As a small business owner, juggling multiple tasks is part of the daily routine. Among these responsibilities, bookkeeping often ranks as the least favorite. Studies show that nearly 50% of small business owners consider accounting their number one least favorite task. Yet, a surprising 65% of business owners choose to handle their bookkeeping themselves, which can lead to late entries, costly mistakes, and confusion due to a lack of understanding and reluctance to seek help. On the other hand, the remaining 35% of business owners opt to outsource their accounting, but traditional bookkeeping services may leave them detached from real-time financial information.
There are many factors to consider, and we’ve prepared this article as a short guide to help you make the right decision– for your business, and for your peace of mind.
DIY Bookkeeping for Small Businesses in Canada: Pros and Cons
Pros
Cost-Effective Solution: DIY bookkeeping using platforms like QuickBooks, Wave, or our free software offers a low-cost solution, ideal for budget-conscious small businesses.
Control and Flexibility: Managing your bookkeeping in-house gives you complete control over your financial data and the flexibility to update records as needed. You’ll also have a hands-on understanding of everything that’s going on inside your business.
Cons
Time-Consuming: Bookkeeping is a time-consuming task that takes you away from core business activities, potentially hindering business growth. Most small business owners spend hours on bookkeeping– hours that could be spent on higher-value tasks.
Potential Errors: Lack of expertise and knowledge may lead to costly errors, leading to financial discrepancies and compliance issues. This is especially true if your business is complicated, or during situations like tax season, hiring, or expanding the business. The risk of making errors can be significant and cause serious repercussions in some cases.
Outsourcing Bookkeeping for Small Businesses in Canada: Pros and Cons
Pros:
Professional Expertise: Outsourcing to accounting firms provides access to expert accountants with specialized knowledge and experience in small business bookkeeping.
Time-Saving: By entrusting your bookkeeping to professionals, you free up time to focus on strategic business decisions and revenue-generating activities.
Real-Time Insights: Modern services, like ReInvestWealth, offer real-time financial data and insights, empowering you to make informed decisions promptly.
Cons:
Higher Cost: Outsourcing may come with a higher price tag compared to DIY solutions. However, the value gained from expert support may outweigh the cost.
Dependency on External Partners: Outsourcing means relying on external parties for critical financial tasks, and communication and trust become essential factors. This also means you should ensure you still have a close eye on things and a general view of what’s going on in your finances.
Evaluating Your Options
Choosing between DIY and outsourcing the bookkeeping for your small business in Canada depends on your unique needs and your comfort level with bookkeeping tasks. Consider the following factors:
Business Complexity:
If your business involves complex transactions, multiple revenue streams, or inventory management, outsourcing may provide the expertise needed to handle these intricacies. Even small changes such as payroll or sales tax may make it difficult for you to handle everything yourself.
Time Availability:
Evaluate how much time you can realistically allocate to bookkeeping without compromising your core business operations. Not only that, but consider the value of your time. You may have hours to spare, but consider the value of those hours if they were to be spent on other, revenue-generating tasks within your business.
Financial Goals:
Assess your financial goals and the value you place on accurate financial reporting. Expertly managed bookkeeping can provide insights to help you achieve your objectives. By keeping your financial goals in mind, you can ensure to select the right platform to support your choice– regardless of the balance between DIY/outsourcing. No matter what you choose, the ultimate direction should be towards your overarching financial and business goals.
The decision to handle bookkeeping DIY-style or outsource it ultimately boils down to the trade-offs you are willing to make. At ReInvestWealth, we believe that most small businesses would benefit from a combination of both methods. Automate what you can, and outsource only what you need to. That’s why we created ReInvestWealth Copilot, an AI Accountant that takes care of bookkeeping tasks which would normally be done manually. Not to mention– we’ve also addressed the “Higher Cost” aspect of outsourcing, by making this solution 10x cheaper than your typical bookkeeping service.