Do your own accounting, what are the disadvantages?

Doing your own accounting is a solution that may seem interesting at first glance. However, it should be borne in mind that this method of accounting management has certain drawbacks; sometimes prohibitive. Compta-Facile reveals them to you by answering the question: do your accounting yourself, what are the disadvantages  ? Here is the summary of the drawbacks of such a management method:

Summary hide

Doing your own accounting is wasting sometimes considerable time

Doing your own accounting is taking the risk of making mistakes

Doing your own accounting means meeting certain hidden costs

Doing your own accounting is depriving yourself of advice from a wise professional

  1. A time consuming activity
  2. A significant risk of error in accounting and tax matters
  3. The presence of hidden costs
  4. Lack of advice

Doing your own accounting is wasting sometimes considerable time

When a company chooses to do its own accounting, it should be aware that it will devote some time to it. The latter depends on:

  • The degree of specialization of the manager or the team in charge of accounting management (a person new to accounting will take more time than a person mastering the essential principles of accounting for example),
  • The volume of documents to be processed (number of sales and purchase invoices, number of lines of bank statements, etc.),
  • And the size of the business.

For some work, taking care of your accounts alone tirelessly leads to a waste of time. Indeed, certain tasks (such as accounting entry) consume time and bring no added value. It is therefore advisable, as far as possible, to automate the processing of the accounts as much as possible: automatic recovery of bank statements , automatic recognition of invoices, etc.

Doing your own accounting is taking the risk of making mistakes

Unless you are deeply aware of accounting , have followed a minimum of studies in the subject or at least in-depth training, it is unlikely to master all the ins and outs of this science. The accounting obeys, in fact, many codes and doing it entirely alone can lead the company to be exposed to certain risks and in particular in:

  • Accounting charge (a transaction is linked to the wrong accounting account),
  • Interpretation (a text is misinterpreted and generates erroneous processing),
  • Extra-accounting restatements (accounting and taxation obey different rules and certain rules accepted in one area are not in the other).

This risk does not only exist at the accounting level, because if the company chooses to take care of its accounting on its own, it will also have to manage the fiscal and social aspects: declarations of results (tax reports), VAT, CVAE or of TVS, drafting of employment contracts, production of pay slips, declaration of social charges…

Using a chartered accountant can neutralize these drawbacks. Without having to entrust him with all of his accounting, the company can simply ask him to verify and establish his accounts (in jargon, this is a mission to present the annual accounts). It will thus take care of the accounting entry work and will realize an economic comparison with a total outsourcing of its accounting. This technique allows him to validate his accounting and thus greatly limit the risk of error. In addition, if the professional commits it, he has civil liability insurance which will bear part of the consequences of the error made.

Doing your own accounting means meeting certain hidden costs

In general, the decision to do your own accounting is guided by a purely financial motivation: saving the fees of the chartered accountant. If this management method allows savings to be made , it is important to specify that they are not as important as one might think . There are, in fact, a number of hidden costs which may qualify this argument in favor of “doing it yourself”.

These are essentially:

  • Amounts paid for the acquisition or rental of accounting software and costs incurred for updates and maintenance,
  • Costs encountered to train staff in accounting techniques or the use of accounting software,
  • Fees for advice in various fields.

Doing your own accounting is depriving yourself of advice from a wise professional

This is the last negative point of internal accounting management. If a company chooses to assume it alone, it deprives itself of the advice of a chartered accountant not only in the accounting field (of course) but also in many other fields:

  • Tax: the chartered accountant knows how to optimize all the tax aspects affecting the company and its manager (social status, remuneration or dividends, etc.) and is empowered to complete all tax declarations;
  • Social: the chartered accountant is authorized to draw up employment contracts, draw up pay slips and declare social charges;
  • Legal: the chartered accountant is able to optimize the legal aspect of the company (annual legal follow-up linked to the approval of the accounts and the allocation of the result, achievement of exceptional legal matters, etc.);
  • Financial: for any business buyout or business development project requiring financing, the chartered accountant is competent to support the company (balance sheet analysis, verification of financing possibilities and selection, establishment of a business plan…

 

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