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Blog » 5 Bookkeeping Myths Business Owners Believe to be True

5 Bookkeeping Myths Business Owners Believe to be True

Last updated: 10 Aug, 2023 By | 6 Minutes Read

bookkeeping myths

For all businesses, bookkeeping is an important aspect. As a business owner, managing bookkeeping and accounting on your own is a complex task because you are not an expert in this field. Here are the 5 bookkeeping myths business owners believe to be true.

Cheers! You’re a CEO and are often too busy in handling your customers and taking care of the needs of your employees and/or retailers. Being a CEO, you might also be doing your own books. Were you aware that there happen to be a lot of misconceptions with regards to managing the books?

In this article, we’ll talk about 5 lies that business owners usually believe to be true concerning bookkeeping:

1. I shall do it on my own and have my accountant review

In case, you have made up your mind to do bookkeeping on your own without taking help from a bookkeeping service provider or choosing to have an accountant review your work; you must ask yourselves these questions:

Are you an expert in bookkeeping? You understand your business the best, however, you possibly don’t understand bookkeeping that well. You may not have sufficient bookkeeping knowledge, which may result in pricey errors at a later point of time. Nevertheless, in case you are managing your own books and it seems daunting, it’s a sign that you must outsource bookkeeping to an expert.

Will it cost you more to have your work reviewed by an accountant?

In a lot of situations, it would be a better choice to have an accountant do bookkeeping as compared to having them review your work. Some accounting professionals may not even agree with fixing your errors. Get in touch with an accounting service provider to see what they suggest to you.

2. Bookkeeping is nothing more than data entry, correct?

Bookkeeping nowadays is a lot more than manual data entry. It does not involve a standard process of entering the numbers. As a matter of fact, businesses can now get rid of manual data entry by automating the process or make use of third-party software applications to manage the bookkeeping process.

For instance: Making use of mobile apps, you can take a picture of your bills and invoices. The app would scan the data and then upload the same on the accounting software. There are applications available for invoice management, payroll processing and everything in between them.

3. A friend or a family member can do my accounting

Having a friend or a relative to manage your bookkeeping chores seems to be a decent idea. However, prior to assigning the bookkeeping tasks to someone, ask the below questions to yourself:

  • Have they got the required training, expertise and an ample amount of time to manage your books?
  • Do they have the ability to solve your problems as and when they arise?
  • Will they still love you in case things go wrong and you choose to go in a different direction?

It is usually not a great idea to hamper your relationship with a friend or family member.

4. Bookkeeping is only required during the tax season

Bookkeeping is not just meant to be done at the time of taxes. Your business requires accurate financial reports in situations like:

  • Applying for a loan
  • Making sound financial decisions
  • Handling cash flow

Do not make use of the tax season as an excuse to work on your books just that single time during the year. Bookkeeping, when done on a regular basis, can be a source of valuable financial reports that you can obtain by managing your books.

5. Accounting software would do my bookkeeping

This is not true, actually. Your accounting software would not perform bookkeeping on your behalf There are several automated processes in accounting applications, such as automatically integrating them with your bank and credit card accounts.

However, these software programs still require regular inputs and checks from your end. Keeping up a daily routine of bookkeeping will assist you immensely in staying organized and paving your way to profitability.

No doubt, the DIY approach is always approachable, but not when it comes to crunching numbers. You need a knowledgeable and experienced accounting expert, and what else could be better than having an entire accounting team. Cogneesol can provide you with complete accounting and bookkeeping solutions. To know more, call us at +1 646 688 2821 or email us at [email protected].

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