Whether you own a global Fortune 500 corporation or a small local retail store with three employees, your financial operations are at the very core of your business. Finance is the one common denominator of all business concerns. While your product or service might represent the heart and soul of your company, money is the heartbeat that fuels it — and that’s why it’s crucial to hire a specialist accounting service provider to help.
What Is an Accounting Service?
Typically, an accounting service (also known as a bookkeeping service) consists of an outside contractor who comes in at a specified time to go over the company books and ongoing financial records. These would include overhead and inventory expenses, revenue and payroll. Depending on your needs, you can hire an accountant to come in at whatever interval you require — once (or more a week), several times a month, quarterly, or once or twice a year for tax purposes.
Accounting services for small businesses (and large ones) generally charge by the hour, so you can budget accordingly. Some businesses use an accountant to regularly handle the payroll every week or two. Others hire an accountant once a month or quarterly to manage inventory and overhead expenses.
How often should you bring in an accountant? This depends upon your needs and your budget — but savvy small business owners know that it pays to use an accounting service as often as possible. With this in mind, here are five ways a bookkeeping service can improve your small business and keep your finances on track and running smoothly.
1. Payroll and Accounts Receivable Accuracy
According to a recent survey by the Workforce Institute, 82 million U.S. workers — representing half of the U.S. workforce — have experienced problems with their paychecks. These include inaccurate amounts, late payments and even non-payments for employee services. If you’re an experienced small business owner, you know that payroll errors can be a huge headache to handle. Every paycheck error ends up costing your company valuable time to correct, and even one slip-up can involve hours of extra bookkeeping. Plus, paycheck mistakes can lead to bad feelings among your staff, and have caused many a good employee to look for another job.
Likewise, accounts receivable errors can cause bad business relationships and mistrust, and take hours to correct. In particular, late or non-payments (even if they’re inadvertent and caused by accounting mistakes) can lead to termination of valuable contracts that your company needs to survive.
By hiring a bookkeeping service, you can greatly mitigate the risk of these mistakes and keep your payroll/payout accounts accurate — as well as your employees and vendors happy and willing to stay with your company.
2. Compliance with State/Federal Regulations
If you own a small business, you know how overwhelming it can be to stay compliant with state and federal regulations — especially financial ones that seem subject to constant changes. A savvy accounting service provider can help with staying up-to-date with all the latest regulations and requirements, and who will alert and advise you whenever you need to make adjustments.
3. Tax Compliance
Speaking of changes and compliance, from 2001 to 2013, the U.S. government made 4,680 changes to the tax code. Here’s another sobering thought: According to IRS statistics, 2016 taxpayers spent 8.9 billion hours on preparing their taxes.
A top-notch bookkeeping service will provide accountants who are specially trained in tax compliance, so you won’t have to worry about whether or not you’ve filled out your taxes correctly, paid the right amount or included all your deductions.
4. Financial Advice in Managing Your Small Business
An outsourced accountant can give you valuable advice that will help you make sound financial decisions — decisions that can lead to financial security and positive profitability. Here are some examples of situations where an accountant can help:
• Burn rate: An accountant can help you identify your company’s “burn rate”— the rate at which your business might be losing money through excess expenditure — so you can make necessary cuts and stop the spending.
• Loan/Investment capital: If you’re seeking a loan or investment capital for your business, an accountant can give you the financial information you need — as well as document and organize it — to expedite the process.
• Financial forecasting: An accountant can help you draw up a financial forecast for your small business by providing you with a set of projected financial statements that can help you plan for the future.
• Good financial habits: An accountant will not only help you stay on track financially, but also help you develop good financial habits in your everyday business operations. Whether you need to think twice before spending, or recognize when it’s necessary to spend more to make more, an outside accountant can provide a positive impact by helping you view your company’s finances with more objectivity and fiscal responsibility.
5. Freedom to Run Your Business
By hiring an accountant to manage your financial affairs, you can have the time and freedom you need to run your small business the way you want to. An accountant can relieve you of the stress and mental energy of arduous, time-consuming bookkeeping, so you can focus on the day-to-day operations of your company.
No matter what type of small business you own, an outside accountant can provide you with a wealth of financial services that can not only improve the quality of your business, but also the quality of your professional life. With someone to manage your finances, you won’t have the constant stress of dealing with financial records and bookkeeping accuracy. And even more importantly, you’ll have the time and energy to concentrate on the business you created.