The Cost of Bad Accounting: How Inexperience Can Lead to Financial Ruin
Authored by Chris Austin, President of Ardiah Managed Services
As entrepreneurs, we often try to cut costs wherever we can. It’s part of the hustle—the belief that if we can handle something ourselves, we’ll save money. One common area where this happens is accounting. Let’s be honest, how hard can it be? You track income, you log expenses, you fill out a few forms…right? But unless you’re trained in professional accounting practices, there’s a good chance you’re getting it wrong. Worse yet, bad accounting can lead to major financial trouble, even give off the appearance of “cooking the books,” and may result in long-term consequences you didn’t see coming.
Learning the Hard Way: My Own Experience
I learned this lesson firsthand 15 years ago when I took over my first business. I was inexperienced but confident. After all, I had a solid background in banking, so I figured I could handle the financials just fine. The seller provided me with basic financial documents—an Excel-based profit and loss statement and a balance sheet. That’s all I needed, or so I thought.
Fast forward a few years, and that business was sinking. It turned out the financials I’d inherited were incomplete and, quite frankly, altered to make the business appear more profitable than it actually was. There was no real tracking of expenses or income streams, and critical data that should have been there simply wasn’t. My banking background didn’t prepare me for the realities of running a business with poorly managed financials.
That business failed within three years, and it left me with my pride bruised, my bank accounts nearly drained, and some lasting scars that I carry to this day. The mistake wasn’t just trusting those faulty financials—it was in thinking I could handle something as complex as business accounting without the right expertise.
The truth is, unless your business is accounting, you’re probably making mistakes by trying to do it yourself.
The Real Cost of DIY Accounting
I see it time and time again—business owners trying to save money by managing their own books, only to end up paying more in the long run. The problem is that most entrepreneurs don’t realize they’re missing critical information. They think balancing the books is just tracking what’s coming in and going out, but there’s so much more to it than that.
When the books are disorganized, it’s not just about keeping your business afloat—it can also create major headaches at tax time. Here’s a reality check: when you take your incomplete, unprofessional financials to a CPA or tax professional, they know immediately. What could have been a simple tax filing becomes a lengthy process where they have to clean up your books before they can even begin to work on your taxes. This costs you time and money.
In fact, many tax professionals are now turning away businesses and nonprofits whose books aren’t managed by a proper accounting firm. Why? Because bad accounting is a nightmare for them. Imagine spending hours—sometimes days—sorting through messy records just to make sense of it all. It’s not the best use of their time, and it’s certainly not cost-effective for you.
Why Accurate Financials Matter—More Than You Think
When you manage your finances the right way—by using professionals like those at Ardiah Managed Services who are trained to handle your accounting, bookkeeping, and payroll—everything is cleaner, more organized, and easier to reconcile. Your books are CPA- and tax-ready, which means your tax professional can file your returns efficiently, saving you both time and money.
And let’s not forget the possibility of an audit. While you can never completely avoid an audit, what you can do is make sure your financials are ready if (or when) that happens. Having everything in order not only saves you stress, but it also makes the audit process smoother for everyone involved. When your financials are clean, the auditors will appreciate your organization, and you’ll have the peace of mind that comes with knowing your business is operating above board.
The Expertise You Need
My team at Ardiah Managed Services often jokes with me that, despite my years of experience, I’m still not ready to handle their jobs. And they’re right! Even though I’m more knowledgeable now than I was 15 years ago, accounting is a specialized skill, and it’s one that most entrepreneurs don’t have. The lesson here is simple: just because you can manage your books, doesn’t mean you should.
There’s no shame in admitting you need help. In fact, it’s one of the smartest things you can do for your business. Partnering with an experienced accounting firm like Ardiah ensures that your financials are accurate, up-to-date, and ready for whatever comes your way—whether it’s tax season, an audit, or just the day-to-day decisions that keep your business running smoothly.
Closing Thoughts
My journey as an entrepreneur has taught me many things, but perhaps the most important lesson is this: you can’t do it all. Hiring experts in areas outside your expertise isn’t just a smart move—it’s essential for your business’s success. So, if you’re still trying to do your own books to save a few bucks, take it from someone who’s been there. It’s not worth the risk.
At Ardiah Managed Services, we have the experience, the software, and the know-how to keep your financials in order. So, let us handle the numbers, while you focus on growing your business.
Disclosure: The information provided in this blog is based on personal experiences and general knowledge of business accounting practices. I am not a certified tax advisor, and this blog is not intended to offer specific tax, legal, or financial advice. While accurate financial management can reduce the risk of errors and complications, it does not guarantee an audit-free experience. Always consult with a licensed tax professional for advice tailored to your individual circumstances.
Chris Austin
President, Ardiah Managed Services
About the Author: Chris Austin is passionate about supporting small businesses and is the President of Ardiah Managed Services, a trusted provider of accounting, payment solutions, POS systems, payroll, and tax services. Chris and his team are dedicated to helping small businesses thrive by delivering tailored solutions and personalized support. If you have a small business support or service need, they would love to help! 207-230-4576 or email: [email protected]
