Many small businesses start off with the owner handling the bookkeeping on the side. However, they don’t usually have a background in this – much less expertise.
If you’re handling your business’s bookkeeping, you’re going to have at least the occasional question. However, if you’re seeking bookkeeping advice more than a couple of times per year, this is a sign of a much bigger problem.
At CSI Accounting & Payroll, we’ve worked with small business accounting for over 50 years. That means we’ve talked to thousands of small business owners who used to do their own bookkeeping. They tend to ask us:
- Why is it bad to search for bookkeeping advice?
- What kind of advice should I seek instead?
- What are the signs that I should stop doing my own bookkeeping?
Why It’s Bad to Seek Bookkeeping Advice as a Small Business Owner
As mentioned above, it’s okay to have the occasional question when you’re handling your own bookkeeping. However, it’s hard to find a professional who will answer a one-off question without roping you into a commitment with them.
This isn’t necessarily a bad thing if you have more than a couple of questions per year. In that case, it may be worth the value to partner with a bookkeeping or monthly accounting service.
Do you know the true cost of doing your own accounting?
Asking the Right Questions
When bookkeeping is not your strength, you also have another obstacle: asking the right questions. Seeking one-off advice means a professional can’t support you month-to-month to fully understand what you’re asking.
Translating Books to Taxes
Not to mention, there may also be errors in your work that you don’t even realize you need to ask about.
Even if you partner with a professional for your taxes, they can only work with the numbers in your books. If your books are wrong, your taxes will be wrong – even if done professionally.
You can end up paying more taxes than you need to, and nobody will even notice. It’s shocking how common this is.
Advice You Should Seek Instead
A professional service already knows the ins and outs of bookkeeping. So, what advice should you be getting from them instead? Here are five of our go-to bookkeeping tips!
A monthly accounting service like CSI Accounting & Payroll works with you year-round, so we have the monthly financial statements and the bandwidth to offer advice on:
- Setting KPIs
- Maximizing profitability
- Industry-specific topics
- Sales and marketing
- Tax strategy (planning, projections, and preparation)
- Hot button financial items
- Money management
- Business financing
- Employment laws
Many of these topics can be addressed in the form of one-off questions that are included in your set monthly accounting fee. The best part? You can ask as many as you want!
If you have a larger-scale project or one that requires a lot of hands-on work from your monthly accountant, you can sign up for our consulting service for an additional fee.
Signs to Stop Doing Your Own Bookkeeping
At what point of confusion is there too much risk to keep doing your own bookkeeping? It depends on who you ask, but we believe that if you think you’re struggling, you should seek help immediately.
Not sure if your position justifies paying for a bookkeeping service? Here are the most common bookkeeping red flags we see from small business owners who have been handling it themselves:
- Negative numbers on the balance sheet or income statement
- Opening balance equity does not tie to the prior year
- Retained earnings do not tie to the prior year
- Items in "Ask My Accountant" or large amount of "Miscellaneous"
- No assets on the books but a large amount of "Office Expenses"
- Loans on the books but no interest expense
- No depreciation
- Large amount in "Deposits in Transit"
- Growing A/R or A/P balances
- Large inventory or Cost of Goods Sold is equal or greater than Revenue
- Large amount of owner personal expenses (not business expenses) reported
Just remember – most people who get audited are the ones who are doing the books themselves. Guessing is dangerous. Is the risk worth it?
Outsource Your Bookkeeping and Cut Your Risk
It’s okay to start with doing your own bookkeeping and seeking occasional advice, but you need to know when enough is enough and you’re putting your business at risk.
Now that you know why it’s a bad sign to seek bookkeeping advice, what other kinds of advice you need, and why you may want to stop doing your own bookkeeping, are you ready to check out monthly accounting services?
If so, please consider CSI Accounting & Payroll! To see if we can be a good fit for your business, click the button below for a free consultation:
Not ready to talk? That’s okay! First, learn more about the cost of monthly accounting by clicking the image below:
