Small business accounting involves controlling, recording, and analyzing your company’s financial transactions. A detailed study of the numbers indicated in the financial statements allows you to conclude the business’s profitability. For business owners, bookkeeping can be the most tedious part of implementing a business plan; however, it is essential to avoid confusion with capital movements and ensure that all paperwork is completed correctly. The best solution would be delegating financial authority to the accountant for small business.
The definition of a small business accountant
Commonly, small business accounting is a set of financial transactions related to the processing, measuring, and exchanging of a company’s finances. Such activities include taxes, administration, asset acquisition, inventory, and payroll.
Although accounting and bookkeeping are often used as synonyms, in reality, these activities are different. Accounting studies finance broadly, including preparing tax returns, applying for a loan, developing a business plan, etc. Bookkeeping focuses on the execution of day-to-day procedures, such as recording money transactions, checking reports, and working with payment documents.
When is accounting advice important?
You can do without hiring a bookkeeper if your business can still be considered a hobby. However, you can talk to a financial specialist early in the company’s development to build a clear business plan and pay attention to the peculiarities of startups.
It is impossible to determine the exact moment when you need to hire an accountant for small business, but it makes sense to use the knowledge and skills of a CPA in such situations:
- when the industry began to generate income,
- before the tax period
- in case need to restructure, sell or expand the company,
- investors are asking to perform a revision of financial statements,
- you made a mistake when filling out your tax return,
- facing an audit, etc.
Many responsible accountants offer free trial consultations. During the first meeting, you can get valuable references and understand what the professionals have to offer if you decide to hire them. You can also discuss the cost of a specialist to see if you can afford the expenses.
Keeping proper financial records is time-intensive and small mistakes can be costly. BooksTime makes sure your numbers are 100% accurate so you can focus on growing your business.
Primary responsibilities of a small business bookkeeper
A qualified accountant examines your organization’s finances and prepares economic reports. These professionals’ job is to ensure that your information is correct and your taxes are paid on time and in full. Modern bookkeepers offer different services when we speak about small businesses:
- Calculation of tax deductions.
- Finding the company’s underlying problems, e.g., inventory inefficiencies, rising product and equipment prices, and huge receivables, before they cause the business to fail.
- Maintaining cash flow at an optimal level.
- Preparation of tax returns.
- Identification of potential areas of growth after.
- Preparation of financial documents necessary to obtain loans and cooperation with investors.
If you plan to cooperate with an accountant for a small business, you must understand how many economic tasks you will delegate to him. Perhaps you want to consult with an expert from time to time when you start your business, or you plan to turn over all data during the tax period to have an expert personally prepare and file a tax return.
How can an accountant help a small business?
Proper bookkeeping will make your life easier during the tax period and form a clear picture of the company’s financial position. Competent accounting will make the company more attractive to customers. Let’s consider how professional bookkeeping does contribute to business prosperity:
- Sustainability: logging every transaction lets you track the level of spendings. You can also make accurate future profit and cost projections to ensure the firm has enough cash to weather any crisis.
- Efficiency boost: collaborating with an expert allows you always to have up-to-date financial information at your fingertips. It will help you decide if the business needs additional investment and when is the best time to invest in a new project.
In addition to all of the above, professional economic reports inform entrepreneurs about costs and cash flow, allowing you to create a brand promotion program. Accurate financial insights let you determine the optimal moment to launch an advertising campaign.
Main things to consider when you try to find a small business accountant
If finance is not your forte, it is advisable to work with an expert to help you manage income, taxes, and other economic obligations. Given the importance of having a competent accountant on the team, selecting a specialist should not be taken lightly. Before you start looking for a professional, ask yourself a few questions:
- What services do you need: make a list of priority tasks that you would like the bookkeeper to take on. The search for a specialist is simplified if you have a job description. The list of work may include daily transaction registration, debt management, payroll, taxation, budgeting, etc. Consider current needs and prospects.
- Do you want to cooperate with an outsourcing accounting firm or with a full-time employee: each of these options has its pros and cons; it all depends on the specifics of the business. Hiring an in-house accountant guarantees a professional will devote all of their time to solving your financial issues. Still, considering the payroll, taxes, etc., such a solution is expensive. Small firms that do not need constant bookkeeping work may choose a comprehensive accounting service from remote specialists.
- How much you are planning to spend: your budget should reflect the knowledge and experience your company requires, given the complexity of financial transactions. The price depends on the skill level, e.g., CPA is more expensive and the company’s location.
A qualified and reliable accountant will help you navigate dynamic and ambiguous tax laws and the circumstances that allow you to scale your business cost-effectively and efficiently. Therefore, you must understand what to look for in a bookkeeper and do your research to select the best professional suited to your situation.
How to find a good bookkeeper for your small company?
You will need a professional with experience preparing financial documents in a company comparable in size and profit to your firm. It’s even better if they’ve interacted with companies that operate in the same industry as your firm, as this will help them understand the business’s specific requirements more quickly. Let’s talk about how to find a small business accountant you can trust:
- Consult with people: finding a specialist independently is problematic. Talk to friends, colleagues, and family; they may have recommendations.
- Do your research: after a few recommendations, do your research to ensure an accountant is right. Read online reviews, and talk to them on the phone to get a feel of their level of service and professionalism.
- Talk about payment: it’s a good idea to ask professionals about fees and how they bill. Some services may charge directly for the work done, while others may be billed hourly; clarifying financial matters in advance is essential.
- Discuss technology: an excellent accountant should be able to use technology and adapt quickly to any software. Be sure to ask how they ensure their security; otherwise, they may be a weak link.
When you find the right expert, you must be honest and kind to them. Provide the accountant with all the necessary data about your business, financial position, and goals so that he helps to make the best decisions. Otherwise, the services they offer may be useless.
The most popular small business accounting programs
Every entrepreneur needs reliable software because it saves time on manual data entry. Accounting programs provide quick and easy access to all financial data. With its help, a business owner can control the balance of accounts, track the movement of capital, and make forecasts regarding profitability, tax payments, etc.
When choosing accounting software, you must consider the following features:
- Platform interoperability: your financial program must be synchronized with the virtual e-commerce solution and allow third-party applications to be implemented.
- Large selection of reports: many accounting systems offer only basic reports. Experts advise choosing platforms that allow you to create additional documents to track inventory, expenses, and the company’s overall financial position.
- Reliable support: read reviews from other users to understand how effective the customer service of software developers is. Choose digital products with 24/7 support and multiple service centers.
After you synchronize your bank accounts and credit cards with a particular program, all transactions will be displayed in a queue and grouped into different types. All these insights you can view in the chart of accounts.
There are many different bookkeeping programs for small companies; You can find paid and free platforms that make financial activities much more straightforward.
It would help if you treated the accountant as a core member of your team. In the end, they largely determine whether your business will be successful.
Qualified professionals may share their ideas about the processes that ensure business development. At the same time, inexperienced or unskilled bookkeepers can be unproductive.
Therefore, when trying to find a professional, it is essential to be selective and take your time to choose the accountant that is best for your company. Ultimately, you plan to partner with an expert who fits your budget, is a professional in their field, and is committed to increasing your firm’s profitability.
Author: Charles Lutwidge