The real cost of DIY bookkeeping

Plenty of business owners do their own books, and for some of them it is genuinely the right call. For most, it is a decision made once in the early days and never revisited, long after the business outgrew it.

It is worth doing the sums properly.

Start with the hours

Be honest about how long it actually takes. For a small business with a reasonable transaction volume, coding, reconciling, chasing paperwork, fixing the things that will not match, and preparing the BAS is commonly a full day a month, and often more in a quarter with a BAS in it.

Call it fifteen hours a quarter. Sixty hours a year.

Now put a value on your own hour. Not what you pay a staff member. What an hour of your attention is worth when it is aimed at the work only you can do: winning the job, pricing it properly, managing the client, deciding what the business does next.

For most owners that number is considerably higher than a bookkeeping rate. That is the first half of the cost, and it is the half nobody puts on a spreadsheet.

Then count what the errors cost

This is the part that is genuinely hard to see from the inside, because you do not know what you have missed.

GST claimed on expenses that never had it. GST not claimed on ones that did. Expenses coded to the wrong account, so your reports describe a business that does not exist. Bank feeds silently duplicating transactions. A BAS lodged late because the quarter arrived while you were busy. Deductions not claimed because the receipt was never captured.

Individually these are small. Repeated quarterly for a few years, they are not.

And the cost of not being able to see

This one is the most expensive and the least obvious.

Books that are months behind are a historical record. Books that are current are a decision making tool. If you cannot tell today which jobs are actually profitable, whether your margin is moving, or how much cash you will have in six weeks, you are running the business on instinct.

Instinct is not nothing. Plenty of good businesses have been built on it. But it gets expensive at exactly the moment the business gets complicated, which is usually the same moment you have the least time to fix the books.

When doing it yourself is genuinely fine

To be fair about it, there are situations where it stacks up. A very small business with few transactions. A sole trader who is not registered for GST. Someone who genuinely enjoys the work and keeps it current. If your books are up to date, your BAS is accurate, and you can answer questions about your own numbers without going and looking, the system is working.

The honest test

Ask yourself three questions.

Are your books current enough to make a decision from today?

Do you know your GST position without checking?

Are the hours you spend on this worth more than what it would cost to hand over?

If the answer to any of those is uncomfortable, that is worth a conversation. Not necessarily a change, but a conversation.

This article is general information only and does not take your particular circumstances into account. It is not tax, financial or legal advice. Rules change and how they apply depends on your situation, so please get advice specific to your business before acting. Spectrum Business Management, CPA and registered BAS agent, Mt Gambier and Australia wide.