing it yourself.
3. Accounting mistakes are expensive, especially for small businesses
Aside from the cost of your time, there is the cost of errors. An accounting error can range from the small-and-frustrating (you can’t make both sides of your balance sheet equal) to the major-and-expensive (you didn’t know about payroll taxes and now the Feds want to know what’s up). But there are also mistakes that you may never be aware of, such as tax credits or deductions you didn’t know you could claim. Major corporations can afford accounting mistakes; small businesses can’t. If a $50 quick car fix can turn into $500 dollars in damage, imagine what you’re looking at with a growing company.
4. You have better ways to spend your time
Remember why you started a business in the first place. The more time you spend on keeping your books, the less time you’re spending making your business a thriving success. Whether you’re editing books, designing apps, or manufacturing microchips, you need to devote your efforts to doing and selling those things.
5. You’re depriving yourself of expert advice
You only know what you know. Sure, you’ll get more efficient over time and, if you’re a researcher, you’ll eventually learn a thing or two in the process. But there’s something to be said for having a team of experts who understand all the pitfalls and opportunities of small business accounting.
For many of our clients, that expert advice ends up being just as important as the accurate financials and saved time they receive from outsourcing their accounting to us.
“indinero has an entire team behind you, so if your point of contact doesn’t know an answer they’ll have someone on hand that does,” says Wade Foster, co-founder and CEO of Zapier. “It would have taken me a lot of time to learn and figure this out myself and there’s no way I could get to the level of expertise of someone who’s done it before and can guide our team through each process.”
