5 Signs Your Small Business Has Outgrown DIY Bookkeeping

Running a small business means wearing a lot of hats. In the beginning, bookkeeping is often one of them.

QuickBooks Online and other accounting tools make it possible for business owners to manage their own books. But as a business grows, bookkeeping usually becomes more complicated and more time-consuming.

How do you know when you've reached the point where doing it yourself is no longer the best use of your time?

Here are five common signs.

1. Your books are always a little behind

Maybe transactions are downloaded automatically, but they haven't been reviewed. Bank accounts haven't been reconciled. Credit card balances don't quite match. Or you find yourself catching everything up right before you need financial statements.

Good bookkeeping isn't just getting transactions into QuickBooks. Your accounts should be reviewed and reconciled regularly so you can rely on the numbers you're seeing.

If you're routinely several weeks or months behind, your business may have outgrown DIY bookkeeping.

2. You're spending too much time on bookkeeping

Bookkeeping takes time, particularly when something doesn't look right.

A business owner may spend hours categorizing transactions, researching discrepancies, reconciling accounts, and trying to figure out why QuickBooks isn't doing what they expected.

That might have been manageable when the business was smaller. As your business grows, those hours become more valuable.

If bookkeeping is regularly competing with client work, sales, or running the business, outsourcing it can make sense.

3. You're not confident your QuickBooks reports are accurate

QuickBooks can produce a Profit & Loss statement or Balance Sheet in seconds.

That doesn't necessarily mean the report is correct.

Duplicate transactions, unreconciled accounts, incorrect categorizations, old balances, and improperly recorded payments can all affect your financial statements.

If you find yourself looking at a report and wondering, “Is this actually right?” that's a good indication your bookkeeping needs more attention.

4. Your business has become more complicated

A growing business often adds complexity without the owner realizing how much the bookkeeping has changed.

You might now have multiple bank or credit card accounts, payroll, contractors, accounts receivable, loans, payment processors, or different services or revenue streams.

Each additional piece creates more opportunities for errors and more information that needs to be reconciled.

The bookkeeping process that worked when the business was small may simply no longer be enough.

5. Tax time becomes a scramble

Your CPA shouldn't have to reconstruct your bookkeeping at tax time.

Ideally, your books should already be reconciled and organized before they're sent to your tax professional. That makes tax preparation easier and gives your CPA better information to work with.

If every tax season involves cleaning up months of transactions, answering a long list of bookkeeping questions, or making significant adjustments, establishing a consistent monthly bookkeeping process can make a big difference.

What good monthly bookkeeping should look like

For most small businesses, bookkeeping shouldn't be something that gets addressed only when there's a problem.

A solid monthly process generally includes reviewing transactions, reconciling bank and credit card accounts, resolving discrepancies, and preparing financial reports that give you a clear picture of how the business is performing.

The goal isn't simply to keep QuickBooks updated.

It's to have financial information you can actually rely on.

Blue Walney Bookkeeping & Advisory provides monthly bookkeeping, financial reporting, and QuickBooks Online support for small businesses and professional services firms. If your bookkeeping has become more complicated than you'd like to manage yourself, we can help you establish a reliable monthly process.