Pros and Cons of Bookkeepers vs the DIY Method

The complex process of bookkeeping can pose significant challenges for small business owners. Regardless of whether you're inclined towards managing it yourself (the DIY method) or hiring a professional bookkeeper, a thorough understanding of both approaches is important. This article offers a comparative analysis of these methods. We'll cover the pros and cons for each to help you make an informed decision for your business.

Bookkeepers vs. DIY

There are two options available for you for bookkeeping: hiring a bookkeeper or the DIY method. 

At first glance, you may think the options are easy to characterize. Bookkeepers offer benefits, such as providing a more wholesome look at your bookkeeping. The DIY method, while more cumbersome, could save you money. However, there's more to both bookkeeping methods that can make your choice harder to decide.

We've listed the pros and cons of bookkeepers and the DIY method below. 

Pros of a Bookkeeper

Whether you hire a bookkeeper for external bookkeeping or work with one in your business, having a bookkeeper offers small business owners several pros.  

1. External Bookkeepers: Neutral Oversight and Specialist Support: An external bookkeeper, being detached from your business, offers an unbiased perspective of your financial health. They can effectively manage your accounting tasks, thereby enabling you to concentrate on other crucial business matters.
2. Risk Mitigation with Professional Assistance: With an external bookkeeper, you can stave off potential complications, such as an IRS audit, or tax underpayment or overpayment. Their professional expertise can significantly reduce the risk of such incidents.
3. Internal Bookkeepers: Accessibility and Familiarity: Having an internal bookkeeper ensures constant access to your financial records, saving you both time and money. Given their close association with your business, they also have a deeper understanding of specific transactions that may potentially pose issues.

Pros of DIY Bookkeeping 

If you decide to go the DIY route for your bookkeeping, there are a couple of pros.

1. Cost-Effectiveness of DIY Bookkeeping: One key benefit of DIY bookkeeping is that you're not spending on external professional help. This approach suits those who are comfortable with tasks such as tax filing, document sorting, and proficient in the required bookkeeping software.
2. Confidentiality in DIY Bookkeeping: An added advantage of DIY bookkeeping is the privacy of your business records. For businesses placing high importance on maintaining the confidentiality of customer and employee data, this approach is particularly beneficial.

Cons of a Bookkeeper

While a bookkeeper, whether hired or within your company, is convenient, there are cons associated with them. 

1. Software Compatibility: When hiring an external bookkeeper, one might face issues such as different software preferences. They might opt for a software different from the one your business uses, potentially leading to compatibility issues.
2. Process Inefficiencies: Involving an internal bookkeeper could pose challenges too. Potential errors in the bookkeeping process due to lack of full comprehension of your industry's requirements could lead to issues with financial transactions and require additional time for assistance.
3. Time Constraints: Regardless of whether the bookkeeper is external or internal, time management can be an issue. If the bookkeeper doesn't have all the necessary financial records or if an important transaction is overlooked, time is needed to rectify these errors. The need for document retrieval in the event of an audit also contributes to time pressures, which can cumulatively become significant.

Cons of DIY

There are cons associated with doing bookkeeping on your own. If you're managing your bookkeeping needs yourself, there are several cons for you to consider. 

If you decide to DIY your bookkeeping, you'll need to remember to keep track of all of your receipts and records. In addition to running your business, you'll also be responsible for the administrative side of your finances. This is a huge drain on time that could be better spent expanding your business or working on your marketing.

1. Time Investment: DIY bookkeeping requires considerable time to collect, sort through, and upload financial transactions to your bookkeeping software. It becomes even more time-consuming if you need to correct mistakes, particularly in response to IRS queries.
2. Risk of Errors: Unless you possess professional bookkeeping skills, there's a substantial risk of making errors in your records. These inaccuracies could lead to false tax information, potentially resulting in fines or even an audit.
3. Cost Implications: Handling your own bookkeeping may seem like a cost-saving strategy in the short term. Any errors could lead to larger financial losses in the long run.

Work With a Professional Bookkeeper

Understanding the complexities of bookkeeping is essential for every small business owner. This article examined the pros and cons of hiring a professional bookkeeper versus the DIY approach, each has unique strengths and potential problems. The choice often depends on your cost considerations, time constraints, and your business's financial complexity.

For those prioritizing time and accuracy, professional help like 1-800Accountant can be beneficial. Offering extensive bookkeeping services, we simplify your financial processes while ensuring accuracy and compliance, preventing costly errors. This allows you to focus on your primary goal - growing your business.