You don’t have to pay someone to do your accounting for you. In fact, a growing number of business owners and solopreneurs are choosing the DIY route.
It can save you money! And with today’s user-friendly accounting apps and online tutorials, it’s never been easier to do your own accounting.
But of course, there are risks to doing it yourself. Make mistakes, and you may face audits and penalties. It’s also more time-consuming to do it yourself.
It all comes down to taking the right approach to DIY accounting. This includes following a few important dos and don’ts, which this post delves deeper into.
The Dos of DIY accounting
Do take time to educate yourself on the basics
Developing a basic knowledge of accounting is key to make sure that you’re meeting all the right regulations and to make sure that you’re not missing out on any deductions. Consider workshops and online courses to help you build this foundational knowledge. You’ll also need to keep up to date with changing tax laws.
Do invest in reliable software and tools
Investing in decent accounting software can make DIY accounting much easier. This software has tools to automate tasks like record keeping, invoice filing and tax calculations. If you’re hiring employees, you’ll also need to invest in payroll software to stay compliant.
Do adopt meticulous routines for record keeping
Tracking every business transaction is key to record keeping. Modern accounting software can automatically track all digital transactions, but you may still need to manually label and confirm some of these transactions. When it comes to paying with cash, you’ll need to keep physical receipts. Get into the habit of asking for receipts and keep these receipts somewhere safe and secure.
The Don’ts of DIY accounting
Don’t mix personal and business finances
Fully separating your personal and business finances is recommended for reducing confusion and separating liability. Start by opening separate bank accounts for personal and business purposes. Then consider whether it's worth setting up a limited company to separate your business debts and personal debts. Be wary that there are extra fees for doing this.
Don’t neglect seeking third-party financial advice
Just because you’re doing your own accounting doesn’t mean that you can’t still outsource financial advice. You may even be able to pay accountants to help with strategic planning or auditing, while still doing your own general bookkeeping yourself.
Don’t fall victim to procrastination
It’s very easy to put off filing taxes or setting up a payroll until the last minute. This can lead to unnecessary stress and potential missed deadlines if you forget about certain obstacles or you have to deal with other emergencies. By doing accounting tasks early, you’ll give yourself time to deal with any challenges and avoid penalties.
All in all, it’s important to educate yourself and have discipline when choosing to do your own accounting. This will prevent unwanted mistakes and unnecessary stress. If you find DIY accounting too hard, weigh up whether it is worth outsourcing help.
