A lot of small businesses when starting off, are running on a shoe string budget keeping costs as low as possible to make sure the business will be a viable investment in time and money. As money is such a finite resource especially when starting up a business, the choice to employ or engage the services for accounting or bookkeeping can be a juggling act.
You could wait until business starts to grow before engaging an accountant, but then your controls and systems might be set up incorrectly or non existent, which could result in the initial engagement fee of an accountant/bookkeeper being larger than had you gone to an accountant or bookkeeper in the first place.
So if you’re unsure of the benefits of a bookkeeper or an accountant can provide, we are going to look out how they can help any small to large business.
What do accountants do?
Essentially the main task of an accountant is to be experts in preparing and examining financial records. If we delve further into this, the job of an accountant is to make sure adequate controls and systems are in place and are working efficiently and effectively to meet the business and other external reporting requirements.
Accountant can be employed by a business or engaged with multiple individuals and organisations (depending on the business’ size and needs) to control monetary transactions by recording financial information, their role can also include analysing and reporting on the financial information to business owners or other key stakeholders, preparing tax returns, auditing accounts or acting as a consultant on a wide range of financial matters as agreed on.
So if you are looking for business strategy advice, or an informed perspective on the financial health of your business an accountant will be able to guide you in the right direction.
What do accountants do for your business?
The explanation above is all pretty high level, so let’s put this into practical terms. Say it takes you 10-20 hours to set up your system just so you can record all the transactions needed for the business, or you have a go at doing the business taxes yourself. First of all, you are spending a lot of your time on something within your business that isn’t a key function of why you started the business.
Now let’s put this into monetary terms at $80 per hour that’s could be $800-$1600 worth of your time that could be better spent on jobs that generate income for your business, rather than something that could be outsourced to an accountant or bookkeeper at a lower cost than your $1,600, and this will be done by an expert who knows how to take care of the details (also avoiding potential errors.)
Another scenario could be that you actually don’t know how to:
a) set up a system to record the transactions of your business, or
b) know how to read the financial information your business is trying to tell you.
You could try to muddle through, but poor systems can result in errors being made, incorrect lodgements occurring and potential fines incurred. Not to mention, inadequate systems and controls implemented during the initial start up phase of a business may be inherited as the business grows and become outdated, this could lead to revenue leakage, in adequate stock management, inappropriate costing and possibly even fraud!
Engaging an accountant from the outset will ensure your systems and controls are fit for your businesses growth and development, (fit for purpose!) and these can continuously be reviewed to ensure they always align with your business needs. This will avoid potentially costly revenue leakage, shrinkage of stock and reduce the risk of fraud.
Accountants are also able to help you make informed strategic decisions, aligning your business goals with what your business is telling you from a financial and cashflow perspective. They can provide reports and data that can be used to interpret how the business has performed and potentially what needs to be changed for improvement, or what avenues for potential further business growth opportunities exist. An accountant can work with you to ensure your business is set to meet the goals you have for it.
And yes an accountant can also do your taxes.
What do bookkeepers do for your business?
The term bookkeeper and accountant seem to be used interchangeably these days, and there are some areas where their skill set does cross over, but to keep things simple, generally a bookkeeper can perform the day to day time-consuming tasks, such as:
- system set up,
- general ledger maintenance
- and recording the day to day financial transactions within the system such as invoicing and receipting.
Essentially they ensure the general ledger of your business is up to date and their role is predominately more transaction based than an accountant. And if they meet the relevant registration some bookkeepers can perform your tax preparation and lodgement requirements.
While an accountant can also perform these functions, an accountant generally interprets the financial statements and can assist you in the strategy and direction of the business as discussed earlier.
Does your business have adequate systems in place?
When deciding if you need the help of a bookkeeper or accountant, you need to ask yourself does your business have any accounting or bookkeeping system in place?
Do you have a way to keep track of when your invoices fall due and do you know how your cashflow is tracking to make sure you can make payment? Do you know what your debtors owe you and do you know when you need to call on payment to be made to you? Does your bank account match agree with how much money you thought you should have in there? Do you know what you should be paying employees and how often?
If the answer is no to any of the above, then you probably need some help.
There are many accounting system packages out on the market these days including MYOB, Quickbooks and our personal favourtite Xero, which is entirely cloud based meaning you, and your accountant can access your business data from anywhere! This means invoices can be raised immediately, reminders for prompt payment can be sent automatically and recording of your expense can be done as soon as you pay.
Then if you have a question or need advise from your accountant they can jump straight online and have a look at your business to see what’s going on!
No need to set up a meeting weeks in advance, and no need to leave your business premises to attend the meeting, saving you time and money! This is the main reason we love Xero at The Accounting Coaches, it means we can keep our overheads down which in turn means lower accounting and bookkeeping fees for our clients, cause we can see inside your business from literally anywhere!
What can The Accounting Coaches can do for your business?
We love small business! And we want to see you succeed and realise the potential your business has in achieving your personal goals!
At The Accounting Coaches we aim to be as hands on or hands off your business as you like!
If you are just after some simple systems to be put in place for regular bookkeeping we have you covered, check out our fixed fee services here.
If you are after some more tailored business advice see what we can do for you through our Virtual CFO services here.
And if you want more in depth step by step coaching advice, so you can be right on the pulse of your business, understanding its needs and opportunities from the outset check out how we can coach you to get the best out of your business here!
Choosing a bookkeeper or deciding on an accountant can be tough decision, and may be paramount to the success of your business. It’s a huge trust exercise as you are entrusting your advisor with the intricacies of your business, this is why at The Accounting Coaches we take this responsibility seriously, we want to get to know you, and then we want to get to know your business!
We believe every great business deserves and needs great accounting, and we understand the cost of accounting holds a lot of businesses back from getting great services, so if you don’t think what you are after is listed in any of the above services, please feel free to give us a call or send us an email at firstname.lastname@example.org. I am sure we will be able to put you on the path of great accounting success at a price that suits any budget!
We really look forward to working with you to make your business the greatest success it can be!
The Accounting Coaches