Running the books for a small business is like handling your personal bank account, right? All you have to do is handle paying employees, buying supplies, analyzing current incomes revenues, taking care of monthly bills, keeping track of all your receipts for tax write offs and what feels like a hundred other things.
Alright, so it’s not quite like keeping tabs on your bank account. It requires time, and more importantly, money.
Let’s say you want to keep track of your own books. How much will that cost you?
Hypothetically, you’ll spend an average of 50 hours a month doing accounting work for your business. Your business makes an average of $3 million in revenue (the average gross revenue of most small businesses) and you give yourself a hearty $200,000 salary. The cost of paying yourself to do your own accounting is $5000 a month, or a yearly salary of $60,000.
That’s right, $60,000 a year to do your own accounting. And that’s just paying yourself to do the work, not including accounting software and other related costs. Both money and time you could be spending doing something you specialize in, and that you want to do.
Accounting for Human Error
Everybody makes mistakes. Yet the difference between catching mistakes and letting them slip through the cracks comes with experience, knowledge, and time; three things you may not have in the accounting business.
So what accounting errors are you missing?
Let’s say that it’s tax season and you have decided to handle your business's taxes. There are tons of things to consider, including:
Are you making sure every expense is itemized correctly?
Have you caught all the deductions you are eligible for?
Do you have proof of every time you reimbursed an employee for a business expense?
Have you projected out your tax needs four or five years into the future and planned out the best route to save money in the long term?
All of these questions can cost you huge sums of money if answered incorrectly- anywhere from a smaller tax refund to being audited by the IRS and losing thousands of dollars in tax fees.
Here’s another example of how a mistake could hurt you. Let’s say you are checking your books and accidentally add another zero somewhere. This could result in showing you are in the black when you are really in the red. It could skew decisions you will make about the future of your business!
Wanted: Bank Robber
The world is a scary place, full of people looking to steal unprotected assets. Taking charge of your small business’s books means being extremely diligent watching those assets.
Do you know how to handle somebody embezzling money from your business? What about fraudulent withdrawal of funds from your bank? How do you combat excessive and unnecessary bank charges?
These are all ways that you can lose money if you aren’t watching your accounts on almost a daily basis.
Does this Keep You Up at Night?
Do you feel stressed after reading this? Are you losing sleep over managing your books? You’re not alone.
Running a small business is filled with stress, and that stress can affect your work, performance, and your health. You can’t afford distractions from your business. You have to stay in tip-top shape to expand your venture into the powerhouse it can be.
Trust DOAAR with your accounting needs. With experience, extensive knowledge, and a passion for growing our clients’ businesses, we want to help you.
Together, we can identify your accounting needs and develop a plan to grow your business.