The issue of doing your own bookkeeping became prevalent with the advent of low cost accounting software in the early 1990’s. On September 27, 1994 Intuit purchased a program called MoneyCounts from Parsons Technology for $64 Million. Intuit changed the name of MoneyCounts to QuickBooks and created a very effective Unique Selling Proposition “You can save money by doing your own bookkeeping”. That USP resulted in Intuit capturing almost 85% of the small business market. Accountants were no fans of this extremely popular software program for several very valid reasons. First, it was not a true accounting program with serious security flaws. Second, it was promoting inexperienced individuals take on a crucial segment of the financial process. Third, it was distracting business owners from their core business, and last, it drastically cut into the accountants business.
Addressing all of the issues concerning DIY bookkeeping in great detail would require a book. I will cover as many of the main issues here to provide the reader with an opportunity to gain a better understanding of an extremely important subject. I welcome any questions and comments regarding the subject matter in an attempt to assist entrepreneurs that may not have had the opportunity to properly make an informed decision.
If you’re reading this special report chances are you’re one of the millions of small business owners struggling with the issue of “doing your own books”. For many, the idea of retaining an outside bookkeeper or accountant to handle your personal financial matters is sort of like opening up your closet to a complete stranger. I believe that this issue of personal privacy is valid. To be perfectly honest, one of the reasons I decided to become a CPA was because I knew I would be in business and wanted to be in control of my own finances. Most entrepreneurs don’t have that option or the skill set. The issue of DIY bookkeeping is of tantamount importance because it could affect the financial viability of the enterprise. There are a number of issues to address including:
The use of bookkeeping information to prepare tax returns
The integrity of the financial information produced
The validity of historical data to project future results
The management of cash flow
The cost of retaining a professional
The time, effort and frustrations of keeping your own books
Addressing the government’s increasing propensity to audit
The time and effort learning about bookkeeping
Creating the bookkeeping processes
The trust factor
As you can see there are a lot of issues to address bookkeeping bedford in making the right choice. This is by far, not all inclusive. There may be many other legal, financial and/or personal issues at stake. The point here is that the subject of creating and maintaining a set of books and records for a small business is of significant importance. The decision as to how it will be done should not be made on a whim or by the uninformed. An individual operating a small business doesn’t know what they don’t know. Operating a business comes with certain responsibilities and obligations. Not knowing is not a valid reason when the books and records fall into question. I submit that as business owner it is your duty to know exactly what the issues are and make an informed decision about addressing each of them. You are, by default, the President of your company which comes with all of the associated responsibilities including tax, legal and personal liabilities.
Reasons & Excuses
Most, if not all startups take on the task of creating their own set of books and records for a few simple reasons:
No funds to retain a professional
Limited amount of transactions
Exposing personal financial information
The perception that it’s easy
The propensity to procrastinate
Every business must file a tax return. Eventually the issue of bookkeeping must be addressed. Millions of individuals choose to prepare their own tax returns which is another issue all by itself. Let me address that before going further. It’s a real easy one and not because I prepare tax returns but because of the complexity of the tax laws, both Federal and State.
I can compare the idea of an individual preparing their own tax return to pulling out my own teeth. When I was a child my teeth came out naturally. I didn’t have to go to the dentist to have them pulled professionally. Even if I pulled them out when I shouldn’t have, eventually my permanent teeth would grow in to cover up my mistaken belief that I was a dentist. As an adult I know better. Hopefully, if you own a business you know better. To attempt to prepare your own tax return would be the same as trying to be your own dentist.