5 Reasons A Good Accounting Firm Can Add Value To Your Business
Over 80% of businesses close down within the first 18 months, and one of the main reasons for failure is poor financial management. Despite this disturbing fact, many business owners are yet to realize the danger of poor financial management. Most businesses see accounting firms as an unnecessary expense, only useful for tax compliance.
A study commissioned by Xero found out that more than half of small businesses owners prefer to handle accounting tasks themselves rather than outsource to an accounting firm. What is even more shocking is that 27% of these businesses still use pen and paper to record their finances.
While the report does not claim these businesses are performing poorly for not having an accountant handle their finances, we cannot dismiss the value an accountant brings to a business.
It is interesting that most people would rather have a professional mechanic check their vehicles but would not hire a qualified accountant to check their business.
Sure, it is difficult to let an outsider handle the most critical aspect of your business, especially if you have had issues of poor financial management in the past. But involving an accounting firm in the business will help you focus on achieving long-term business goals. Here are five ways in which a good accounting firm can add value to your business.
Business planning
To run a sound business, you need a business plan regardless of size. A well-prepared business plan is critical in measuring your past and current business performances and where you want to be.
Your accountant will come in handy in putting all the ideas and information into a formal plan to help your readers have a clear clue about your business.
As the business grows, you may seek financial support. Whether you look for help from banks or investors, you will need a functional business plan.
A good accountant will ensure the plan covers financial aspects such as cash flows and forecasted profits.
Financial management for real-time decision making
Periodic financial management is critical for business success. It goes hand-in-hand with business planning. Many businesses tend to track their performance more infrequently. In most cases, the main purpose of the measurement is tax calculation.
An accounting firm will help you handle periodic (quarterly, half-yearly or even monthly) financial performance management. This will help to paint a clearer picture of business performance against the expected, thus letting you take corrective measures in time.
When you engage a good accounting firm, it will have the opportunity to assess your business performance and give continuous advice.
Of even more importance is that a good accountant will ensure that you realize your business goals. Finance is a critical aspect that touches on almost all your business decisions.
Whether you plan to open another branch, upsize, or improve facilities, you have to bring in the money aspect. This means if you don’t have proper financial management systems, it is hard to get accurate financial reports that will help you make critical business decisions.
Saves you time and trouble
Some entrepreneurs assume that because they are operating on a tight budget, they cannot afford to hire the best accountant. But if you factor in all the time and effort, you used to manage business finances yourself and the cost of hiring a good accountant, the benefits outweigh the cost. Moreover, you could make serious errors while reporting, which could lead to losses or poor financial decisions.
You should spend most of your valuable time on running the business. Stressing yourself over how much tax you have to pay can take your focus away from important things. Engaging a good accountant means, somebody is taking care of the financial issues to ensure you meet deadlines and save you from heavy penalties.
Besides this, a good accountant will help to pinpoint areas where you could save money, for example, claiming for some business expenses.
Often, business owners are interested in maximizing on deductions, but they are caught off guard most of the time because they usually think about this towards the end of the year when it is already too late to make an impact. An accountant can help to identify and advice on these potential deductions from the start of the year.
Avoid audit
While accountants will not help in fixing financial mistakes after they have occurred, they will help you avoid the foreboded audit. You can avoid audit if you get the right guidance of an accountant throughout the year.
There are many issues that could lead to your business being audited. These include excessive write-offs, appearing too charitable, or even making several mistakes on the tax documents.
All these aspects can be addressed before they get out of hand. Think of an accountant as your long-term partner who takes a keen interest in ensuring the business remains fiscally sound.
A wide range of services
An accounting firm will handle all accounting and financial management aspects on your behalf. Often, accounting and other roles such as filing tax returns, risk mitigation, corporate strategy, business incorporations, costs management, internal audits, and oversight over all aspects touching on the business’s financial health can be handled by an external firm.
Missed tax deadline is one problem that most business owners grapple with. This normally arises because of poor planning and a lack of proper financial management.
While you remain legally responsible for the accuracy of the financial performance of your business, you can let your accountant help you remain compliant.
Conclusion
Whether you have been running your business for a while or you are newly incorporated, hiring a good accounting firm is a smart investment. Without an accountant, the life of a business owner can be difficult, especially when you have a pile of invoices and receipts to go through at critical times of the month.
Your focus should be directed towards crucial issues such as goal setting, business development, and strategizing. The partner you need is someone who understands your business, operations process, and somebody who can set up high standard accounting systems and controls.
Category: Business
