Myths that downplay the importance of having a bookkeeper are pretty commonplace for entrepreneurs who are just starting. Time will usually prove the opposite to be true but, rather than wait until someone makes those mistakes, we’re going to take a look at three of the more common ones and debunk them.
Myth #1: Do It Myself
The “I can do it myself” myth is probably the most common because most people perceive bookkeeping to be simply inputting information—data entry. Now, while it is true that a good deal of bookkeeping does involve data entry, our job doesn’t just end there. If anything, data entry happens to be the simplest part of the task.
A bookkeeper must also reconcile accounts every month to make sure there are no discrepancies. If there are, it is their job to track down what caused the difference and then solve the problem before it can become a larger problem. You are effectively acting as an investigator, combing through every transaction to piece together the story of what happened and how to prevent it from happening again.
Naturally, all of the above takes a large amount of time that a business owner might not have. And, depending on the full scope of the work, a bookkeeper might also handle paying bills, pursuing invoice payments, providing reports, and more. Even with modern bookkeeping and accounting software, that’s still more than one person can handle while running a business.
Myth #2: Falling Behind Is Fine
The “It’s okay to fall behind” myth usually comes up when time becomes a factor. Since most small businesses don’t have to report their finances to anyone other than the IRS, many of them will wait until its tax season before going back to correct their bookkeeping. But the more you fall behind, the worst it’ll get.
It will take far more time to go back through months of transactions and bank statements than if you have attended to them monthly. You’ll also likely miscalculate your quarterly self-employment taxes (if not miss them entirely) and incur extra penalties because of it. Not to mention that if you require accurate financials for anything like budget planning or loan applications, you’re immediately out of luck.
Myth #3: My Accountant Can Handle It
Last is the “My accountant can handle it” myth. This one usually surfaces roughly around tax season, when a business owner will want to roll their previous bookkeeping duties into their tax filings. Under the belief that accountants are usually just better bookkeepers, they will foist the duty onto an accountant and call it a day.
Here’s the thing: while accountants do have duties that overlap with bookkeeping, but they are not bookkeepers. Bookkeepers handle maintaining your business’ finances for the general day-to-day. Accountants use the information provided by the bookkeeping duties in reports, tax filings, and other related things that contribute to the bigger picture.
Some accountants will offer bookkeeping services, but most are likely more proficient with taxes than bookkeeping. And those who are usually don’t have the time to go through a backlog of transactions. Nor will they appreciate needing to do so.
And with that, we here at From Red To Black LLC hope you have a better understanding of why having a bookkeeper is so important. Follow our blog for more helpful bookkeeping advice, and don't hesitate to Contact Us. We'll help keep your books in the black.
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