Yes, you can. But, you shouldn’t. Especially, if you want to believe in your numbers. In our experience, this arrangement harms you more than it helps you. Therefore, we don’t set up accounting systems that you maintain yourself. Our refusal is for your sake, not ours. When we have tried this in the past, it has cost the client more money to have their accounting fixed than to have had it done right all year long.
It’s like asking us to build you a shiny new car and hand you the keys, but you don’t know how to drive a car.
There is no logical reason to pay for a shiny new car unless you know how to drive it. Or, you can afford to hire a driver.
If you buy the car anyway… your investment may just sit in the parking lot, unused.
If you buy the car anyway.. your investment may be driven poorly and wrecked.
If you buy the car anyway… you may have paid for more cars than you really needed.
Why should I hire an accountant to drive my car?
To be blunt, if you don’t understand the tools in the car; you won’t know how to maintain them. In other words, if you don’t understand the tools in the accounting system; you won’t know how to maintain it and it will break.
Setting up an accounting system starts with…
- Choosing software
- Importing a chart of accounts
- Preventing fraud
- Integrating apps
- Creating recurring bills
- Managing users
- Creating direct bank feeds
- Setting up invoice templates
- Compliance reporting
- Automating reconciliations
- Creating reimbursement process
- Management reporting
- Establishing payroll
- Connecting payment processors
- Paperless filing
- Adjusting journal entries
- Training self and staff
- Writing policies & procedures
Wait, why would an accounting system break?
It’s not that the process “breaks”, but it does change continuously. Therefore, professional monitoring is required to adapt to the changes as they occur. Here are some common changes that would mean the system needs an edit.
- You change a vendor – If you decide to switch from AT&T to Verizon… reconciliation rules have to be edited.
- You change payment processors – If you’ve normally accepted payments through PayPal but now you want to add Stripe… you need to know that Stripe charges processing fees differently than PayPal. If you don’t set this up correctly, you won’t be recognizing your full revenue.
- You get a new credit card or bank account – If you decide that your agency needs a new savings account for an Emergency Fund… the new bank feed needs to be set up in Xero and a transfer rule can automate the reconciliations.
- You hire an independent contractor – If a photographer is hired to produce website photos… a W-9 needs to be collected from the photographer so that you can comply with 1099 rules. Your accounting software needs to be set to track payments made to the photographer so you know what amount to report on the 1099.
- Direct bank feeds break – If the direct bank feed for your Amex card glitches and duplicates all the transactions for one day during the month… an experienced accountant will detect this and correct it at month’s end when the Amex statement is reconciled.
- Syntax of bank feed changes – If your vendors or your bank decides to alter the syntax of bank feeds… the rules need to be edited.
What if I can’t afford to pay for monthly accounting for my agency?
First of all, good job having a budget and sticking to it! Yay you! I can only think of 2 reasons why monthly accounting fees are not fitting into your budget.
Reason #1 – You just don’t have the cash right now.
If you are in start-up mode or coming out of a debt crisis, this is a time to keep things simple and consistent. Your accounting system needs to be set up where you (or an employee) fully understand the inputs and outputs. You can use a spreadsheet or software and invest time in training.
Consistency is important. Document your process and stick to it. It’s always better to do something wrong, the same way, ten times in a row, than it is to do something wrong in ten different ways.
When your accounting is more complex and you need to hire an accountant, they will inevitably have to “clean up” your accounts. This is normal. I’ve never seen an accountant take over do-it-yourself-ers books and not have corrections to make. If you have consistency, it will cost you a lot less to have the “cleanup” done.
Reason #2 – You can’t justify the monthly expense because you don’t value the work that an accountant does for you.
If this is you, then I bet that you have never had a trustworthy and talented accountant. I hate to hear that. I hope you know that there are dreamy accountants in the world who want to help you succeed. Your agency deserves a dreamy accountant. Please, click here to learn how to find yours.
What else do you want to know? If you still have questions on this topic, feel free to email me at [email protected]. I may answer your question in my next blog.