Unlike the laws of thermodynamics, no rules of the universe compel you to hire an accountant. However, by scrimping on accounting fees, you may end up spending more than your cost-cutting measures save; entrepreneurs who handle their accounting themselves soon discover it’s more complicated than they anticipated.
Becoming a do-it-yourself (DIY) accountant means taking sufficient time to assure that every transaction is correctly recorded in accounts created in the required format, with no ambiguity regarding proper tax treatment of any item. That takes away time from the demands of maintaining your business.
Maybe this doesn’t seem overwhelming because you’ve heard that software does everything. One little problem: computer programs only process the input you select.
Questions to ask yourself before deciding to become a DIY accountant.
Do you have the time to learn about tax classifications and account categories? Can you easily discover errors and adjust journal entries accordingly? Do you know how to record liabilities incurred when purchasing new equipment? Can you navigate tax software for handling depreciation and asset sales? Do you know how to prepare a payroll correctly? Could you handle a tax investigation?
If you answered “no” to any of these questions, hiring an expert is your best choice. Your mistakes will cost more in the long run than the accountant’s fees. You’ll be spending more time – and earning more money for the business – by focusing your efforts on sales and management rather than accounting.