Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Startup business owners must make this one critical business decision at some point: should they do their bookkeeping or outsource it?
Often, their default decision is to do it themselves.
While there's nothing wrong with DIY bookkeeping, entrepreneurs must recognize the point where they should stop doing it themselves and start considering outsourced Ontario bookkeeping services as a viable option. We will explore that in this article.
When It’s Okay to Do It Yourself
As an entrepreneur based in Ontario, you may be torn between doing your own bookkeeping or hiring a certified bookkeeper in Ontario. It's a battle between cost and convenience, and perhaps you're not sure which choice is better.
Here are some valid reasons to do your own bookkeeping.
You Have Experience
If you have a good knowledge of bookkeeping, then you can give it a shot. At the very least, you should know how to do journal entries and make debit and credit adjustments.
Your Business Is Still Relatively New
If your business is new and has less than five employees (including yourself), it's okay to do your bookkeeping. Because the volume of cost and revenue transactions at this point is still low, you can still find the time to do it.
You’re Organized and Detail-Oriented
If you have a knack for putting things in order, especially when it comes to money, there's no harm in giving bookkeeping a shot. Accurate categorization is a must in bookkeeping, so knowing which transaction goes where needs good organization.
You Have a Lot of Free Time
Bookkeeping is time-consuming. It involves sifting through financial documents and receipts to record transactions.
If you have time to spare and don't mind doing it for your business, you can do your accounting records.
The Risks of Doing Your Own Bookkeeping
Most business owners who do their books learned it via bookkeeping courses or in college. Unfortunately, their knowledge, while helpful, is not enough. Because of this, they risk falling into traps that certified bookkeepers foresee and avoid.
Here are some of the common pitfalls when you go DIY.
Incorrect Transaction Recording
Transposition errors are common even for professional bookkeepers. However, the difference is that a certified bookkeeper can find and correct these errors and avoid making them in the future.
If you're not a professional bookkeeper, you may not notice these errors as you move along the bookkeeping process.
Inaccurate Financial Data
Apart from transposition errors, you risk misclassifying a transaction. For example, you might record expenses as revenue or payables as receivables. These errors might not show up when you do the trial balance, and you'd be left thinking all is well when it isn't.
If you're lucky, you can spot it yourself, but most likely, you'll need the help of bookkeeping services in Burlington, Ontario, or any of its adjacent cities.
Lack of Experience in Fixing Errors
Adding to the risk of errors and inaccuracy is the inability to correct the recorded financial transactions. If you do a trial balance and the amounts turn out unequal, that's an indication of an error in recording.
However, finding errors is tedious. If your knowledge is limited, you may hire bookkeeping services in Hamilton, Ontario, where rates are lower.
When to Outsource Bookkeeping to a Professional
The answer is pretty straightforward—right now. But if you are still on the fence, here are some indicators that will tell you when to stop doing your own accounting.
Your Business Is Growing
The sales are increasing, as are the number of transactions you're recording. It may be gradual, or it may come in droves that will overwhelm you. An increase in the volume of transactions from other parts of your business may increase too, so much that it becomes more complicated to keep track and record all of them.
It Makes Business Sense
Sit down and reflect on your business performance. Can the revenue cover the cost of outsourcing bookkeeping services in Windsor, Ontario, or another place? If a bookkeeper takes over, do you think you can earn more as you use your time to get more clients?
Look at your business data. If it screams a loud “yes,” then you should go for it.
You Need Accurate Financial Statements
Entrepreneurs applying for a business loan need accurate financial statements. These statements will let your banker determine whether or not your business deserves the loan.
Professional bookkeepers can quickly generate that statement for you. Accuracy is important so that both you and your banker can make the best choice.
You Have Poured a Lot of Money into the Business
If you've secured that loan or injected your own money into the business, you want to make sure you’re using it to maximize profits. Thus, you'll need to monitor your cash flows, assets, and liabilities to ensure your business stays afloat while it tries to bring in more money.
In this case, bookkeepers can help you accurately track and record every business transaction, no matter how simple or complex.
Why You Should Outsource Your Bookkeeping Needs
Making a decision to outsource your bookkeeping is daunting. Your first impression may be that it will require a lot of back-and-forths and heavy data work.
Bookkeeping services have recently found ways to streamline processes so that you can get the advantages below.
Bookkeeping and accounting technology makes things simple. However, learning them requires considerable time and brainpower that you might rather invest in other profit-generating endeavors.
Fill the Manpower Gap Instantly
Outsourcing your bookkeeping is a quick process. It starts with choosing a plan from the service provider; afterward, they will get your business onboarded. It requires little to no effort on your part, and the bookkeeping service will hit the ground running as soon as you give them all the requested data.
Timely Update of Books
Bookkeeping services are dedicated to this task, so you are assured that your books are updated regularly and promptly. When the time comes that you need an accurate financial statement, you'll get it instantly.
Peace of Mind
You won't have anxieties about being audited or not paying the correct amount of taxes. Professional bookkeepers are trained to record and classify transactions, as well as find and fix errors. You and your auditor will get clean and crisp financial statements and records, making everyone's job a breeze.
Ease of Transition and Continuity
Switching from do-it-yourself to outsourced bookkeeping requires turning over all financial and accounting data from one bearer to another. In this case, the bookkeeping service will make sure this transition runs smoothly.
Are you planning to switch bookkeeping services or perhaps sell your business? Your current bookkeeping service provider can give you and the concerned parties all your business data for a pain-free transition and continuity.
Unloop Yourself from Bookkeeping
Doing your own books takes time, patience, and love for bookkeeping. But if you're more in love with making money than recording it, you can untangle yourself from this complicated process and leave it to professionals at Unloop.
Talk to us, and we'll take care of your bookkeeping with the same love and effort you put into your business.