Many small business owners take on more roles than they should when starting a small business. Some owners ask if they can do their own accounting for their small businesses.
The truth is you can do your own accounting for your small business as it has become easier with more resources at business owners’ disposal.
Should a Small Business Owner do Their Own Accounting?
As a small business owner, getting hands-on with your own books means you will be able to see the income and expenses easier. You’ll want some knowledge of the numbers in business even if you don’t prepare the books or accounting records yourself.
Luckily, doing accounting for a small business has only gotten easier with solutions like QuickBooks personal.
Look at the trade-off between your time spent doing accounting for your small business vs working on your small business to move it forward.
If you are bootstrapping or trying to use your own money to get the business running then you may need to track your income and expenses in the first year if you don’t have income coming in.
It almost goes without saying that doing your own accounting is cheaper but that’s not always the best solution, especially if you aren’t qualified. When you transition over to an accountant or bookkeeper then it can be costly if they have to go back and fix your previous books.
So Where Can I Learn Small Business Accounting?
Once you build your foundational skills, then one of your best friends should be Google if you have an accounting question. It’s still the resource for many of the big 4 accountants out there. Those are some of the best accountants and they still use Google.
Our resources should also have a lot of the information you may need to answer your questions or grow your accounting skills.
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Is Learning Small Business Accounting Worth the Effort?
If you have the time on your hands as a small business owner (many don’t) then it can be worth it at least to learn the basics of accounting. You almost can’t run a business unless you understand some basic accounting rules and principles.
Another thing business owners should be able to do is read a set of financial statements.
Financial statements paint the picture of how a business is running. The basic statements you need to be able to understand if you want to do your own small business accounting are the balance sheet, income statement, statement of cash flows and statement of owners equity.
It isn’t uncommon for small businesses to just prepare an income statement and balance sheet. If you aren’t familiar with all these financial statements yet then be sure to go back and brush up on them.
What if I Have No Accounting Background?
Even if you don’t come from an accounting background, you can still learn accounting with a bit of studying and ambition. Having no accounting background shouldn’t stop you from learning accounting, especially as a small business owner or employee.
Maybe you are already familiar with the many challenges that small businesses can throw at you, accounting is just another one of them.
Will You Save Money Doing Your Own Small Business Accounting?
By the time you put in the hours to learn the basics of accounting (which you should), you most likely won’t be saving money by doing your own accounting. For most small business owners, it often makes sense to outsource to a bookkeeper or accountant.
If accounting isn’t your skill set then once you have learned to read the financials, you can leave the day-to-day to someone else and focus on the high-level decisions.
Many small businesses aren’t doing day-to-day accounting. Instead, they might be preparing the accounting records at the end of the week or month.
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Getting Started Doing Your Own Small Business Accounting
The first step to doing your own accounting is to get that base-level knowledge and build up your accounting skills. It may feel like you have some things to learn but any great entrepreneur or small business owner is constantly learning.
Next, you’ll need to pick an accounting software. While many small business owners keep their accounting records in excel, two common software are QuickBooks and Freshbooks.
QuickBooks has been a staple for years for small businesses but Freshbooks is becoming a popular alternative. Since so many businesses are on Quickbooks, that has generally been our recommendation when starting out.
It is user-friendly for setting up accounts and they have good support.
The last step is to set up your accounting records or books as they are called. It’s pretty easy but if you run into any trouble then hop back over to resources or call in a bit of help.
The better you set up a program like QuickBooks in the beginning means you will have to do less work in the coming months as the software categorizes the transactions.
Final Thoughts on Doing Your Own Small Business Accounting
If we had to summarize it all, then it could be said that having some accounting skills as a business owner is a must. You have to know your numbers if you want to stay in business.
It doesn’t mean you need to be an expert but you should learn some accounting knowledge and skills. Keep on learning and then decide if it’s right for you to manage the accounting in your business or outsource it.
