4 thoughts on “DIY Accounting: Why it’s a BAD IDEA! Don’t make this mistake!

  1. First year in business with a ltd company, and I’ve done my own accounts, and your video helped me feel ok good with that decision, since I have familiarised myself with everything you mentioned. I did book a session with an accountant to make sure I’m doing everything I need to, and how to actually get the numbers (I’m using Quickbooks) which was invaluable, but much much more affordable than him doing the accounts, which I really can’t believe would have saved me anywhere near his fee. It might be *wise* to use an accountant, but it won’t necessarily save you any money. And you won’t have any idea what needs to be done, which ultimtely is the director’s responsibility. Moving foward, I will do the books myself, and get an accountant to look over it and file.

    1. Thanks for your comment Jeremy. 9 times out of 10 a good accountant will save you money but if your business is very simple and the accounting is straight forward enough and you are ok with numbers, then yes it makes sense for you do it yourself. You are still using an accountant to check everything which is what we found when people who came to us who had made a mess of things or tried to do everything themselves never did and hence the mistakes, errors and missing out on tax breaks. You are doing the right thing with still having an accountant check your homework so to speak! And this is what we are tying to encourage with the video. We don’t necessarily need to do the bookkeeping but it is wise to have an accountant check and file the accounts for you. Although in most circumstances all they are doing are checking you are claiming for the right things and put the correct numbers into the correct box. Did they give any advice? I don’t know your business and it may be a very simple business. I will give some recent examples of clients who were of a similar mind to you and thought they were saving money. 

      One client did all his accounting himself. It was a straightforward business and on the face of it accounting was simple so he did it himself using Xero software and filed through companies house. He came to me as we met by chance. He had sold an asset in his business and wanted to see if there was any way to reduce his personal tax liability. Unfortunately he was too late. Had we been engaged before he sold the asset in the business, we could have saved him over £250,000 in personal tax. It was too late to do anything. He thought he was saving money by not having an accountant. Unfortunately it cost him 1/4m pounds in unnecessary taxes. 

      Another client came to us because they had become time poor and wanted someone to do the bookkeeping. They had done it themselves for a few years to save money. They had never heard of R&D tax credits. We identified they would be eligible. You can only go back two years. He had costs beyond the 2 year period that would have been eligible. We were able to get him back around £60k but he lost the tax benefit of the first two years of his business life.

      We have had several clients come to us who have again thought they were saving money with DIY accounting. Similar to you, had an accountant check their numbers and gave them the thumbs up. We took over and identified use of home claims mileage claims and other expenses that they had never put through and they didn’t know they could. One we noted could have put their garden office they paid £25k for through the business. All the accountant was doing was checking their homework. He wasn’t giving advice or getting to know the client to see where they could help save money.

      Another one recently we found out they had bought an electric car. They bought it personally. Had they known and had they been a client of ours from the start, they would have been able to save a lot of tax by having the company buy the car. He didn’t know at the time that electric cars could be bought by the business and the great tax breaks it offers.

      One last point I would add, you can’t put a monetary value on your time. Time is a valuable commodity to any start up and time spent on researching how to do accounting and save on taxes and doing all the accounting yourself means less time spent on your business and doing what you love. But if accounting is what you enjoy and something you don’t mind doing and have the time to do, then I agree. Save yourself the cash but for any reader of these comments, bear in mind there will be a point as a business grows expert help will be needed and I find it best to start that relationship from the beginning.

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