When you start a small business, no matter your level of business skills and experience, you know that keeping accurate records of your income and expenses is critical to your business. With numbers of accounting software programs available today, many business owners feel confident in keeping their books on their own. But should they? Below are some of the many problems your business may face when setting up your books, keeping them, and handling related reporting issues if you don’t involve an accountant.
Setting Up Your Books
Small business owners approach starting their business with various skill sets. They should personally know the technical and operational aspects of what they want to do. But how many are also knowledgeable about human resources, business administration, or accounting? Setting up your Chart of Accounts, for instance, is one of the first steps in establishing your accounting system. How many account categories should you set up? What should those categories be? What subcategories should you include for your business? Setting up these categories correctly sets the stage for your ability to create detailed financial reports that show revenues and expenses for each operation. This is the first basic step to the proper management of the profits and expenses of your business. Get it wrong and you will be operating from bad data. That rarely turns out well.
What is Your Cash Flow?
Many people look at the Profit & Loss statements to see how their firm is doing. Experience teaches, though, that cash flow is king. A business cannot function without adequate cash flow to sustain operations month-to-month. How do you forecast your cash flow? Is the data you have complete and accurate? To keep track of your cash flow and project it into the future, even for a short time, you have to get accurate accounting of your accounts receivable, inventory, outstanding bills and debt. The projected income and expenses for your firm. You want them to be correct now so you can rely on them to project where you will be in the near future. How sure are you of your numbers?
Who Does Your Taxes?
Doing your own accounting, and keeping track of all the financial matters and regulatory changes, can take up much your time. Time you could spend on other aspects of your business. Beyond that, filing your taxes accurately and in accordance with regulations is critical to your business survival. You got into business to succeed, to create an income and security for you and your family. A prime reason that businesses fail, however, are problems with accounting and tax issues.
These are just some accounting issues faced by a small business. You may think your small business can’t afford a full-time accountant or CPA. You may want to save the money and handle it yourself. But there are hazards to doing it all on your own. By hiring a contract accounting firm like CustomOne CFO & Controllers, you can get cost-effective and efficient part-time accountant services. To explore contract accounting services, contact CustomOne CFO & Controllers and ask for information on their services. The money you save by hiring an accountant to help eliminate mistakes and refine your business operations could easily pay for the services and increase your profits!
Bookkeeper or CPA?