Everything You Need To Know To Be Your Own AccountantBy Skillcrush
Jul. 6 2021, Published 5:30 a.m. ET
If you’re thinking of starting your own business, you need to start investing in the tools and resources that will make your job easier and put you in a position for success. Part of that investment is figuring out which aspects of regular business maintenance you can do yourself, as opposed to hiring expensive contractors to do the work for you. But there’s a fine line when it comes to what falls under the DIY umbrella—you wouldn’t want to be provide your own legal advice, for instance.
I reached out to three small business owners. Here’s what they had to say.
Doing Your Own Business Accounting Is Easier Than Ever
Doing your own business accounting isn’t only possible for business owners, it’s easier now than at any time in modern business history. Marg Hyland, the owner of dress design and manufacturing company Pegeen Flower Girl Dress Company, says she’s been doing her own accounting and bookkeeping since starting the business in 1982. She says this process took two to three hours a day before the advent of personal computers, but she felt it was a necessary measure to save money and to succeed as her business grew.
Thirteen years later Hyland’s business moved online and affordable accounting software became commonplace, which was a total game-changer. Today, Hyland spends less than two hours a week (as opposed to 15 or 20 in her early days) managing her books, in addition to meeting with a tax accountant once a year to review her taxes and make sure she’s compliant with tax laws. If it was possible for Hyland to handle her accounting by hand in 1982 (albeit with a good amount of effort), it’s definitely possible in 2018 with so many of these processes now automated and manageable with online tools (see below).
Tools of the DIY Accounting Trade
It’s easy to say that doing your own accounting and bookkeeping is possible due to contemporary home accounting tools, but what exactly are those tools?
Deborah Gallegos, Co-Owner at video production company Making a Scene Productions says she’s been doing her own accounting since the company formed eight years ago, and she does it using the accounting software package QuickBooks. She adds that there was a learning curve for using the software at first, but it was baked into the bigger, general learning curve of building start-up businesses and understanding how business finances work.
Gallegos taught herself how to use the software through YouTube tutorials and ultimately found the basics to be easy. Once she moved past the fundamentals, she then relied on further Google and YouTube searches whenever unique circumstances came up. “QuickBooks really seems to cover everything I need as a small business owner,” Gallegos says. “We hand over our financial reports via QuickBooks each year at tax time and our tax preparer says they are always very easy to work with.”
In addition to QuickBooks, Hyland points to Quicken—another commonly used and available accounting software program—as a solution for business accounting needs. Quicken was actually the predecessor to QuickBooks (originally developed by the same company) but was intended more for personal finances than small businesses. Still, for her online business’ bookkeeping and accounting needs, Hyland says Quicken has always been perfectly adequate and, like QuickBooks, its output transfers easily to her tax preparer.
Finally, Ada Chen Rekhi, Founder and COO at collaborative notes platform Notejoy, says business start-ups like hers can maintain their bookkeeping and accounting with nothing more than spreadsheet software like Google Sheets. Rekhi says that as her business grows and becomes more complex she envisions moving to an accounting software package like QuickBooks, but that a simple spreadsheet approach is a good first way to get a handle on your financial data and to keep track of your early accounting and bookkeeping.
Meanwhile, whether you use personal accounting software, software geared toward small business finances, or a basic spreadsheet program, there are plenty of resources online to learn how to make the most of these programs and how best to approach financial record keeping, generally speaking.
Along with Gallegos’ recommendation of Google and YouTube searches, QuickBooks’ parent company Inuit has a number of free resources on their own site geared toward bookkeeping and accounting for individuals and businesses while sites like Lynda offer free Quicken courses and resources like Udemy offer affordable classes on basic business accounting.
It’s Worth It to Do Your Own Accounting
So it’s totally possible to do your own accounting, the tools are relatively basic and commonly available, and online learning resources abound. But is it worth it? What are the benefits to doing your own business bookkeeping and accounting other than simply because you can?
For business owners like Rekhi who are overseeing a business in its early stages, it’s all about controlling expenses, With sites like Upwork citing accountant rates between $20 an hour for junior accountants and $150 or more an hour for senior business consultants, farming your bookkeeping and accounting to someone at the middle (or even lower half) of that range can easily balloon into hundreds of dollars a month.
Rekhi says the tradeoff between the time she spends doing her own accounting and the cost of hiring someone else to do it is completely worth it at this phase in her company. “Each month I update a note in our Notejoy app that documents our monthly processes, including links to the spreadsheets I use to track things and each service (bank accounts, payment processors, vendors, etc.) that I need to check in order to update the books,” Rekhi says. She adds that her company has also established processes for where to keep receipts and how to track expenses for their team as a way of making sure their accounting stays fast and efficient. “It’s really important to stay on top of maintaining your books because otherwise, it can quickly snowball into a multi-hour effort,” Rekhi says.
Beyond the monetary savings, there’s also the benefit of saving time. Rekhi says she’s learned from past experience that hiring accountants and other vendors can sometimes lead to more time spent than if you simply did the job yourself—according to Rekhi, getting your receipts and accounts in shape is the bulk of the work behind accounting anyway, and you’ll end up doing this whether you handle the final steps of the process or hand your work off to someone else. Particularly for small businesses where financial data is relatively easy to keep track of, Rekhi says this becomes a no-brainer.
Gallegos adds that there’s another tangible benefit above any savings of time or money, and that’s the fact that doing your own business accounting gives you a hands-on understanding of your finances.
By balancing her own books, Gallegos says she knows where her business stands with profit and loss at any given moment, and can make quick decisions based on that information. While she says that she’s open to changing her approach and seeking the help of a professional accountant as the company grows and evolves, at this point the trade off of doing it herself and being hands on remains worth it.
The takeaway here? Whether you’re a freelancer keeping track of your clients or a startup business trying to make the most of your time and money, managing your own accounting is a helpful soft skill to add to your toolkit.
Take some time to familiarize yourself with different software options, find which platform works best for your needs, and don’t hesitate to branch out and try some free or inexpensive online accounting classes and tutorials.
This post was written by Scott Morris and originated on Skill Crush.