The financial side of running a small business is always one that can cause problems. Often causing a lot of stress and anxiety purely because of what it is (get your figures wrong and you could be facing a whole host of different issues), you have two options available to you – take the time to manage things yourself or hire an account to do all of the hard work for you.
From my own experience, I’d say that the majority of small businesses decide to do their own accounts to begin with, usually because they want to keep their outgoings to a minimum. However, after a couple of months, I don’t think it would be out of place to say it’s probably about half and half, generally due to the fact business owners realise they don’t have the time nor experience to effectively manage their accounts.
In your situation, whether you’re a brand new startup or an established small business, should you do your books yourself or would it be more appropriate to hire an accountant?
Undoubtedly an individual decision, the best way to make your choice is to view both options and work out which is more suitable for you.
For example, looking at the DIY route, the most obvious benefit is you won’t have the outgoing of having to pay someone else to manage your accounts. It will take up your time – time which is already precious and a sparse commodity – but for many small business owners, they don’t have any other option, as they’re already trying to work on a shoestring budget.
One of the main downsides to the DIY route – and arguably the most notable positive aspect of hiring an accountant – is that you’re unlikely to know how to do anything other than the basics. For example, you’ll know how to record what you spent on an obvious level, what you made (through product sales, for instance) and produce the resulting balance.
Should you decide to hire an accountant, however, they’ll know exactly what you can and can’t class as an expense. This means that whilst the accountant may cost you X amount of money each month, they’ll be able to advise on expenses that you may otherwise not have known about, which could prove to be invaluable to reducing the amount of tax you pay at the end of the year.
This decision really isn’t one you should make lightly, no matter which way your thoughts are swaying. Hiring an accountant can undoubtedly be a fantastic option, but it can’t be forgotten that the cost can be substantial, particularly for a small business. Therefore, as much as an account can be the best choice for some, if their cost is going to prove to be too detrimental to your small business’s success, the DIY option may very well be the better choice.