One of the most important aspects of running a business is bookkeeping. It’s probably also one of the most dreaded tasks of most business owners, especially those that don’t quite understand how it works or the importance of keeping careful records.
You have two options for bookkeeping when you own a business – DIY or bookkeeping services. Most business owners start with the DIY method to ‘save money’ but eventually transition to professional services. You may not realize it yet but doing your own bookkeeping can be hurting your business.
If you’re ready to make the transition to professional bookkeeping services, here’s what you should know before making the transfer.
Why Consider Bookkeeping Services – The Dangers of DIY Bookkeeping
Doing your own bookkeeping has its pros, but it has many cons too. Sure, you don’t have to pay someone to do your books for you and you are in control, but there are many dangers too. Understanding the downside of doing your own accounting can help you realize it’s time to transition and get professional help.
It Takes a Lot of Time
Running a business takes a lot of work. When you have to do the back-end work too, it can feel like you’re burning the candle at both ends. You have to make time not only to run your business but to keep track of all money going in and out of your business.
Just when you think you have a good system going, you hit an obstacle and have to start over from scratch, taking time away from your business or putting your accounting needs on the back burner, is never a good idea.
Remember too that time is money. The more time you spend trying to figure out your bookkeeping, the less time you have to run your business which could mean a loss of sales or productivity, which means losing money.
If you pay an employee to do your bookkeeping, not only do you lose time in training him/her, but then you have the financial burden of having an employee. Not only must you pay him/her a salary, but you might also have to pay benefits.
You Must Know a Lot
If you don’t know the first thing about accounting, it can be difficult to do your own bookkeeping. Not only are there complicated laws, calculations, and requirements, but the parameters change all the time. You must be able to stay on top of all the latest information to avoid penalties or issues.
If you aren’t up to speed or you fall behind on your requirements, it’s hard to catch up. This can lead to mistakes, which can be detrimental to you, your employees, and your bottom line.
When you use professional services to handle your bookkeeping and payroll services, the burden is taken off you. This leaves you much more time to focus on operating and growing your business, training employees, and keeping your bottom line above water with the help of knowledgeable accountants.
Mistakes are Expensive
You might think you’re saving money by doing the bookkeeping yourself, but what happens when you make a mistake? It could be costly and not just in dollars, but with your reputation too.
If you make a mistake on payroll or you do something wrong with vendor invoices, it could ruin your reputation and make it harder to run your business the way you want.
How to Transition to Using Professional Bookkeepers
If you’ve decided you’re ready to make the change to professional services, use these simple steps to proceed.
1. Interview Potential Services
Bookkeeping services aren’t one-size-fits-all. Do your research and take time interviewing different companies to see what they offer and who is a good fit. You are trusting your most important documents and information to these services, so you want to choose a trustworthy service that you work well with too.
Talk to any potential services about the fact that you’re transitioning from DIY and see how they respond. If they’re reputable, they’ll know how to handle the situation with ease, guiding you to a slow transition that prevents any hiccups in your process. But if they aren’t familiar with the process, they might rush you through and risk more mistakes.
2. Gather your Paperwork
Transferring from DIY bookkeeping to professional services may take a little time to get organized. When you transfer from one service to another, you pretty much know what they need and can just transfer the documents right away.
Since you handled them yourself, you’ll need to gather the following at a minimum:
- All payroll data including W-4s, I-9s, bank account information for direct deposit, and past timesheets
- All bank statements, vendor invoices, client invoices, loan statements, and reports, such as sales reports, P&L, or any other reports you created.
- All past tax documents
- All sales tax information
Your new service should be able to tell you exactly what you must provide and when so they can provide you with a smooth transition.
3. Time the Change
The hardest part will be timing the change from DIY to professional services. Since bookkeeping tasks don’t just stop, you need ample time to transition without interrupting things like payroll or sales tax reporting.
Talk to your new service about the best way to transition so that you are handling tasks as needed, but slowly handing everything over to the new service. You might transfer over some tasks but not all right away until you get a smooth process under control.
Transitioning from DIY to professional bookkeeping can seem overwhelming. Look for Vancouver bookkeepers that are experienced in the process and can walk you through slowly so you get the job done right.
While at first it might feel overwhelming or like you’re losing control, once you get into the swing of things with your new company, it will feel a lot less stressful and even more secure. You’ll know that your bookkeeping tasks are always handled on time and right while you can put your focus on running your business.