Traditionally, SMBs have kept accounting practices in-house because of the perceived risk that confidential financial information could pose risks if it falls into the wrong hands. With the developments in technology, however, outsourcing has reached into all aspects of running a business, including accounting and bookkeeping. So, should you outsource your bookkeeping or shouldn’t you?
The Pros and Cons
Although doing your own bookkeeping can save you money, you need to consider whether you are capable of and confident doing your own accounting. It is compulsory for all Indian businesses to have a legitimate book of accounts in accordance with the business operations and transactions, so it is necessary to have some knowledge of bookkeeping or accounting. You will also need to have some understanding of balance sheets and financial statements.
For most SMB owners, time is scarce and a valuable resource, so consider the other things you could be focusing on, like developing your business, rather than keeping your own books. You may find that it actually costs you more to do it yourself than it would to outsource your accounting to someone else.
Doing it Yourself
The most important part when it comes to doing your own bookkeeping is being organized. Every transaction, expense or revenue item needs to be recorded correctly. You may also need to account for VAT or service taxes. Set aside a small amount of time every day to make sure your accounts are recorded, because accumulating your bookkeeping at the end of the month could be a tedious and daunting task to get through.
You also run the risk of losing documentation, like receipts, in the weeks preceding the close of the month accounts. You may prefer to go the more traditional route and use spreadsheets in the beginning, but bear in mind that this method is prone to errors, and you will also need to ensure your documents are properly backed up in the event of possible loss of data, such as during a power outage or in the unfortunate case of theft. That in itself can be arduous – and is also risky. This is where small business accounting software like QuickBooks india Online can come in extremely handy.
With QuickBooks Online, you can easily organize your finances and access your sales information, expenses and even automate your payroll. You also don’t have to worry about backing up your data. The cloud automatically syncs with your devices and ensures your business’s financial information is up-to-date at all times.
Getting a Professional
It can be challenging to hand over control of your accounting processes to an external party, but outsourcing this monthly task frees up more of your time to focus on developing and growing your business. Although you will have to spend money, another benefit of hiring someone to do your bookkeeping is that you can be sure it’s done on a timely basis, so you don’t worry about things like reconciling your accounts payables and receivables at the end of each month.
Hiring someone who has experience keeping the books for a business in the same industry as yours also has its advantages – they’re likely to be more familiar with the tax deductions your business is eligible for, and are probably able to make recommendations on how to improve your cash flow.
Whichever route you take, keep your business objectives in mind and take into account whether cost is important to you at this stage. Or is peace of mind something you’d like to prioritize? That should help you decide whether you should do your bookkeeping yourself, or outsource.