Bookkeeping: DIY vs. Hiring an External Bookkeeper – What’s Best for Your Business?

As a small business owner, you’re probably used to wearing many hats. From managing daily operations to marketing your services, there’s always something demanding your attention. Among these responsibilities, bookkeeping is often seen as one of those “necessary evils”—essential, yet time-consuming.

When it comes to managing your business’s finances, you have two primary options: handle the bookkeeping yourself or hire an external bookkeeper. Each approach comes with its pros and cons, and the decision depends largely on your specific business needs, goals, and capacity.

In this blog, we’ll break down the key factors to consider, including time savings, cost savings, and overall efficiency, to help you decide which option is best for your business.

DIY Bookkeeping: The Benefits and Drawbacks

Many small business owners opt to manage their own bookkeeping, especially in the early stages of their business. It can seem like a good way to save money, stay involved in the day-to-day financial picture, and maintain full control over your books.

Benefits of Doing Your Own Bookkeeping

1. Cost Savings
The most obvious benefit of handling your own bookkeeping is saving money on professional services. If you’re running a lean startup or a small operation with limited resources, avoiding the cost of an external bookkeeper can feel like the right choice. You won’t have to worry about hourly rates, retainer fees, or monthly service costs.
2. Full Control
By managing the books yourself, you’re fully in tune with the financial details of your business. You have immediate access to every transaction and piece of financial information, giving you direct insight into cash flow, expenses, and profitability.
3. Flexibility
DIY bookkeeping allows you to manage your records on your own schedule. You don’t need to wait for someone else to provide reports or update your financials—you’re in control of the process.

Drawbacks of DIY Bookkeeping

1. Time-Consuming
The biggest downside to managing your own bookkeeping is the significant time investment. Depending on the size of your business and the volume of transactions, keeping your books up-to-date can take several hours a week. This is time that could be spent growing your business, working with clients, or improving operations. For many business owners, the time cost outweighs the financial savings.
2. Risk of Errors
If you’re not a trained bookkeeper, the chances of making mistakes are high. Misclassifying transactions, missing tax deadlines, or making calculation errors can lead to costly consequences. Even a small error can snowball, potentially leading to inaccurate financial statements, penalties, or trouble during tax season.
3. Lack of Expertise
While you may understand the basics of bookkeeping, you likely lack the specialized knowledge that a professional bookkeeper can bring to the table. Bookkeepers are skilled in optimizing financial processes, ensuring compliance with tax laws, and providing valuable insights that can help you improve your bottom line.
4. Stress and Burnout
Many business owners who handle their own bookkeeping find it stressful. It can become overwhelming to juggle bookkeeping alongside the many other tasks required to run a successful business. Burnout is a real concern when you try to take on too much.

Hiring an External Bookkeeper: The Benefits and Drawbacks

Outsourcing your bookkeeping to a professional might feel like a leap at first, but it can bring significant benefits that outweigh the costs. Here’s why many small business owners opt for external bookkeeping services.

Benefits of Hiring an External Bookkeeper

1. Time Savings
One of the biggest advantages of hiring an external bookkeeper is the time you’ll save. Bookkeeping is a time-consuming task that takes you away from your core business functions. By outsourcing it, you free up hours each week to focus on growing your business, serving customers, and improving your product or service offerings.
2. Expertise and Accuracy
Professional bookkeepers have the training and experience to ensure that your books are accurate and up-to-date. They know the ins and outs of tax laws, how to categorize expenses properly, and how to spot potential issues before they become problems. This expertise can help prevent costly errors, ensuring that your financial statements are reliable and your tax filings are accurate.
3. Improved Efficiency
Bookkeepers have efficient systems and software in place to manage finances quickly and effectively. This can streamline processes like payroll, invoicing, and reconciliation, saving time and reducing the likelihood of errors. Additionally, they provide regular reports, giving you a clear and organized snapshot of your financial health.
4. Cost Savings in the Long Run
While hiring an external bookkeeper comes with an upfront cost, it can save you money in the long run by improving efficiency, preventing mistakes, and avoiding penalties. Professional bookkeepers help you manage your cash flow better, optimize tax deductions, and ensure you’re staying compliant with financial regulations. Their guidance can help you make informed decisions that ultimately improve profitability.
5. Peace of Mind
Knowing that a professional is managing your books brings peace of mind. You can focus on running your business without worrying about missed tax deadlines, inaccurate records, or falling behind on financial tasks. Having an expert on your side allows you to approach tax season or financial reviews with confidence.

Drawbacks of Hiring an External Bookkeeper

1. Cost
The primary drawback of hiring a bookkeeper is the cost. Depending on the complexity of your business’s finances, professional bookkeeping services can range from a few hundred to several thousand dollars per month. However, it’s important to weigh this cost against the time savings and the potential for long-term financial benefits.
2. Less Immediate Control
When you outsource your bookkeeping, you relinquish some control over the day-to-day financial management of your business. While you’ll still have access to reports and updates, you won’t be as hands-on with the numbers. For business owners who prefer to have a direct hand in every aspect of operations, this might feel like a downside.
3. Finding the Right Fit
Not all bookkeepers are created equal. Finding the right external bookkeeper can be a challenge. You’ll need to find someone who understands your industry, aligns with your communication style, and can provide the level of service you need. The wrong bookkeeper can cause frustration or even financial harm if they don’t manage your books correctly.

So, What’s the Best Choice for You?

The decision to do your own bookkeeping or hire an external bookkeeper depends on several factors, including the size of your business, the complexity of your finances, and how much time you have to dedicate to managing your books.

If your business is small, with minimal transactions, and you enjoy hands-on management, DIY bookkeeping might be a viable option—at least for a while. However, as your business grows, the time required to manage your books, the risk of errors, and the need for financial expertise will likely outweigh the cost savings.

For most small businesses, hiring an external bookkeeper provides significant benefits in terms of time savings, accuracy, and long-term financial health. Outsourcing allows you to focus on what you do best—running your business—while leaving the financial management to a trained professional.

Ultimately, the right choice is the one that allows your business to operate most efficiently while keeping your finances in order.

If you’re considering hiring an external bookkeeper, Open Book Bookkeeping is here to help. With a focus on small businesses, we offer personalized, professional bookkeeping and financial guidance to help you grow and succeed. Contact us today to learn more!