In an attempt to control expenditures, small business owners and entrepreneurs usually employ the do-it-yourself approach, even when it comes to accounting, taxes, and bookkeeping related matters. However, managing the finances and accounts of even a small business can become complicated over the course of time. Small errors and oversights can slowly accumulate into bigger quagmires.
Big financial mistakes can actually inhibit the growth of the business or affect your bottom line, shake the confidence of staff members, vendors and customers, and put the firm on the radar of IRS or government agencies. Managing the financial side of a business can be a make or break deal for your small business. Hence, it is best to entrust the highly technical matters of accounts and taxation to a qualified accountant in order to give your small business the best chance to grow.
Here is how an accountant can do so:
Development of a Realistic Business Plan
Usually entrepreneurs and business owners feel the need to hire an accountant during the first filing of taxes. However, getting an accountant involved in your business at the time of writing your business plan is very beneficial. An accountant’s input will make your business plan more realistic, professional and easily executable. An accountant will also help you with your business plan by:
- Helping you develop accurate business projections of revenue and expenses
- Setting realistic targets and forecast figures
- Improving your chances to attract potential investors
- Improving your odds of acquiring a bank loan through including details of financial condition and future prospects in your business plan
Perceptive Decision Making
Accountants keep financial statements and records of a business up to date, which allows business owners to make timely and strategic operational and financial decisions. Accounting is a powerful system that lends insights into the soundness of one’s strategic business decisions and the extent of their success. In general, any kind of decision that has an accounting, financial or taxable implication should be taken only after consulting an accountant.
An accountant can empower you in the following ways:
- Organize complex and dispersed information, such as entries in books, credit card statements, invoices, into easy-to-understand data
- Crunch numbers into easy-to-comprehend graphs and charts that can help decision makers easily measure key business metrics
- Help in allocating scarce resources effectively
- Catch sight of any financial risks associated with an existing financial decision and suggest ways to minimize them
- Empower managers to analyze efficiency, track performance, and devise and deploy key strategies accordingly
Management of Finances
Many small business owners think that an accountant can only generate financial statements and help them comply with governmental and legal obligations; however, he/she can do more than just maintain books and file taxes. This person can conduct a financial analysis of your business processes, predict future growth, and strategize and budget accordingly. A competent accountant can help you:
- Generate detailed sales reports
- Create sales forecast for the next financial quarter
- Manage payroll of employees against the revenue
- Highlight the overstocked items
- Identify latest profitable services
- Monitor the cash flow
- Put appropriate financial controls in place
- Determine the financial standing and stability of your business
- Depreciate all the right assets in the most dynamic manner
- Assess business structure for growth potential
An accountant can help you save money by regulating your cash flow, maximizing profit, and raising capital for expansion. Delegating the accounts management task to a trained professional allows entrepreneurs to save time and focus on what they do best, concentrate on revenue generating activities and offer excellent products and services to customers.