In small business, there are generally two kinds of accounting help owners use: bare bones support and support that actually impacts your bottom line.
Inc.com defines an accountant as “someone who solves a problem you didn’t know you had in a way you don’t understand.” Though a purposefully comical answer, it’s a pretty accurate “description” of the kind of help that empowers small business owners to improve their company and take home more money.
Partners who provide comprehensive support help by pinpointing accounting problems, making you aware of them and creating solutions to fix them.
Fighting The Urge To Think Short-Term
Having started three small businesses of his own, Kirk Simpson has learned the importance of working with a partner who has intimate knowledge of accounting and tax laws.
“I know how tempting it can be to save a buck and [manage your accounting] yourself, but it’s almost never more cost-efficient in the end,” Simpson writes in a Forbes article. It’s easy to think about the expense of hiring someone, but with a professional capable of finding tax deductions you never knew about and ensuring your compliance, for instance, you save money in the long run.
Xero offers an additional point: “Like all small business owners who are looking to save money, you may think you can’t afford an accountant. But look at how long it would take you to do certain tasks (such as taxes), and ask yourself, is that a good use of your time?”
Accounting Help Beyond Tax Filing
So you’ve already decided to hire an accountant, or you currently work with one. As mentioned, all accountants are not created equal.
Many small business owners hire accountants, but they meet with them once a year to complete and file their tax forms. The nature of this relationship has nothing to do with saving money and maximizing your profits. It’s simply a partnership to check off a requirement.
The full scope of support you need to manage your accounting needs and maximize your profits is nonexistent in this relationship.
Kristin Ewald, an author at QuickBooks, details 21 different accounting tasks necessary to ensure your small business is as profitable as possible.
Of the 21 tasks, only three are annual requirements, and only one of them is completing and filing tax forms. The tasks she outlines are needed daily, weekly, monthly, quarterly or annually and include:
- Record keeping
- Reviewing cash flow and finances
- Reviewing inventory levels
- Processing and reviewing payroll
- Analyzing your financial health and progress from previous periods
- Preparing and reviewing profit-and-loss statements
- Reviewing sales tax and making quarterly payments
- Estimating your income tax and making quarterly payments
Some of these tasks require your input, some are the responsibility of your partner, and many require you and your partner to work together.
Impacting Your Profits With True Accounting Support
As you may have noticed, the kinds of responsibilities outlined above include a great deal of review and analysis, and it’s no coincidence that so much time is spent on these tasks.
Your financials give you or your advisor great insight into the health of your business. The key is having the knowledge to assess your numbers. If you looked at your income statement, they may not mean much. But a knowledgeable partner can pinpoint issues that are cutting into your bottom line and offer the necessary advice to boost your profitability.
Every business decision you make has implications on your bottom line. Having a partner to consult is often the difference between a profitable year and one in which your hard work leads to little money in your pocket.
If you’re like most business owners, you want to do what you love and make money. Get the right accounting help and turn greater profits while making the most of your precious time.