Hiring an Accountant vs DIY Accounting: Make The Right Choice For Your Business

Hiring an Accountant vs DIY Accounting Make The Right Choice For Your Business

DIY Accounting vs Hiring an Accountant: Which Is Right for Your Business?

When you’re starting out as a small business owner in Australia, the temptation to manage your accounting yourself can be strong. Hiring a professional accountant or tax advisor costs money, and it seems like an overhead you can eliminate by handling your financial management solo, right?

But is DIY accounting truly the best option for your business? And why might partnering with an experienced accountant be a valuable investment in your future?

DIY Accounting: The 5 Big Challenges of Managing Your Own Accounts

At the initial stages of founding your business, you might think that raising a few invoices, paying a few supplier bills, and ensuring there’s cash in the bank is within your abilities. However, as your business grows, and you take on more customers and employees, your finances are likely to become far more complicated—and far more time-consuming. So, should you still be managing your accounts solo at this crucial stage of growth?

Here are five common challenges of going down the DIY accounting route:

1. The Knowledge Gap

Grasping the finer points of accounting principles and tax regulations is complex. If you try to navigate these financial complexities without the right knowledge and experience, you greatly increase the risk of errors, missed deductions, poor record-keeping, and non-compliance with Australian tax law. Errors in your accounting can lead to penalties from the Australian Taxation Office (ATO) and missed opportunities for tax savings.

2. The Drain on Your Time

Managing bookkeeping, payroll, day-to-day accounting, and tax filings takes a lot of time. Recent statistics show that Australian business owners spend an average of 6 hours and 19 minutes per week on financial administration. If you’re spending a significant portion of your week on finance admin, that’s time you’re not spending on growing the business. As an ambitious owner, you should be concentrating on business development and other strategic tasks that drive growth—not doing the books.

3. Staying Up to Date with Regulations

Company tax laws and accounting regulations change frequently. If you’re not keeping up with the latest regulatory changes, you might fail to meet your compliance duties. Moreover, you may miss out on the latest government incentives and tax reliefs—financial perks that could be key to funding the next stage of your business expansion plans. Staying compliant in Australia requires a keen eye on both state and federal tax law changes, which can be a full-time job in itself.

4. Anxiety About a Company Audit

Undergoing a company audit from an external auditor can be stressful. Depending on the status of your business, you may need to comply with regular auditing rules. Without an accountant, your record-keeping might be haphazard, making the job more difficult, time-consuming, and disruptive. Proper audit preparation requires meticulous records and an understanding of auditing standards, which can be overwhelming without professional help.

5. A Lack of Strategic Insight

If you’ve never run a business before, you might lack the awareness of how good financial management drives strategic insight. The better your accounts, the higher the quality of your finance data, reporting, and management information. This data and reporting can be a goldmine when making big strategic decisions, setting budgets, and forecasting cash flow. Without an accountant, you might miss critical insights that could propel your business forward.

How Hiring an Accountant Turns These Challenges into Business Benefits

Taking full responsibility for your own business finances is a major drain on your time as an owner and business leader. However, partnering with an accountant can quickly lighten this load and allow you to focus on growing your business.

By engaging an accountant to manage your financial tasks, you gain the following benefits:

1. Expertise of a Finance Professional

When you hire an accountant, you add a financial expert to your team. They'll help you navigate the complexities of accounting, keep your records accurate, and ensure compliance with all relevant tax regulations. This minimises errors and maximises your deductions. In Australia, where tax laws can be intricate, having a professional who understands these complexities can save you both time and money.

2. More Time to Focus on the Business

By delegating bookkeeping, payroll, accounting, and tax filings to an accountant, you free up valuable time. This allows you to focus on talking to customers, developing growth strategies, and building relationships with clients, partners, lenders, and investors. More time spent on business development translates directly to business growth and success.

3. Staying Ahead of Regulatory Changes

A professional accountant knows exactly which legislative and regulatory changes are planned and ensures you’re always compliant. They’ll also be aware of any new government tax deductions or funding incentives that could provide extra cash for your business plans. For instance, staying on top of grants and tax incentives specific to Australian businesses can be a significant advantage.

4. Peace of Mind During Audits

With an accountant managing your accounts, you can be confident in the quality of your record-keeping, reporting, and financial compliance. This is a major bonus during an external audit process. Your accountant can represent you during the audit, reducing potential stress and keeping you focused on running the business.

5. Expert Strategic Guidance

Accountants do much more than just crunch numbers. Your accountant will work with you to analyse your financial data, manage your cash flow, identify patterns and trends, and provide valuable insights to inform your decision-making. An accountant is a key part of your management and strategic team, helping you drive the success, efficiency, and profitability of your business. In the dynamic Australian market, strategic financial planning can give you a competitive edge.

Outsourcing Your Financial Management

Hiring an accountant is a smarter investment in your business than opting for DIY accounting. Instead of getting bogged down in bookkeeping or stressing over record-keeping, hand over the financial management workload to the experts.

