Accounting and finance are a part of every business, no matter the size. And the faster you grow, the sooner you have to decide how you’ll manage your accounts. It’s a tough decision: should you manage your own accounting, hire someone in-house, or outsource it? The answer depends on several factors:
- Your time and financial resources
- Your comfort with using your accounting program and filing taxes
- Whether there is benefit in hiring a professional
The DIY Approach
For many business owners, updating their accounts is just another daily task they don’t mind doing. If you understand how to record income and expenses and run reports like Profit and Loss Statements, and if your taxes don’t require sophisticated wrangling, you should be fine doing your own accounting. Also, many programs will automatically download your bank transactions, making it even easier to manage finances.
Doing it yourself can save you the expense of hiring someone, which is ideal for brand new businesses or those that are cash-strapped.
Hiring a Pro
If you don’t have either the time or desire to do your own accounting, consider hiring a professional. Now, here you have two options:
- Hire a full- or part-time employee who will work on site
- Retain the services of an accountant to perform regular maintenance of your accounts and handle tax filing
If you process a high number of invoices or transactions, it might make more sense to hire an employee. If you like to check in on what’s happening with your finances, this makes it easy to do so. But if you prefer a hands-off approach, or if you need an even more sophisticated solution, look to accounting professionals that have experience in working with businesses in your industry. They’ll know the intricacies surrounding tax laws for your field, and can help you pay less in taxes come tax time.
Realize that you will pay more, whether you hire internally or retain a firm. Make sure it makes sense to spend the money on your accounting before you make the move. Will outsourcing it give you more time to focus on what you do best — growing your business? Will you recoup the expenses elsewhere, such as in the amount you save on taxes?
Whichever solution you decide on, make sure you or your accountant is up to date on tax and finance laws to avoid the likelihood of being audited.