If you’re a business owner, you’ve probably asked yourself this question at some point. Maybe you’re starting out and trying to save money. Maybe you’ve been doing it yourself for a while and wondering if it’s time to get help.
I have a few thoughts to share that will hopefully make your decision easier.
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When Doing It Yourself Can Work
For most business owners starting out as a sole proprietor, doing your own books probably makes the most sense. You have very few transactions and simple activity.
What you need at this stage:
- A separate bank account just for business transactions
- A spreadsheet to track income and expenses
- A safe place to keep your receipts
This method will likely get you through the year and be helpful. But here’s what it won’t show you: the full picture of your business.
If you have loans or assets (things you own), you won’t be able to track those in a spreadsheet the same way. But for a very simple business just starting out, this can be a good solution.
When It Gets More Complicated
You might want to consider getting better tools or hiring someone when your business gets more complex.
Signs your business is getting more complicated:
- You have a partnership or S-corp (these require higher level reporting)
- You have loans or credit cards to track
- You bought equipment or other assets
- You have employees and need to track payroll
- You collect sales tax
- You have multiple bank accounts or point-of-sale systems
If any of these ring true, you’ll likely need more than a spreadsheet can give you. This is when bookkeeping software like QuickBooks Online or Xero becomes necessary.
The ABCs of Doing It Yourself (If You Use Software)
Bookkeeping software gets advertised as really simple and easy for anyone to use. But you can get yourself into a messy situation if you don’t know what you’re doing.
If you want to keep doing your own books with software, here are three things to keep in mind:
A – Accounting Basics
Make sure you understand the basics of accounting, which is the logic behind the software. As I mentioned in a prior post, bookkeeping is a part of accounting. To use the software as it was designed, you really need to understand at least the minimum basics.
There are so many ways to learn: books, YouTube channels, courses. But it will really benefit you in the long run to learn some accounting upfront.
B – Bank Separation
Make sure you have a separate bank account dedicated only to business transactions. This will help you do your books, understand what’s happening, and avoid trouble from mixing business and personal expenses (especially important if you have an S-corp).
C – Consistency
Make sure you’re updating your books regularly. Don’t wait until the end of the year to do 12 months at once. It’ll be so much easier and simpler if you do it bit by bit. You’ll actually understand what you’re doing because you’ll be doing it often.
If the ABCs already sound like a lot, you might want to consider hiring someone to help.
But if you can follow the ABCs, you can do your own books for as long as you want and feel comfortable.
Questions to Ask Yourself If You're Unsure
If you’ve been doing the books yourself and wondering if it’s time to hire someone, here are some questions to consider:
How comfortable am I with accounting and the software I’m using?
Do the accounting principles make sense? Does the software make sense? Do you know what you’re doing in there?
If you had to rate your comfort on a scale of one to ten, and it’s anything under an eight, you might want to consider getting help. Maybe have someone teach you, or offload it completely to a bookkeeper.
How often am I updating things?
If you’re updating your books monthly or weekly, and it’s just a normal part of your process, you can probably keep going.
But if it’s taking you months (or a whole year) to get to your books, you might want to have someone else do them so they actually get done and are actually useful.
How do I feel while I’m doing the books?
Do you dread it? Are you feeling negative? Do you hate your life when you’re doing them?
If you feel any of those ways, that might be a sign it’s time to let it go and give it to someone else.
What’s my budget?
Can you afford to hire a bookkeeper at this time?
Sometimes you might not have looked, and maybe you can afford it. Bookkeeping pricing varies, but I’ve heard it could be one to three percent of revenue as a general figure.
If you can afford to spend a few hundred dollars a month to take the books off your hands, that might be a sign it’s time to pass it along.
What would hiring someone free up for me?
Think about the time, energy, and emotion that goes into doing your bookkeeping. What would you be doing instead if you weren’t doing that?
If you passed it off to someone good who was actually taking care of it for you, what would that free up? What would you be able to do in your business? What would you be able to do in your life?
If giving it away to someone else would make you feel more at peace, more comfortable, more relaxed, that might be a sign it’s time to hand it off.
Also consider: If you look at how much you make per hour and how many hours you’re spending on your own books, you might find you could spend more time on income-generating activities and hand off your bookkeeping. It might be a net positive.
The Bottom Line
However you pay yourself, the goal is the same: be intentional.
Through your answers to these questions, you’ll start to feel whether it’s time to continue doing the books yourself, get some help, or hire someone to do your bookkeeping completely.
And if you do decide to hire someone? My next post is about how to find the right person for you.
Have Another Question?
This is part of my Ask This Bookkeeper Anything series, where I answer real questions from business owners about bookkeeping and money stuff.
Got a question you’d like me to answer? Submit it anonymously here: https://forms.gle/JAxedbfEfaaSsBoQ6
Curious what a bookkeeping partnership with me might look like?
