The Pros and Cons of Doing Your Own Bookkeeping The issue of doing your own bookkeeping became prevalent with the advent of low cost accounting software in the early 1990's. On September 27, 1994 Intuit purchased a program called MoneyCounts from Parsons Technology for $64 Million. Intuit changed the name of MoneyCounts to QuickBooks and created a very effective Unique Selling Proposition "You can save money by doing your own bookkeeping". That USP resulted in Intuit capturing almost 85% of the small business market. Accountants were no fans of this extremely popular software program for several very valid reasons. First, it was not a true accounting program with serious security flaws. Second, it was promoting inexperienced individuals take on a crucial segment of the financial process. Third, it was distracting business owners from their core business, and last, it drastically cut into the accountants business. Addressing all of the issues concerning DIY bookkeeping in great detail would require a book. I will cover as many of the main issues here to provide the reader with an opportunity to gain a better understanding of an extremely important subject. I welcome any questions and comments regarding the subject matter in an attempt to assist entrepreneurs that may not have had the opportunity to properly make an informed decision. The Issues If you're reading this special report chances are you're one of the millions of small business owners struggling with the issue of "doing your own books". For many, the idea of retaining an outside bookkeeper or accountant to handle your personal financial matters is sort of like opening up your closet to a complete stranger. I believe that this issue of personal privacy is valid. To be perfectly honest, one of the reasons I decided to become a CPA was because I knew I would be in business and wanted to be in control of my own finances. Most entrepreneurs don't have that option or the skill set. The issue of DIY bookkeeping is of tantamount importance because it could affect the financial viability of the enterprise. There are a number of issues to address including: The use of bookkeeping information to prepare tax returns The integrity of the financial information produced The validity of historical data to project future results The management of cash flow The cost of retaining a professional The time, effort and frustrations of keeping your own books Addressing the government's increasing propensity to audit The time and effort learning about bookkeeping Creating the bookkeeping processes The trust factor As you can see there are a lot of issues to address in making the right choice. This is by far, not all inclusive. There may be many other legal, financial and/or personal issues at stake. The point here is that the subject of creating and maintaining a set of books and records for a small business is of significant importance. The decision as to how it will be done should not be made on

1. The Pros and Consof DoingYour OwnBookkeeping
The issue of doingyourown bookkeepingbecameprevalentwiththe adventof low costaccounting
software inthe early1990's. On September27,1994 Intuitpurchaseda programcalledMoneyCounts
fromParsonsTechnologyfor$64 Million.Intuitchangedthe name of MoneyCountstoQuickBooksand
createda veryeffective Unique SellingProposition"Youcansave moneybydoingyour own
bookkeeping".ThatUSPresultedinIntuitcapturingalmost85% of the small businessmarket.
Accountantswere nofansof thisextremelypopularsoftware programforseveral veryvalidreasons.
First,itwas not a true accountingprogram withserioussecurityflaws.Second,itwaspromoting
inexperiencedindividualstake onacrucial segmentof the financial process.Third,itwasdistracting
businessownersfromtheircore business,andlast,itdrasticallycutintothe accountantsbusiness.
Addressingall of the issuesconcerningDIY bookkeepingingreatdetail wouldrequire abook.Iwill cover
as many of the mainissueshere toprovide the readerwithanopportunitytogaina better
understandingof anextremelyimportantsubject.Iwelcome anyquestionsandcomments regardingthe
subjectmatterinan attemptto assistentrepreneursthatmaynothave had the opportunitytoproperly
make an informeddecision.
The Issues
If you're readingthisspecial reportchancesare you're one of the millionsof small businessowne rs
strugglingwiththe issue of "doingyourownbooks".Formany,the ideaof retaininganoutside
bookkeeperoraccountantto handle yourpersonal financialmattersissortof like openingupyour
closetto a complete stranger.Ibelieve thatthisissue of personalprivacyisvalid.Tobe perfectlyhonest,
one of the reasonsI decidedtobecome aCPA was because Iknew Iwouldbe inbusinessandwantedto
be in control of my ownfinances.Mostentrepreneursdon'thave thatoptionor the skill set.The issue of
DIY bookkeepingisof tantamountimportance becauseitcouldaffectthe financial viabilityof the
enterprise.Thereare a numberof issuestoaddressincluding:
The use of bookkeepinginformationtoprepare tax returns
The integrityof the financial informationproduced
The validityof historical datatoprojectfuture results

