The Downsides of an In-House Bookkeeper
Updated: Dec 12, 2019
If you're starting up a brand new business, there are several reasons why it may fail. The most common cause of failure is that owners fail to understand how expensive it is to stay afloat, like most small businesses that end up failing.
It costs much to keep operating during the first few years. In a sense, the depth of your accounting practice will help determine whether or not you succeed in the long-run.
However, many business owners may feel that they want to keep accounting in-house to give them a sense of control over confidentiality and security.
They might think that outsourcing this task will compromise on such aspects and may even get very costly. These reasons are justifiable, but the real problem is when you, or any business owner, task the wrong person to do accounting. Here are four pitfalls you will face when giving the task to a person who has to manage finances with no accounting background.
1 - Mistakes in Reporting
The goal of accounting is to track where the money is coming and going, the business' performance, and its financial position. Thus, your accountant must get these aspects accurate. Balancing credits and debits isn't something anyone can do. This job is meant for professionals who pay extra attention to the smallest details.
If you hire someone who is an amateur, you may start wondering why your money is disappearing. In the beginning, these minor mistakes may be a few dollars, but this will rack up over time. With no knowledge of your exact financial position, you may end up making costly investment decisions. Making inaccurate information results in terrible decision making.
2 - Faulty Payroll Calculations
For you, and many smaller companies, payroll is one of if not the most most significant expense. If you have a large number of employees, this is undoubtedly true. Your workers expect to be paid on time and in full, as they have families to support and bills to pay.
If they receive only two-thirds of what they are supposed to get, it will disrupt their productivity and lose motivation to work hard. By not correctly paying your workforce, your profits will drop. Whomever you task with payroll has to be exceptional with numbers, extremely organized, and is up-to-date with tax regulations.
3 - Failure To Meet Deadlines
You know that running a business is very expensive. There are too many things to pay for, such as rent, products, utilities, employees, and others. It doesn't help that you have to pay for these expenses regularly at intervals. If your bookkeeper isn't up to the task, more time than necessary can be wasted on every single job.
This will cause much delay before doing the next task, resulting in missed deadlines. You forget to pay the bills, fail to create financial reports for decision making, and more. Penalty fees can be imposed on you, which can ruin your credit scores, or you even may run out of cash to keep your business running.
4 - Spend More, Gain Little
If you only have one person to handle your accounts, you might be paying them more money. This is all right if that person is competent at accomplishing the task. The mistake most businesses make is spending much money on the wrong person. That money that was wasted could have gone to an actual third-party professional.
In most cases, money can even be saved if done this way. If you're facing this problem, consider hiring a professional. Also, if you don't save money, rest assured that you're placing that money in the right person.
If you’re looking for an accountant or bookkeeper on the gold coast, get in touch with us today for a free consultation.