DIY Accounting vs Hiring an Accountant: Make the Right Choice for Your Business
Did you know that 91% of UK small businesses choose to hire an accountant? This high number of companies reflects the importance of proper financial planning. In this article, we’ll highlight the differences between DIY accounting or hiring a professional to help you make a choice about what’s best for your business.
What’s the Difference Between DIY accounting and Hiring an Accountant?
DIY accounting refers to when business owners manage their own accounting obligations. While this can be completed with the use of accounting software or other tools, individuals are solely responsible for ensuring their company remains financially compliant. This form of accounting is most often chosen by sole traders or small businesses who are just starting out.
Hiring an accountant is a popular choice, as a range of accounting tasks can be outsourced to trained professionals. Companies can opt to simply have support with tax returns and compliance or choose to have accounting teams manage all aspects of a businesses finances.
What are the Main Challenges Associated with DIY Accounting?
Although DIY accounting can be an effective way to manage finances for some business owners, the following challenges tend to commonly arise:
Issues with Time Efficiency and Planning
The main issue that business owners tend to become faced with is not having enough time to keep the required plates spinning. While this doesn’t always negatively impact operations, getting finances wrong can cost companies in many ways.
Managing financial tasks, such as bookkeeping and staff payroll, takes up a large chunk of time when managed properly. Although this time is being spent on tasks that contribute to business performance, the reality is that they take away from other tasks that could be driving growth.
Gaps in Knowledge of Processes and Regulations
DIY accounting can also lead to issues when it comes to successfully managing financial obligations as expert knowledge is not available. As you may know from searching tax questions online, there are often conflicting responses. It’s therefore risky proceeding to manage financial obligations without having a strong knowledge of financial regulations and processes.
It’s also important to mention that even if a strong level of knowledge is achieved through initial learning, time needs to be dedicated regularly to researching accounting changes. HMRC and individual sectors are constantly releasing updates to improve how finances are managed. If a business owner doesn’t pay close attention, they could end up making costly mistakes.
Enhanced Stress for Business Owners
Without the support of a professional accountant, managing finances can be stressful. This ranges from the pressure to get everyday financial processes correct to the added pressure that companies will face should a tax audit be requested. In reality, without an accountant, your record-keeping may contain errors that could lead to undesirable outcomes.
Why Do Most Businesses Opt to Hire an Accountant?
Although DIY accounting can be a brilliant solution for some companies, most choose to work with a professional. This offers peace of mind for owners as all tasks associated with financial management are taken away. Furthermore, having an accountant manage a company’s finances improves efficiency, reduces errors, and ensures tax deductions can be optimised.
Having more time to focus on the business means aspects such as growth can be better managed. Moreover, having access to an accountant who understands the company aids other business objectives, as professional advice is always readily available.
If you think that working with an accountant is what’s best for your business, get in touch with our team today.