Risks of DIY Bookkeeping That You Should Understand
While learning the risks of DIY bookkeeping, one must understand why bookkeeping is a very sensitive operation that requires optimum proficiency and expertise.
Bookkeeping is a part of accounting that is mainly associated with keeping a record of financial transactions. These transactions include sales, purchases, payments, and receipts carried out by an individual, a specific department, or the whole organization. Similarly, it is one of the most sensitive operations that demands optimum accuracy and attention to detail.
As the use of the Internet has grown enormously over the past decades, a new world of Do It Yourself (DIY) has been dominant. There are millions of tutorials and how-tos in multiple topics across multiple disciplines. This has led to the thinking that one can gain basic or even advanced proficiency in any subject they wish to pursue.
Bookkeeping is a mandatory task for all businesses, both small and large. Therefore, there are tons of resources for learning bookkeeping that will suffice for the early stages of a company. Similarly, cautious business owners will look to cut expenses while hiring a professional bookkeeper. Furthermore, the development of advanced bookkeeping and accounting software, in general, has reduced much of the complications.
Risks of DIY Bookkeeping
DIY Bookkeeping might look like a promising prospect when it comes to cutting down costs during the early stages of a company. However, this might prove counterproductive and costly in the long run. Bookkeeping being a sensitive process, any mistakes or shortcomings will only invite more time-consuming corrections and amendments.
If you are a business owner thinking of taking the matter into your own hands, you must understand these risks of DIY bookkeeping.
Limited Knowledge of Accounting and Taxation
One of the primary risks of DIY bookkeeping is that you will be short of knowledge. Even though the Internet can be your friend, you cannot beat education and experience. Similarly, bookkeeping is not an isolated task. You must possess the knowledge of accounting and taxation guidelines. Similarly, since the organization and government policies are changing frequently, you must also keep up with them. Any mistakes, whether minor or heavy, will disrupt the balance in your books and cause possible penalties and fines.
Hence, you must understand that your lack of knowledge and training in bookkeeping will prove to be counterproductive and cost you in the long run. There is a reason why most if not all companies employ professional accountants. Likewise, you must understand that accounting is a very demanding subject and requires extreme dedication during the years of learning.
Lack of Time
One of the greatest risks of DIY bookkeeping is that it will consume most a huge chunk of your working time. For a new business owner, there are a lot of things to keep track of. Building new partnerships, attaining and retaining customers, and marketing and sales are the most important tasks during the initial stages. Therefore, you must dedicate most of your effort and focus and effort in these tasks. Divided attention means none of your tasks will be carried out decently. Since bookkeeping is a time-consuming task and requires multiple checks and comparisons, you would do better to keep out of it.
One of the major risks of DIY bookkeeping is the possibility of missing important deadlines. Bookkeeping is not a task that you can toss up and leave for next month or next year. There are strict deadlines that you must follow or risk penalties from tax officials. Procrastination and leaving your tasks for the last minute will only increase inaccuracies and cause further damage.
Too Much Dependence on Technology
One of the unseen risks of DIY bookkeeping is the heavy reliance on technology. Since you are likely to learn from online courses and tutorials, much of those will be based on software. However, too much reliance on technology will degrade your ability to understand your books as it will hide critical information.
Software Learning Curve
Another one of the risks of DIY bookkeeping is the lack of time to properly understand the software that you will be using. No matter how you gain your accounting knowledge, your practice will mostly be based on software. Therefore, since learning new software takes time and mastering it takes years, you might be missing out on the best tools and practices. Furthermore, not all software built will be a good fit for your organization and its operations. Without a decent experience, you will not be able to understand this beforehand.
How Can We Help?
We learned the major risks of DIY bookkeeping and why it would be better to hire a professional. In short, you make better use of your time and leave sensitive tasks to those who can carry it out accurately.
3E Accounting is a world-class bookkeeping service provider in Hong Kong who can take care of your books efficiently so that you can focus on more important tasks. Our professionals have unmatched expertise and years of experience in this field. This allows them to build solutions that are the best tailored for your business.
Even though our services are top-quality, they are still very affordable. Moreover, our guaranteed satisfaction is backed by thousands of our customers worldwide.
You can directly contact us for more information.