After talking with hundreds of small business owners, I’ve noticed a few patterns:
- Entrepreneurs are excited to talk about their companies—they want to tell me what they do, the problems they’re solving, how they’re unique. I hear the energy in their voices!
- Entrepreneurs are not excited to talk about bookkeeping (which is usually why we’re talking in the first place!). Their voices shift. They are bored.
This isn’t surprising. We know that bookkeeping, accounting, and tax filing are the most disliked aspects of running a business. So it seems like the vast majority of small business owners would be rushing to outsource their accounting.
But even though they hate it, some people still resist.
I’ve noticed a few patterns here, too. Hesitations about outsourcing accounting and tax filing tend to revolve around a few widely held myths.
Myths About Outsourced Accounting
1. Outsourced accounting is expensive
inDinero was built on a foundation of bootstrapping, so we’re big fans. Up to a certain point, doing your own accounting is definitely cheaper up front. But even then, there can be hidden costs when mistakes lead to missed deadlines and penalties. And you may lose out on opportunities for tax deductions and credits because you don’t know they exist. Outsourced accounting also means that you don’t have to hire somebody, which eliminates the extra overhead of benefit packages or payroll taxes.
2. I save money by doing my own accounting
This may sound the same as #1 at first, but there’s a different mindset at play here. Because it is too early to hire a full-time (or even part-time) bookkeeper or accountant, some small business owners feel that they are upholding a commitment to running a lean startup by managing their books themselves. Even though they hate it, they suck it up because they believe it’s the “right” thing to do.
To know whether you’re truly saving money, you need to know how much your time is worth in the first place. This handy tool from Clearer Thinking will help you calculate how much an hour of your time is worth—you might be surprised by the result; I sure was. You may find that you can outsource your accounting for less than your time is worth. That’s money saved. Remember: There’s an opportunity cost when you spend time on things like bookkeeping and tax filing that don’t generate revenue for your business.
3. I’ll lose visibility into my books if I outsource
I totally get it—it seems like it makes so much sense that if you do something yourself, you understand it better. But when it comes to accounting, we’ve found the opposite to be true.
There are insights you don’t get from simply paying your bills and updating your balance sheet when you have time. When your books are kept accurately and up-to-date by pros, you have better visibility into your business’s financial health. That means you can quickly identify challenges or opportunities and adapt accordingly by cutting spending in a certain area, or investing in office equipment to lower your taxable income for the year, for example. Not every outsourced accounting solution specializes in this type of transparency; inDinero does.
4. I don’t have time to bring on a new accounting solution
If your business is growing rapidly, every minute of your time counts. And hiring a new vendor or consultant can take longer than expected when you have to track down information and learn a new system. But, if you don’t put in that time while your business is expanding, the demands on your time will only grow. inDinero, and some other accounting services, are designed to scale with the companies they serve. As you grow, your accounting will grow with you and that will be one less operational headache for you to deal with.
We know that sticking with something familiar—even if it’s a total time suck—can feel easier than making a switch. To make the process transparent, we created a checklist of the information a small business needs to provide in order to hire inDinero. To be clear, this is likely the same information you’d need to hire most accounting firms, but we can only speak for ourselves.