Expert accountants are there to lighten the load, sort out your accounts, and put you back in complete control of your finances and strategic decision-making. By outsourcing your accounting tasks, you can focus on what you do best—running and growing your business.

Get in touch with your preferred accountants to discuss how they can help manage your accounting needs and support your business growth in Australia. With their expertise, you can rest assured that your financial management is in safe hands, allowing you to concentrate on achieving your business goals.

What are the main advantages of hiring an accountant for my small business?
Hiring an accountant brings expertise and experience to your business's financial management. Accountants ensure accuracy in bookkeeping, compliance with tax laws, and can identify potential tax deductions and incentives. This allows you to focus on growing your business rather than spending valuable time on complex accounting tasks. Additionally, accountants provide strategic insights based on financial data, helping you make informed business decisions and plan for future growth.

How does DIY accounting affect my time management as a business owner?
DIY accounting can significantly impact your time management. Managing your own bookkeeping, payroll, and tax filings requires a substantial time investment each week. This is time that could be better spent on core business activities like customer service, marketing, and strategic planning. For many business owners, the time saved by hiring an accountant outweighs the cost, allowing them to focus on driving business growth and improving efficiency.

What are the risks associated with DIY accounting?
The risks of DIY accounting include potential errors in financial records, non-compliance with tax laws, missed deductions, and poor financial planning. Without a thorough understanding of accounting principles and regulations, you may inadvertently make mistakes that could lead to penalties from the tax authorities. Additionally, inadequate financial management can result in cash flow issues, inaccurate financial reporting, and a lack of strategic insights necessary for making informed business decisions.

How can an accountant help with tax compliance in Australia?
An accountant stays updated with the latest tax laws and regulations in Australia, ensuring your business remains compliant with all requirements. They handle tax filings accurately and on time, reducing the risk of errors and penalties. Accountants also help you take advantage of available tax deductions and incentives, potentially lowering your tax liability. Their expertise ensures that your business meets all compliance obligations, providing peace of mind and financial stability.

Is it more cost-effective to hire an accountant or do my accounting myself?
While hiring an accountant incurs an upfront cost, it can be more cost-effective in the long run. Accountants help avoid costly mistakes, penalties, and missed tax deductions, which can save money. They also free up your time, allowing you to focus on revenue-generating activities. The strategic insights provided by an accountant can lead to better financial decisions and increased profitability, making the investment in their services worthwhile.

What should I look for when hiring an accountant for my small business?
When hiring an accountant, look for qualifications such as a Certified Practising Accountant (CPA) or Chartered Accountant (CA) designation. Experience in your industry is also valuable. Check their reputation through reviews or referrals and ensure they have a good understanding of Australian tax laws and business regulations. Communication skills are essential, as you'll need to work closely with them to manage your finances effectively. Finally, consider their fees and ensure they fit within your budget.

How can an accountant provide strategic business insights?
An accountant can analyse your financial data to identify trends, strengths, and areas for improvement. They provide detailed financial reports and forecasts, helping you understand your business's financial health and make informed decisions. Accountants can advise on cost-saving measures, investment opportunities, and strategies to improve profitability. Their expertise in financial planning and analysis is invaluable for setting realistic goals and achieving long-term business success.

What are the common mistakes business owners make with DIY accounting?
Common mistakes in DIY accounting include inaccurate record-keeping, overlooking tax deductions, misclassifying expenses, and failing to stay updated with tax regulations. Business owners might also struggle with cash flow management and financial forecasting. These errors can lead to compliance issues, financial losses, and missed growth opportunities. Without professional guidance, DIY accounting can result in inefficient financial management and hinder business growth.

Can an accountant help with financial planning and budgeting?
Yes, an accountant can assist with financial planning and budgeting by providing detailed analysis of your income, expenses, and cash flow. They help create realistic budgets, set financial goals, and develop strategies to achieve them. Accountants use historical data and market trends to forecast future financial performance, ensuring you have a clear plan for growth. Their expertise helps you allocate resources effectively and make informed decisions to enhance your business's financial health.

How do I decide if I should hire_an_accountant or manage my own accounting?
Deciding whether to hire an accountant or manage your own accounting depends on your business size, complexity, and your accounting knowledge. If your business is small and your finances are straightforward, DIY accounting might be feasible. However, as your business grows and financial management becomes more complex, hiring an accountant is often beneficial. Consider the time you spend on accounting tasks, the potential for errors, and your ability to stay compliant with tax laws. If these challenges outweigh the cost of hiring an accountant, it's likely time to seek professional help.

Acro Accounting & Financial Planning (AAFP) offers a one stop solution right from accounting, taxation, financial planning to other business advisory services. As Certified Practicing Accountants (CPA’s) and professional tax advisors, we pride ourselves on being experts with the latest developments relating to business and taxation. We as professional public practice firm, provide high quality taxation and business advice to our clients through a personalised service at competitive rates.

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