Does That Off-the-Shelf Bookkeeping Software Really Save You Time and Money?
20128
Business
Nov 30, 1999
Does That Off-the-Shelf Bookkeeping Software Really Save You Time and Money?
In today's society we are constantly being presented with opportunities and suggestions that we can do everything ourselves and that it will save us money. This extends to business as well. Software companies are selling bookkeeping software to run your business, there are web site offering free advice for managing your business, and you can go to hundreds of websites to become incorporated at a fraction of the cost of going to a qualified professional. Does a small business actually save money by doing these tasks themselves or do they inevitably cost themselves money, time and opportunity. A small business owner has to wear multiple hats including being the president and owner, the sales and marketing team, financial and accounting specialist, administrator, HR guru and technician. The key to success for any business owner is to identify those tasks that are essential and productive to growing their business and seeking assistance for other tasks. The two most essential functions in any business are sales and operations - finding customers to sell to and providing them with the goods and services you are delivering. All other functions of a corporation are non-core functions. This is not to say that they are not important. In fact having a good solid financial and accounting system is essential to understanding the performance of your business and then using this information to effectively manage your business and make informed decisions is crucial to your success. Most business owners do not have the knowledge, expertise and/or training in these disciplines to perform these functions correctly. If they do have this knowledge and expertise, is their time better spent on growing their business and managing their operations or is it performing bookkeeping and financial administrative tasks? I submit to you that the value of their time is best spent growing and managing their business. The realty is, when an owner is spending time away from focusing on the core functions of the business he or she has a direct cost that is associated with performing those tasks as well as indirect costs. The direct costs are quantifiable and can be measured. The cost of an employee or the business owner managing his or her own books, running his payroll, filing sales tax or payroll tax reports, running financial reports, etc. multiplied by his or her hourly wages. If a business owner spends 15 hours per month on bookkeeping, accounting or payroll tasks and their time is worth $50 per hour or more then the direct costs are more than $750 per month. If an employee is performing these tasks then all wages including benefits and payroll taxes have to be factored in as well as the time an owner spends managing and training the employee. If the hourly wages for an employee including benefits, equals $25 per hour and a business owners has to spend an additional 2 hours each month managing and training the employee then the direct costs are $475. The indirect costs are not as transparent or as easily measured but may be even more significant. The indirect costs can include lost sales opportunity, decreased efficiencies and higher expenses in operations, a decrease in customer service or overall quality of services or products being sold, simply due to the business owner having less time to spend managing the operations side of the business. Indirect cost may even include mistakes due to an insufficient understanding of the subject matter, laws or filing deadlines. It may also include in an inability to access financing due to an improper corporate structure or poor financial reports that lack supporting backup documentation. It has been our experience as a professional CPA firm that has looked at thousands of owner prepared financial statements that the vast majority of them are incorrect and in many instances have contributed to the failure of a business. Finally, lawyers, CPAs and other professionals will typically spend more than a hundred thousand dollars investing in their education and learning to practice in their respective fields. They then have to pass a rigorous exam showing a proficiency and understanding of the knowledge in there respective fields. Most likely they will have dealt with hundred of clients and thousands of unique situations. This experience should not be minimized or dismissed. When the investment of hiring a professional CPA is matched against the direct and indirect costs of not hiring a professional CPA, the decision will be a "no brainer." By hiring a professional CPA firm a business owner realizes the following benefits: he or she frees up valuable time to manage their business; the bookkeeping is done correctly so that the owner has accurate timely financials to make informed decision; financials are available to a banker or venture capitalist when financing is required; the business owner stays in compliance with the tax laws. At the end of the day a CPA firm will end being one of your most inexpensive but most valued members of your team. Not tapping into this knowledge and experience puts the business owner that is not utilizing these services at a disadvantage to their competitors who are making use of these services. The competitors that are utilizing these services and tapping into this experience are saving time, money and capitalizing on opportunities that will contribute directly to increasing both the top line - sales and bottom line - net income. If you are not currently using a CPA and trying to go it alone, give a CPA firm a call and learn how they can put their experience and knowledge to work for you.
Richard A. Beauchemin, CPA is owner of a CPA firm in Charlotte, NC. Find out how our company can help your business succeed by visiting our web site at http://www.carolinaaccounting.com.
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