Bookkeeping is necessary in every business whether it is a small or large scale business. As a small business owner, following basic accounting principles is essential for success, record-keeping and financial analysis is key to not only monitoring your expenses, but to discovering new avenues of growth. In addition, it ensures you stay responsible for tax obligations to the government and to your employees.
Accounting closely monitors your accounts receivable to illustrate trends or behaviours in your customer base. It can also cut down on the costs you incur by pursuing late payers. Establishing a detailed budget to help discover inefficiencies within your operations. Sudden changes in vendor costs or sales revenues can alert you to important industry changes. Understanding your financial position in order to spot problem areas that could interfere with loans earmarked for expansion.
Taxes are unavoidable. Depending where you operate and the nature of your business, the IRS has very specific requirements about the documentation you’re required to file. Submitting improper or inaccurate documentation can get you into trouble, and it can be extremely costly in terms of fees and penalties. Preparing the required tax documentation has its benefits though, and it can give you vital information about the health of your business. Monthly or quarterly financial statements, cash flow statements, and asset and income statements can provide a clearer picture of your business than your bank balance. Understanding IRS requirements and how you can make them work for you can give you a deeper understanding of your company’s financial health.
As your accounting strategy, review your company’s financial goals. Whether you are a solo entrepreneur or you employ a staff, your survival hinges on clearly stated financial objectives. You may be in business to reap as much profit as you can, or you may be interested in sharing a product or service that you believe in. Either way, one of the most common reasons small business fail is because cash flow runs dry. To prevent this disaster, your business should implement policies for efficient record-keeping and a sound financial strategy.
A qualified accountant can assist in numerous ways outside of managing day-to-day finances like advising on how best to structure a company before it’s formed, consulting on the financial details of your business plan, identifying potential cost savings in operations, managing payroll, developing a financial safety net, liaising with the IRS in the event of an audit.
The financial implications of business ownership are extensive, yet critical to a company’s success. Having a dependable, efficient accounting service can free up your time to focus on the things you love about your business.