Every entrepreneur should have a basic understanding of bookkeeping and business fundamentals, even if it feels challenging. Over time the knowledge grows and some entrepreneurs may already have a solid foundation, making handling your own accounting sensible and cost-effective. Especially for sole proprietors or small limited liability companies, to handle bookkeeping partially or even entirely on their own could be a good solution.

There are several user-friendly software options available to support accounting. Accounting software can enhance your comprehensive understanding of financial management and help you make better business decisions. Now is a great time to consider whether it would make sense to handle bookkeeping for a sole proprietor or a limited liability company yourself!

Costs of bookkeeping

One of the biggest advantages of doing your own bookkeeping is cost saving. Hiring an external professional means paying for their services. If you do it yourself, you save on these costs.

Saving is only worthwhile when it truly reduces costs. A quality accountant charges around 50–100 EUR per hour, excluding VAT, or a fixed monthly fee. Regardless of the billing method or amount, you’re able to save money by doing accounting yourself. You can invest the savings into other areas, such as business growth or savings. However, real savings require that bookkeeping is done properly. Hiring the cheapest possible accountant or doing careless bookkeeping yourself will probably cost you more than the amount saved.

It’s essential to be realistic about savings. If the bookkeeping of a sole proprietorship or limited liability company is straightforward, the savings can be quite worthwhile. As the business grows, or if it involves complex accounting or tax-specific elements, it may be wiser and more cost-effective to outsource it.

Better understanding of your own business

When you do your own bookkeeping, you gain a deeper understanding of your business. You see precisely where your money goes and comes from. It can help you identify cost-saving opportunities and make better strategic decisions to improve your business.

Doing accounting gives you complete control over your financial data and supports a deeper understanding. You aren’t constantly dependent on outside professionals, and you can make changes or updates as needed at any time. Additionally, you can tailor your accounting to your needs, providing you with the exact information you need to manage your business successfully.

Handling everything yourself is also a learning experience. Although it may initially seem challenging, you can learn a lot about business finance, taxation, and bookkeeping basics by doing it yourself. Many find it satisfying to track their finances directly. This knowledge can also be useful in the future, whether for your business or when working with others.

If bookkeeping is outsourced, communication is key! Without adequate communication between the entrepreneur and the accountant, some tax benefits may go unused, or unexpected taxes might arise when there isn’t cash on hand. Such situations can arise if the entrepreneur and accountant don’t actively communicate or assume the other is aware of relevant matters. Conversely, even if you do everything yourself without sufficient research, similar issues may arise.

Utilizing technology and partial assistance

Accounting no longer requires a massive collection of binders; everything can be handled electronically. There are many user-friendly bookkeeping software options that can make bookkeeping smoother. These tools can automate many routine tasks, such as sending invoices and tracking payments, saving you time and effort.

An accountant’s assistance can also be used partially. It’s now easier for entrepreneurs and accountants to collaborate since there are several web-based bookkeeping programs where multiple users can work simultaneously. Electronic bookkeeping software also eliminates the need to deliver physical documents to the accountant since materials are already in digital form.

Entrepreneurs and accountants can decide on a division of responsibilities. For instance, the entrepreneur can handle day-to-day bookkeeping and periodic tax declarations, while the accountant manages the annual financial statements and tax filings. In this way, the accountant can also provide advice on how to make day-to-day bookkeeping as easy as possible. There are many different models for how entrepreneurs and accountants can work together on bookkeeping.

Who might be suited to do their own bookkeeping?

It can make sense, especially for sole proprietors or small limited liability companies, to handle accounting yourself if you have a solid understanding and an interest in learning accounting and tax matters. Basic bookkeeping is manageable but requires a commitment to learning.

Being comfortable with numbers is helpful, but in reality bookkeeping can be done well if you know how to add and subtract and understand percentages. Bookkeeping software takes care of calculations, but the person handling bookkeeping must understand what they’re doing and where the figures come from.

Organizational skills and attention to detail simplify bookkeeping, and it’s also essential to remember a few deadlines. Nowadays, many electronic bookkeeping programs store data online, which helps organize documents, requiring the user to do little more than attach receipts as attachments to financial entries in the financial management software.

There’s plenty of information available both in books and online to help you learn more. User-friendly software and available instructions, along with user support, make it easier to learn how to use your bookkeeping program.

What to consider in your decision

Whichever decision you make, it’s essential to understand this: The more informed an entrepreneur is about their own business, the better they can make well-reasoned decisions. There are many solutions for accounting. An entrepreneur can, for example, take care of daily bookkeeping and outsource the preparation of financial statements. Bookkeeping can also be entirely outsourced while the entrepreneur remains an active user of the bookkeeping software to better understand it over time.

While we encourage you to take on bookkeeping confidently, remember that if you have no prior knowledge or interest in it, it’s generally better to at least partially outsource it. So, if necessary, seek external help sooner rather than later. If you do bookkeeping yourself without understanding it, you may end up paying a high price in corrections later. Conversely, if you completely outsource everything, it’s still worth staying informed about your company’s financial situation. The entrepreneur is ultimately responsible for their company’s operations.

It’s advisable to utilize an accountant’s help for bookkeeping at a low threshold. For example, calculating your own salary is simple. But if you have external employees, outsourcing payroll can be a better option. Payroll for employees involves many regulations. Additionally, if your business is large and generates significant profit, an accounting firm might be a more sensible option. Larger businesses often require more extensive financial management and tax knowledge.

In any case, be informed even when everything is outsourced. It’s always helpful for an entrepreneur to understand basics, such as reading the profit & loss statement and balance sheet. Financial understanding is always beneficial in running a business. Here you can also find more information about monthly bookkeeping.