A knowledgeable small business accountant is one of the best tools a business can have as it grows. If you don’t have one, your business may be missing out on a valuable resource. Many businesses, especially many small businesses, attempt to make their way without an intelligent and experienced accountant on hand. Very often these businesses sell themselves short, because they’re missing the guidance that a skilled accountant can bring.
Accounting and bookkeeping
In a recent survey of small businesses, it was found that 45% of those surveyed had neither an accountant nor a bookkeeper on staff. 25% of those businesses surveyed had an accountant, 4% had a bookkeeper, and 11% retained a combination accountant and bookkeeper. Both these functions are very important to a business, and both are different.
A bookkeeper has the responsibility for maintaining business records of daily financial transactions, most of which are related to expenses and income. Bookkeepers will also generally handle invoicing and the company payroll. A small business accountant on the other hand, is responsible for the preparation of tax returns, and helps to provide a broad perspective on the company finances.
He or she is tasked with the preparation review of all company financial statements, as well as any necessary reports. He or she also will providing advice on important financial decisions that affect the company.
Wearing many hats
Due to budget constraints, many small business owners engage in some fairly risky business where accounting is involved. Approximately 72% of small business owners use the same company person to handle all accounting and bookkeeping functions, as well as HR functions.
While this is understandable in a small business environment, it does ignore the fact that accounting and HR are two very distinct and specialized fields, and both require an immense awareness of current regulations, rules, and compliance requirements. Your company would be much better off to outsource the accounting function to a knowledgeable professional, than to rely on the same individual to carry out multiple responsibilities.
There are several very popular types of accounting software used by small businesses these days, with QuickBooks being by far the most popular. QuickBooks is currently used by 74% of all small businesses, and 33% of all small businesses use software which is not connected to the internet. There are some downsides associated with working exclusively in local-based software though, which your small business accountant could point out.
For example, if both you and your accountant are accessing your accounting software, it can be difficult to determine which version is the most current. Also, you won’t have access to the books when traveling, or whenever you leave the office, unless you take files home with you on a thumb drive. There’s also more chance for errors to be introduced when you have multiple copies of accounting files.
In case you’re wondering, a full 25% of small businesses in the survey admitted that they still used paper-based accounting. There are obvious problems with this approach, starting with the fact that paper records can be lost or damaged. Also, you can’t share these records with your accountant or your banker, unless you copy them. There’s also a far greater chance for errors to be introduced by manual calculations, as opposed to using software which has been thoroughly debugged.
The bottom line is – either hire a small business accountant or outsource the function to a competent and knowledgeable professional!
Doerhoff & Associates knows you can use all the help you can get to run your small business successfully, and we are here for you. We strive to provide what you really want and need – a unique and customized set of services to fill the gap and support you, the business owner. Please contact us if we can provide you with further direction on this or any other small business accounting topic.