Whether you own a local shop or provide a basic service to your community, an accountant is as much a valuable resource as if you were a national chain or international conglomerate. Small businesses benefit from special accounting services similar to those that big companies receive.
Obviously, large accounting firms deliver a complex array of services to large organizations. However, accountants who specialize in small businesses understand the need for support for different matters with the same degree of diligence. By focusing on the issues that affect an entity of your size, an accountant brings high-intensity fuel to implementing improvements. Superior advice improves efficiency and reduces costs, just as it does for larger companies.
Bookkeeping is an especially apparent area where the advice of an accountant is vital. Different standards are applicable to tracking income and expenses. Depending upon your industry and the size of your business, your accountant will explain the best system. The optimal bookkeeping method reduces your tax liability and simplifies the monitoring of your financial affairs. Your accountant can also help set guidelines for capital costs that follow depreciation rules in addition to situations for expensing smaller asset purchases. As your status changes, revised recommendations are sometimes necessary.
Commensurate with a sound bookkeeping process is understanding your cash flow. Knowing where your money is going is only part of the puzzle. A business needs to determine upcoming cash requirements based upon growth patterns and obsolescence of equipment. Your accountant will help you to properly predict cash flow and identify potential problems before they hit you without warning.
Planning and Control
Accountants are an enormous advantage when devising budgets for extra projects and managing expansion plans, because their experience with businesses at various stages of development gives them keen insights into your circumstances. With detailed planning, you are able to ascertain borrowing needs and the effect this will have on business profit. Moreover, having an accurate picture of expected outcomes helps convince bankers to make loans.
Cost control is a key factor in the success of every business. Excessive spending relative to revenue or making large acquisitions at the wrong time creates substantial setbacks. Ask your accountant for advice about expense trends.
Measuring the impact of expense-reduction initiatives is also crucial. For example, many organizations are abandoning traditional print and broadcast advertising, while expanding their online presence. Reviewing your sales per marketing dollar tells you the payoff from such a decision.
Similarly, a business spends more on employees as sales grow as a result of higher customer volume. Monitoring the ratio of revenue to payroll costs uncovers the feasibility of expanding your workforce. A rising trend in this ratio verifies that prior staff additions are bringing positive results.
In addition to the expertise accountants deliver for complicated tasks such as the preparation of tax returns and financial statements, many other accounting services can improve your business performance. With a clear picture of your overall condition, you are able to implement sensible and timely actions.