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As a small business owner, you have to make many decisions that affect your finances, such as how to manage your accounting. Accounting is the process of recording, organizing, and reporting your financial transactions, such as income, expenses, assets, liabilities, and taxes. Accounting is essential for keeping track of your cash flow, complying with tax laws, and making informed business decisions.

However, accounting can also be a complex and time-consuming task, especially if you are not familiar with the accounting principles and practices. That’s why you may face the dilemma of whether to do your own accounting (DIY accounting) or hire an accountant to do it for you. Both options have their pros and cons, and the best choice depends on your needs, preferences, and budget.

In this article, we will compare the pros and cons of DIY accounting vs hiring an accountant, and help you decide which option is best for your small business.

DIY Accounting: Pros and Cons

DIY accounting means that you handle your accounting yourself, using accounting software or tools, such as QuickBooks, Xero, FreshBooks, or [Wave]. DIY accounting can be a good option for small businesses that have simple accounting needs, such as sole proprietors or freelancers. Here are some of the pros and cons of DIY accounting:

Pros of DIY Accounting

• Cost: One of the main advantages of DIY accounting is that it can save you money on professional fees. Accounting software or tools are usually free or low-cost, and you can use them anytime and anywhere. You can also avoid paying for services that you don’t need or use and only pay for the features that you need.
• Control: Another benefit of DIY accounting is that it gives you more control over your financial data and records. You can keep direct oversight of your financial details, and access and update them whenever you want. You can also customize your accounting software or tools to suit your preferences and needs and integrate them with other tools that you use, such as your POS system or your bank account.
• Insight: A third advantage of DIY accounting is that it can give you more insight into your business’s financial performance and position. By doing your own accounting, you can gain a deeper understanding of your income and expenses, assets and liabilities, and cash inflows and outflows. You can also analyze your financial data and identify your strengths and weaknesses, opportunities and threats, and trends and patterns.

Cons of DIY Accounting

• Time: One of the main drawbacks of DIY accounting is that it can take a lot of time and effort. Accounting can be a tedious and complicated task, especially if you have multiple transactions, accounts, or tax obligations. You may have to spend hours or days each month to record, organize, and report your financial transactions, and to prepare and file your tax returns. This can take away time and energy from your core business activities, such as marketing, sales, or customer service.
• Errors: Another disadvantage of DIY accounting is that it can increase the risk of errors and mistakes. Accounting requires a lot of attention to detail and accuracy, and even a small error can have a big impact on your financial statements and tax liabilities. If you are not familiar with accounting principles and practices, you may make errors or omissions in your accounting records, such as missing transactions, duplicate transactions, incorrect amounts, or wrong classifications. This can lead to inaccurate financial statements, tax penalties, or audits.
• Expertise: A third drawback of DIY accounting is that it can limit your access to expertise and advice. Accounting can be a complex and dynamic field, and it can be hard to keep up with the changing accounting standards and tax laws. If you do your own accounting, you may miss out on the valuable guidance and support that a professional accountant can provide. A professional accountant can help you with the technical aspects of accounting, such as bookkeeping, tax preparation, and financial reporting. They can also help you with the strategic aspects of accounting, such as financial planning, budgeting, and forecasting.

Hiring an Accountant: Pros and Cons

Hiring an accountant means that you outsource your accounting to a professional accountant or an accounting firm, such as TMD Accounting1. Hiring an accountant can be a good option for small businesses that have complex and diverse accounting needs, such as corporations or partnerships. Here are some of the pros and cons of hiring an accountant:

Pros of Hiring an Accountant

• Time: One of the main advantages of hiring an accountant is that it can save you time and hassle. An accountant can handle your accounting for you, and take care of all the details and paperwork. You can delegate your accounting tasks to an accountant, and focus on your core business activities, such as marketing, sales, or customer service. You can also rely on an accountant to meet your deadlines and obligations, and to keep your accounting records and financial statements up to date.
• Accuracy: Another benefit of hiring an accountant is that it can ensure the accuracy and completeness of your financial data and records. An accountant is a trained and certified professional who has the knowledge and skills to perform your accounting correctly and efficiently. An accountant can help you avoid errors and mistakes in your accounting records, such as missing transactions, duplicate transactions, incorrect amounts, or wrong classifications. This can lead to accurate financial statements, tax savings, and compliance.
• Advice: A third advantage of hiring an accountant is that it can provide you with expertise and advice. An accountant is not only a technician, but also a strategist who can help you with the technical and strategic aspects of accounting. An accountant can help you with the technical aspects of accounting, such as bookkeeping, tax preparation, and financial reporting. They can also help you with the strategic aspects of accounting, such as financial planning, budgeting, and forecasting. An accountant can also help you with other business matters, such as business formation, financing, growth, or exit.

Cons of Hiring an Accountant

• Cost: One of the main drawbacks of hiring an accountant is that it can be expensive. An accountant can charge you by the hour, by the project, or by the service, depending on their qualifications, experience, and reputation. You may have to pay for services that you don’t need or use, or for features that you don’t need. You may also have to pay for additional fees or expenses, such as travel, software, or materials.
• Control: Another disadvantage of hiring an accountant is that it can reduce your control over your financial data and records. You may have to share your financial details and access with an accountant and trust them to handle your accounting properly and securely. You may also have to rely on an accountant to provide you with your financial data and reports and to update them regularly. You may also have to adjust your preferences and needs to suit your accountant’s style and methods.
• Compatibility: A third drawback of hiring an accountant is that it can create compatibility issues. You may have to find an accountant who is compatible with your business, your industry, and your personality. You may have to look for an accountant who has the relevant qualifications, experience, and reputation for your business and your industry. You may also have to look for an accountant who has the same vision, values, and goals as you. You may also have to look for an accountant who is easy to communicate and work with.

Conclusion

Deciding whether to do your own accounting or hire an accountant is an important decision for your small business. Both options have their pros and cons, and the best choice depends on your needs, preferences, and budget. You should consider the factors and best practices that influence your accounting needs, such as your business size, structure, industry, complexity, and goals. You should also weigh the advantages and disadvantages of each option, such as the cost, time, accuracy, control, insight, expertise, and advice.

If you need professional help with your accounting, you can contact TMD Accounting, the best small business accountant in NJ. We offer a range of accounting services, including bookkeeping, payroll, tax, and accounting, for small businesses in various industries. We have the expertise, the experience, and the resources to handle your accounting with accuracy and timeliness. Contact us today at (856) 228-2205, or email us at info@tmdaccounting.com, or visit our website at https://tmdaccounting.com/. We are located at 202 Ganttown Road, Turnersville, NJ 08012. TMD Accounting, the best accounting firm in New Jersey.