01 Dec The dangers of DIY small business accounting
It’s no secret that most small businesses face numerous financial challenges, including limited cash flow and inadequate capital.
As a result, many small business owners opt to DIY most of their tasks, including small business accounting, to save money. Unfortunately, they only end up losing more money.
Keep reading to learn more about the dangers of DIY small business accounting.
1. Inaccurate bookkeeping
It’s normal to assume that bookkeeping for a small business is a minuscule task because there’s not much paperwork, and the employees are few. However, you can quickly fall behind with your company’s bookkeeping, especially if you juggle different tasks within the business.
As stacks of receipts, invoices and paperwork pile up, you experience irregularities such as late filing, mistakes in payroll and outdated books. This results in profit miscalculations, unpaid invoices, loss of profits and even problems with HMRC.
2. Missed deadlines
HMRC requires small businesses to file tax documents and provide business and accounting records within a certain period. Unfortunately, with DIY accounting, keeping up with such deadlines can be difficult as tax laws keep changing.
Additionally, it’s easy to forget important deadlines, resulting in hefty fines and penalties that are detrimental to your small business.
3. It costs you more in the long run
DIY small business accounting costs you more in the long run as it leaves you open to tax issues, cash flow problems and hefty penalties. Without up-to-date and accurate accounting records, you’re more likely to spend money fixing accounting mistakes and irregularities, limiting your company’s growth and development.
You’re better off hiring a small business accounting specialist from the onset to avoid costly financial mistakes in the future.
4. It’s time-consuming
The most significant downside of DIY accounting is that it’s time-consuming. Since you’re no expert, you’ll spend more time researching and familiarizing yourself with small business accounting than performing the actual accounting, e.g., payroll and bookkeeping.
DIY small business accounting does more harm than good, increasing the need to hire a specialist like SQK Accountancy. We’re experts in small business accounting and can handle all your business accounting needs as you focus on other essential tasks.
Contact us today for small business accounting services in the Manchester area.