Money. A simple word that is the lifeblood of any business, small or large. But for the small business that doesn’t yet have a large store of capital and resources, juggling every dollar that comes in and goes out becomes even more critical. A lost customer, broken equipment, or unexpected personnel problems could spell doom if not handled correctly. That is when having a really good CPA can mean the difference between handling the bad times or letting it break you.
What then are the functions of an accountant and how do they do their job in a small business?
Everyone is aware of the job of tax preparation and the legal compliance requirements to which a qualified accountant will make sure a business adheres. However, there are many more advantages to using accounting as a strategic weapon to ensure efficiency and increased profits at each stage of a business life cycle.
1. New Business Setup
Once an idea for a business is born, an accountant can recommend the proper business structure, such as a sole proprietorship, partnership, or a corporation such as a C, S or LL C designation. Depending on the tax environment of the state the business is based, this is most important to get this right from the outset and a qualified accountant will know which is best for each business situation.
This is the time when setting goals and formulating strategy is most important. All startup and initial operating costs need to be identified, as well as realistic income forecasting. This will enable the CPA to create a proposal to specific lenders or investors, that are a good fit for each business.
2. Growth and Ongoing Financial Management
This is where a good accountant is worth their weight in gold. Day to day operations relies on systems to not only operate the business but to manage cash flow and debt.
Technology is the key
Technology in the form of accounting software. An accountant can choose the most effective accounting software for each small business from the start, as well as being able to scale up as a business grows. Whether it a dedicated in-house software package, or the newer cloud-based service, it will automate daily functions so that Income and expense data will be linked directly to your accounts. The accountant will set up inventory management automation and reporting. They can save money by determining the cost of holding inventory and make it more efficient by predicting stock requirements based on sales information.
A good CPA will be able to combine all areas of the ledger and Income/Expense, to stay on top of payroll, accounts payable and receivable, inventory, etc., and make sure that tracking and daily reporting is available to the owner and/or manager of the small business. Many one-size-fits-all software packages include reporting that isn’t relevant or useful, but an accountant will make only the most useful data reporting on a cash flow dashboard available 24/7, to desktop or mobile applications.
A small business accountant in Sandy can help with are in budgeting, loan proposals, and even hiring.
Set A Budget For Your Business
Budgeting can be time-consuming and may not always be reliable, is based on estimates and inaccurate assumptions. They can create a detailed budget that gives reliable numbers so an owner can know the current cost of doing business, saving money that would otherwise be misspent based on vague data.
Loan proposals are more than just a set of cold numbers, they need to tell a story of what will happen after the loan is granted. A good accountant knows what charts and graphs should be grouped as an effective forecast that loan officers will need to feel confident in granting a loan. Hiring can be made better when an accountant calculates the costs involved with not only hiring but training, paying and knowing how the hire will be boosting the bottom line the most. They’ll be able to know what additional insurance, government tax, and compliance will be required as well.
So the small business accountant can wear many hats and offer many more benefits to the small business than just handling tax preparation and compliance. It’s the details that matter to the success of business both for the service their customers receive and especially in managing the money the best best way possible.