Having a strong handle on your accounting tasks is an important component of any business, and small businesses are no exception. With limited resources, many small businesses may find they run into problems by attempting to do accounting on their own. Unless you have significant accounting knowledge, handling the accounting for your business is rarely a good idea.
Fewer Long-Term Costs
Part of the reason you may consider doing your own bookkeeping and accounting is to save money. Most small businesses find hiring a full-time accountant is unnecessary to keep financial documents in order. One type of economical accounting service option is a virtual accounting service. These services typically charge a monthly fee that is significantly less expensive than hiring a full-time accountant and can be more convenient than scheduling time with a contract-based accountant in your area.
Virtual accounting services are versatile in the type of services provided. Depending on how comfortable you are with handling accounting concerns, you may only want a platform that allows you a quick way of capturing and storing financial documents. For business owners who are uncomfortable with managing any aspect of their accounting, some virtual accounting services offer a human component to their services.
Although you will upload and store documents for your virtual accountant, you can have one-on-one interaction with a certified accountant if you have questions or concerns. The monthly costs of hiring an accountant, whether utilizing a local or a virtual accountant, is small when compared to the peace of mind that comes with confidence in your business finances.
Sometimes it can be difficult to identify and acknowledge financial problems that may contribute to losses in your business, since your business can have sentimental value. Leaving accounting information to a professional can provide you with a clear and honest view of how your business is doing and can let you know if you need to make changes for the longevity of your business.
The objectivity from an accountant not only benefits your current business income, but can help you with business decisions for the future. You may want to expand products, hire new employees or branch out into other markets. Your accountant can help you determine if any of your ideas are appropriate based on the current state of your finances.
Small business taxes are nothing akin to personal income taxes, and many small business owners who take it upon themselves to file will quickly find they have met their match. Having solid bookkeeping throughout the tax year will make the process smoother, but you also need a reliable and knowledgeable person to ensure you are reporting all your income and losses. Furthermore, in the event of an audit, having an accountant in your corner can lead to a more favorable outcome.
Having an accountant who is specialized in the area of small business accounting can give you the best opportunity at minimizing your tax burden by finding any deductions and credits for your business. If your business does not qualify for certain tax credits during the current tax year, your account can make suggestions that could improve your qualifications if the same tax credit appears in future years.
Additional Layers Of Protection
It is easy to become overwhelmed and overlook money and inventory coming into and going out of your business. Handling your accounting tasks on your own presents the ideal opportunity for theft and fraud. An accounting service routinely looks at your finances, which includes business bank accounts, credit cards and profits to determine if money is unaccounted for or if there is unauthorized activity on your business accounts.
Although you may be concerned about virtual theft or robbery, you should be equally concerned about theft that can occur from trusted employees. Theft of cash is a serious problem, but theft in the form of products is often less obvious. It is easy for sketchy bookkeeping to result in thousands of dollars in lost profits through missing products.
Many small businesses have a limited budget, but skimping on your accounting needs is not the area to cut costs. Investing in specialized accounting services for small business is a necessity to reduce tax troubles and improve longevity of your business.