Every business owner needs something of a DIY attitude to succeed. This particularly true in the early days of a new venture.
And as Kiwis, we are perfectly equipped for a bit of DIY on any occasion. All we need is a bit of number 8 wire, right? Or maybe some duct tape like MacGyver?
However, to successfully run and grow your business, you can’t be all about the DIY. You also need to recognise the tasks that you are better off outsourcing.
Bookkeeping is an area commonly handled in-house. While on the surface you may think you are saving money this way, dig a little deeper and you’ll see there are hidden costs involved in trying to handle this essential task on your own.
Want to know the real cost of DIY bookkeeping? Then read on…
The Real Cost Of DIY Bookkeeping
Do The Math
Let’s start at the beginning by doing the math about…. well, doing the math!
By doing your own bookkeeping, you are not spending the money every week on a professional bookkeeper. But that doesn’t mean your bookkeeping is done for free! It still takes time, and time is money.
Let’s say you decide to do this job yourself, even though you have minimal training. So, how much is your time worth? Shall we say $100 per hour (and that’s likely a low estimate, but it makes for easy math!). Let’s assume you decide to dedicate an hour every day to balancing the books, creating invoices, checking your cash flow, and coding transactions.
Already you are up to $500.
Add in another hour or two per week to research some of the tax stuff, scan and sort receipts, and sort the payroll. You’re looking at a minimum of around $600 – $700 worth of your time a week just to stay on top of things. That doesn’t even include learning how to use your accounting software efficiently, chasing up late payments, and understanding your tax responsibilities!
Now, let’s consider the cost-effectiveness of outsourcing to an expert. Firstly, they are going to be able to do the same amount of work as you in a fraction of the time – probably two or three times faster. Plus, they know their way around the software, the legal stuff, and are far less likely to make mistakes.
And it is safe to say they won’t cost you $700 a week in fees!
Smart Business Decisions Are Priceless
Smart business decisions are made using accurate data – and accurate data is dependent on accurate bookkeeping. It’s not just about popping figures into a spreadsheet and pressing enter. A professional bookkeeper ensures the finances are entered correctly and the information presented to you is up to date, so you can guide your business using the best information available.
They also make sure everything is accounted for correctly, coded as it should be and you are ticking all the legal boxes for the IRD. These are things that you simply can’t put a price on!
Errors Can Be Costly
While accounting software can make life easier, it’s only as good as the human entering the data. If you make a mistake, chances are your software isn’t going to pick up the misplaced decimal point or wrongly coded transaction. But a bookkeeper will!
Getting your figures wrong can send your business in the wrong direction, incur penalties at tax-time, or cause you to miss out on money that could be coming your way.
The Mental Cost
Along with the financial costs of DIY bookkeeping, it’s essential to think of the costs to your energy and focus. As much as we would like for both those things to be unlimited, you can only work so many hours in a day.
Wouldn’t you much rather use your brainpower on things that motivate and energise you, rather than those that bore you or stress you out?
Plus, if you get to focus your energy on the things that you do best in your business, you can boost your sales and bring in even more money! Who wouldn’t sign up for that?
When it comes to your business, DIY bookkeeping is not mandatory. If bookkeeping isn’t your cup of tea, pass it on. You will find the benefits to your business, your bank account, and your peace of mind far outweigh the costs on paper.
Ready to pass on your bookkeeping? Then we are ready to take it off your hands.