So you have just incorporated a company. Now you wonder if you should do your accounting yourself or engage an accounting firm to do so.
It may sound ironic that I’m promoting DIY accounting as a freelance accountant. However, sharing what I strongly believe in through this accounting blog is crucial.
These are the top 5 reasons why you should do your accounting yourself.
1. Minimise expenses
When you are just starting your life as an entrepreneur, managing expenses is of utmost importance. Every single cent counts!
I have seen numerous companies paying thousands of dollars every year to keep their books. It is just not sustainable.
You can’t afford to spend money on things that you can do yourself. Accounting is one of them. It is something that you can learn and apply to your business.
Why pay when you don’t have to?
2. Accounting is easy to learn
Running a business is all about learning. That applies to doing your accounting yourself too. The good thing is that accounting is easy to learn!
For a start-up, the book is not complex. With some basic accounting knowledge, you are good to go!
In addition, you don’t have to have prior background in business to learn accounting. My educational background was a degree in engineering. I learnt accounting from scratch before completing ACCA as a Top 30 Graduate in Singapore.
In Singapore, students at the age of 15 or 16 can easily prepare financial statements. If they can do so, I’m sure you can do it too as an entrepreneur.
3. DIY Accounting provides real-time insights into your business
How many times do you communicate with your accounting firms in a day? Many of you probably don’t speak to them more than a couple of times in a month, sometimes a quarter. You can’t run a business with lagging information.
When you do your accounting yourself, you have real-time feedback on how the business is doing. If it is in the red, is that due to insufficient revenue? Or excessive expenses incurred? Outsourced accounting firms do not have obligations to keep you updated at this level of detail. On the other hand, you can detect these problems easily when you do your accounting yourself.
4. If you can’t prepare the account, you can’t audit it
Your business will grow. Eventually, you will need to hire an in-house Finance Manager to manage the accounting matters of your company.
Many times the variable performance bonus will depend on the company performance. As the owner of the company, you will need to ascertain whether the financial statements are accurate. If you do not have sufficient accounting knowledge, you can only rely on what has been provided by your Finance Manager. I’m sure that is not something you are probably comfortable doing. At least, I don’t. I would want to audit the financial statements before declaring any variable bonus.
5. You need to know accounting to invest the reserve
The day will come when your company has generated a significant amount of reserve. You can’t possibly leave all the money in the corporate account. Most corporate accounts are not interest bearing.
While investing the company’s reserve is a whole big topic by itself, you will need to know accounting to invest successfully.
Many investors believe that they can do well in investing without accounting knowledge. Of course, the outcome is obvious. You will need to be able to read financial statements to invest successfully.
Conclusion
Yes, it is perfectly okay to engage an external firm for corporate secretarial services. However, you should seriously consider doing your accounting yourself.
– Yanto Wong –
