Did you know that around 80% of new businesses fail within the first 18 months? Poor financial management is one of the main problems for these businesses. Why? The answer might be surprising – 53% of small business owners don’t have an accountant, and they attempt to manage their money themselves.
Even more surprisingly, some business owners use pen and paper or simple Excel spreadsheets to keep track of their business finances. Accountants and bookkeepers are often underrated – they provide a lot of expert advice, knowledge, and experience that is fundamental to maintain the health of your business and maintain growth. It is important to understand that managing your own finances can do you more harm than good, which is why you should seriously consider partnering with a professional. Here’s why:
Accountants ensure your safety
Running a business can be stressful and hectic, especially when financial problems start appearing. Tax payments, financial statements, reports and paperwork are regular tasks you need to deal with. One of the main things when it comes to finances is keeping on top of paperwork to avoid late penalties and fines. Having an accountant can allow you to stop worrying about tax deadlines or dates you might miss. Additionally, when it comes to tax audits, accountants can help you avoid them. Of course, some of these issues can’t be fixed entirely after they’ve already occurred, so the key is to continuously monitor them and prevent them from happening in the first place. The guidance of an accountant will keep you from making mistakes on tax forms or spending too much time and money on unnecessary things that don’t add any value to your business.
When new legislation or financial regulations are introduced, you might not be informed or educated about them, whereas a professional advisor should always be up to date. Bookkeepers and accountants can also be helpful with getting your payroll right, which includes complying with government paperwork and insurance requirements. In general, bookkeepers and accountants are always there with advice to help you stay secure, fix your problems and make better decisions with data and analytics in order to keep your business from failing and helping it to grow.
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They save you money
Every business needs a budget – it allows you to create a spending plan for your money, helps keep you out of debt and generally enables you to control your finances. It might seem like working with an accountant is an expendable cost, but the benefits of having one should easily exceed what the costs are. An accountant can work with you on a range of matters from creating an accurate business budget to other matters like the assisting your with the sale of your business. Whenever tax season comes around, most business owners begin to panic and think of ways to maximize their deductions; usually when it’s too late to do anything about it. An accountant can help you with this consistently throughout the year and help you make strategic decisions for deductions, rather than rushing at the end of the financial year.
The risk of attempting to do this by yourself is that you might be overlooking many factors that can cost you more in tax. Accountants can also assist with other business decisions such as working out the costs of hiring, training and paying employees as well as making sure you’re able to pay them and still make a profit. They can also help with things like inventory management, and identify ways to fix the issues and come up with strategies on how better to manage stock and cashflow.
They save you time
Everyone knows how precious time can be. Since your accountant will be taking care of most of your paperwork, payroll, and payments, it will allow you to focus on other important aspects of your business, for example investing in client relationships or implementing other business plans you initially set out to achieve.
Many business owners make the mistake of attempting to take over some of the tasks that a bookkeeper or accountant will take care of, such as attempting to fill out tax or compliance paperwork themselves, rather than having someone who is an expert at it. Sometimes it can be counterintuitive trying to save a few dollars in costs when it is costing you hours in time, which could be spent making more sales, for example. Additionally, cloud-based software is helping accountants to provide their services more effficiently which means they are able to give you better value for money and costs are generally very affordable.
They help you plan the future of your business
Thinking about the future of your business can be stressful. An accountant can give you proper advice on how to prepare for the future and learn from past mistakes through your financial information. It is crucial to analyse and examine the history of your business during specific months – this will help you see what to change in your budget plan or strategy. Accountants are more objective and can identify areas where you can improve and transform your business for the better. The input and judgements they can offer are not only based on objective financial data, but also experience – rather than emotional decisions or reasoning, which business owners can make the mistake of.
Financial forecasts are a significant part of estimating your future financial outcomes – an accountant can also assist with this. They can help you predict revenue, future costs, profit and loss, operation plans and more. In addition, they can help you predict potential investment risks. You should always be prepared for any situation – good or bad. Professional accountants have the right expertise and are in the right position to protect and help grow your business.
They organise your technology ecosystem
How many apps do you use to run your business?
How much time are you spending processing data entry every day?
Are your apps integrated and sharing data with each other to avoid double handling?
How are you recording information about your business to analyse important information and trends?
These are just some of the questions that professional bookkeepers and accountants will be asking you.
A strategic digital ecosystem will help you receive insights on how your business is doing, which allows you to analyse trends and make informed decisions. A solid ecosystem will streamline your processes and save you time and money that can be reinvested to grow your business.
What should you focus on when choosing your software? This is a question that your accountant or bookkeeper can help you with.
There are many online tools available for accountants and bookkeepers to help customers connect apps to run their business and streamline the flow of data. Your business needs a solution that will help you keep track of your daily accounting tasks (tracking expenses, recording and reconciling sales transactions, bills, payments, etc.).
Integrations are key to unlocking your business’ full potential by automating various tasks, including managing vendors, tracking inventory, assisting with purchase orders and recording sales transactions.
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These services also make it easier for you to run your business since they integrate with many cloud-based apps that you likely already use. Usually you can automatically share data between systems setting up a connection in just a few minutes.
If your POS, e-commerce, rostering management, loyalty programs and similar are all cloud-based, you have the opportunity to look at one, cohesive digital infrastructure rather than a series of standalone apps. Running a business on apps that do not speak to each other will only increase your workload and level of frustration. How much time are you already spending managing apps and processing data entry? It can significant (and therefore costly).
Connected apps will additionally give you a holistic overview of the performance of your business, and with data-aggregators like PowerBI you will have an easy way to access information and custom reports in the one place.
Advisors will be able to guide you to make sure the apps you choose are a good fit for your business and your needs – an integrated ecosystem and the right mix of software cand add a lot of value to your business.
Accountants and bookkeepers can be game-changers for businesses – they can provide a range of benefits and add value in so many ways that there is no reason you shouldn’t be seeking a professional relationship. Saving money, time, and having a solid financial plan for the future all are essential when running a business. A good bookkeeper or accountant will be a great source of wisdom, advice and knowledge in helping your business to avoid many of the pitfalls and continue to evolve and grow.
It is important to be mindful that not all professionals are well equipped with the best set of skills and traits to help your business. Many professionals lack up-to-date knowledge and experience with technology, which needless to say, nowadays is a must-have. Some of them can be stuck in the middle of a digital transition and as a result not be in a good position to offer you the best advice in relation to these matters. Some traditional old style bookkeeprs and accountants continue focusing on old fashioned approaches to accounting and bookkeeping, completely ignoring new trends and technology. As technology and in particular accounting and business management apps are ever-evolving, professionals must take the opportunity to lift their profile and their role accordingly.
Do you know how to recognise the right professional for you?