2. The managementof cash flow
The cost of retainingaprofessional
The time,effortandfrustrationsof keepingyourownbooks
Addressingthe government'sincreasingpropensitytoaudit
The time and effortlearningaboutbookkeeping
Creatingthe bookkeepingprocesses
The trust factor
As youcan see there are a lotof issuestoaddressinmakingthe rightchoice.Thisisby far,not all
inclusive.There maybe manyother legal,financialand/orpersonal issuesatstake.The pointhere is
that the subjectof creatingand maintainingasetof booksand recordsfor a small businessisof
significantimportance.The decisionastohow it will be done shouldnotbe made ona whimor by the
uninformed.Anindividualoperatingasmall businessdoesn'tknow whattheydon'tknow.Operatinga
businesscomeswithcertainresponsibilitiesandobligations.Notknowingisnota validreasonwhenthe
booksand recordsfall intoquestion. Isubmitthatasbusinessowneritisyourdutyto know exactlywhat
the issuesare and make an informeddecisionaboutaddressingeachof them.Youare,by default,the
Presidentof yourcompanywhichcomeswithall of the associatedresponsibilitiesincludingtax,legal
and personal liabilities.
Reasons& Excuses

3. Most, if not all startupstake on the task of creatingtheirownset of booksand recordsfor a few simple
reasons:
No fundstoretaina professional
Limitedamountof transactions
Exposingpersonal financial information
The perceptionthatit'seasy
The propensitytoprocrastinate
Fear
The Facts
Everybusinessmustfile atax return.Eventuallythe issueof bookkeepingmustbe addressed.Millionsof
individualschoose toprepare theirowntax returnswhichisanotherissue all byitself.Letme address
that before goingfurther.It'sareal easyone andnot because Iprepare tax returnsbutbecause of the
complexityof the tax laws,bothFederal andState.
I can compare the ideaof an individualpreparingtheirowntax returntopullingoutmyownteeth.
WhenI was a childmyteethcame out naturally.Ididn'thave to go to the dentisttohave thempulled
professionally.Evenif IpulledthemoutwhenIshouldn'thave,eventuallymypermanentteethwould
grow into coverup my mistakenbelief thatIwas a dentist.AsanadultI know better.Hopefully,if you
owna businessyouknowbetter.Toattemptto prepare yourowntax returnwouldbe the same as
tryingto be your owndentist.

4. There issimplytoomuch at stake.Potentiallymissedwriteoffsorevenworse,overaggressivewrite offs
resultinginanauditand the veryunfortunate mistake of notincorporatingyourbusinessandexposing
your personal assetstoa lawsuit,justtoname a few.If youhaven'tfiguredoutmypositiononthis
subjectletme make itclear.Doingyour owntax returnisa monumental mistake.If youare goingto
opena businessyouneedtoenlistthe advice of agoodtax accountant.
Gettingback to the do ityourself bookkeepingissue,anotherfacttoconsideristhe financial aspect.This
isvalidas moststart ups have zerofundsto beginwith.The ideaof investinginprofessional guidance
takesparticularshrewdness.One thingtoconsideristhe verypopular"Free consultation".Idon'tknow
manyprofessionalsthatwouldnotofferaninitial strategysessiontoapotential new client.Thatpretty
much makesthisissue null andvoid.
If you decide toretainthe professional toguide youtheywill understandthe financialissuesinvolved.
The right personwill be willingtonurture youand yournew businessandcome upwitha pricing
structure that will work.Don'texpectagood accountantto workfor free anddon't enlistafamily
memberorfriendthatis willing toworkfor free.Theywill nottreatyouas anyotherclientforthe
simple factthatyou're not. Some of the worst clientsIeverhadto workwithwere friendsandfamily.
The problemisthat manytimesI wasthe bearerof verybad newsputtingme ina precariousposition.If
youhave a friendorfamilymemberthatisinthe business,askthemtoreferyouto one of their
associates.Youwill all be happyyoudid.
The remainingissuesall reallyhave todowithyourpersonal mindset.Fear,procrastination,perception
etc.all have tobe addressedatthe mindsetlevel andI'mnotqualifiedtoaddressthose issuessoI
won't.Businessandpersonal mindsetcoachesare inabundance today.
Twentyyearsago whenIntuitperpetratedthe missguidedUSPthat"You can save moneybydoingyour
ownbookkeeping",businesscoachingwasnotmainstream.Itwasprobablymore inthe realmof
psychotherapyorbusinessconsultingwhichwaseitherinthe categoryof extremelypersonal ortoo
expensive forastart up.Today therapyandbusinesscoachingisstandardfare makingthe issue of
mindsetreallyanissue of - are you seriousaboutthisbusinessornot?
That reallyonlyleavesone remainingissue toaddress;whichisthe volumeof transactions.Doesitreally
make sense toseekthe helpof a professionalbookkeeperwhenthe volumeof yourtransactionsare
minimal?Thisquestionleadstoanotherquestionwhichis,whatconstitutesminimal?If it'snotminimal,
shouldyoustill be doingyourownbooks?

5. NowI can reallygetintothe subjectmatterof whetherornot a businessownershouldbe doingtheir
ownbookkeeping.Let'sfirststartwiththe definitionof bookkeeping.Itseemsobviousthatasubjectso
crucial to a businessneedstobe definedinordertoproperlymake aninformeddecisiononthe matter.