Do you want to know more about DIY accounting? This article will give you an overview of this method of accounting. Why should you consider it? It is a popular method among small and large businesses who use QuickBooks and similar software programs.
Bookkeeping for small businesses
The aim of DIY accounting is to provide businesses with a simpler system of bookkeeping. It is not a bookkeeping method that provides a professional degree of accounting or CPA accounting services; it is a method of accounting which can simplify the bookkeeping of small businesses. For small businesses, who do not wish to outsource their accounting work to accounting companies, or whose accountant is too busy or too expensive, or for some other reason, DIY accounting provides a good alternative.
Why should you consider using DIY accounting? The primary reason is that it provides a practical choice for managing personal finances. Small businesses can choose to either outsource all or some of their finance management, or they can opt to go ‘diy’. By ‘diy’ I mean that they will keep the books themselves, taking care of the accounts themselves. All or some of their finance related tasks such as income tax, VAT and capital gains will be taken care of by the accountant using his own software program, rather than by the business owner employing him.
Improve cash flow
Another reason for considering DIY accounting is that it can improve cash flow. For instance, when a company is not paying its bills on time, or is late in paying its taxes or in collecting its debts, it will have a negative effect on its credit rating. However, if the business owner decides to go ‘diy’, he will have to ensure that all his transactions are paid on time, and he will not be charged any penalties for being late in paying the bills. This is important because a company’s credit rating can affect future borrowing. If a business owner is able to show that he has paid his bills on time, and has a good financial history, he will be able to obtain more loans from lenders, which in turn will improve his ability to earn profits.
Standalone software programs
Some small businesses may think that employing an accountant would cost them too much money, especially if they do not need to deal with complex financial issues, but the reality is that small business owners can manage accounting and bookkeeping themselves very effectively. A number of small software programs are available that can do most of the accounting and bookkeeping tasks that businesses need. For example, most businesses will want to use their accounting software to maintain the daily records of their cash flow, their sales and purchases, their inventory levels etc. Many businesses also want to use their accounting software to generate reports such as profit and loss statements, balance sheet, cash flow analysis etc. These tasks can easily be handled by any good DIY accounting program.
One other important reason why many small business owners consider using a DIY accounting program to handle their accounting responsibilities is because of the time savings that one gets. This is because most of the work can be accomplished by the software within the office hours of the business owners. All they have to do is install the software and then let the software do the work. This not only saves them time, but also prevents them from hiring professionals to do the job for them. It is also extremely easy to start up and get going with this form of bookkeeping and accounting and can be started and running within a few hours.
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