How Quality Accounting Services Can Help Your Small Business
Starting a small business in the United States is the easy part.
Making it profitable is an entirely different story.
Did you know that nearly 45% of small businesses fail within the first five years?
This figure increases to 65% over a 10-year span.
Poor financial planning is one of the primary reasons why small businesses fail.
They do not have enough capital or their operating expenses are too high to yield an acceptable profit.
This is why quality accounting services are such a major asset to a smaller business.
A good accountant not only helps your business survive, but thrive in the most uncertain climates.
Read on to learn about the benefits of small business accounting.
Explore topics such as the role of bookkeeping in your company and why you should hire financial services.
What Is Small Business Accounting?
Your small business accountant serves so many different roles within the company.
Continue reading for a breakdown of the many services provided.
Tax Preparation and Filing
When people think of an accountant, tax preparation and filing are the first things that come to mind.
This is a crucial task to ensure that your business properly reports income to the U.S. Internal Revenue Service (IRS).
Failing to do so can result in significant financial penalties.
Poor tax planning can leave your business with large and unaffordable IRS payments.
Your small business accountant uses software to track income and deductible expenses.
They use their knowledge of the tax code to minimize your company’s liability to the federal government.
The best small business accounts minimize your company’s risk of an IRS audit.
In the rare event that an audit does occur, they will help your business adequately answer any IRS requests.
It is important to hire a small business accountant with sufficient experience.
Their experience should extend well beyond Schedule C.
This is because small businesses experience a wide variety of income and taxable expenses.
Interest, dividends, capital gains, and royalties are just a few examples of potential income.
Your accountant should be knowledgeable in how to handle retirement benefits and health care expenses.
Lastly, look for an accountant that knows about K-1 losses and income, which is captured on Schedule E.
There are also many tax returns that need to be filed throughout the year.
Payroll, sales tax, and state income tax are a few examples.
Depending on how your business is classified, different tax filings are required.
For instance, a C Corporation needs to file Form 1120.
On the other hand, S Corporations and partnerships file Forms 1120S and 1065 respectively.
Budgeting
Small business accounting is about much more than tax preparation.
Filing taxes is simply about being compliant with the U.S. and state tax code.
Daily operations require quality accounting services to maximize profit.
Budgeting is a perfect example of why you need a good accountant.
Earlier in this article, we discussed the high failure rate of small businesses.
Low cash flow is one of the primary reasons that companies close their doors.
This is where accurate budgeting comes into play.
Your accountant can help ensure that projects, departments, and work sites stay under budget.
Staying on or under budget is imperative for keeping operating expenses down and profits up.
Financial services set up budget line items for all expenses incurred by a business.
This includes payroll, benefits, supplies, and more.
Your accountant will also ensure that there is adequate funding to cover these expenses.
Financial Statement Preparation and Analysis
Executives at the company should not be tied up with creating important financial statements.
Instead, an accounting services company can handle this work.
This includes important financial documents like balance sheets, cash flow statements, and income statements.
These documents are required on a recurring basis.
Often, they are submitted on a quarterly and annual basis.
With these documents in hand, management can focus on the details.
They can identify strengths and weaknesses in the business model and adjust accordingly.
Larger companies may need to submit these financial documents to their investors.
This makes high-quality and accurate reporting all the more important.
Accounts Payable and Accounts Receivable
Two of the most important facets of accounting involve paying and receiving money.
This includes all forms of transactions including cash, credit, checks, and more.
For starters, your accounting services will set up and manage your accounts payable.
The best way to describe accounts payable is the money that your company pays out.
It covers all expenses including payroll, utilities, rent, and more.
Accounts payable also include any short or long-term debts taken out by the business.
Paying off these debts in a timely fashion is critical to maintaining a good credit history and keeping financing expenses down.
Accounts receivable are the direct opposite and cover money coming into the company.
It represents the revenue due to your business when products or services are purchased.
Accurate reporting for both accounts payable and receivable is essential to produce a balance sheet.
Quality bookkeeping services are needed to accomplish this.
Business ownership has more important things to do than tracking every penny in accounts receivable.
Should You Outsource Accounting Services?
One popular question is whether you should hire an in-house accountant or bring on a services company.
Outsourcing is an effective way to keep operating expenses down.
For starters, you are not responsible for providing benefits like retirement savings or paid time off.
You can also keep your headcount down and use smaller office spaces.
Your business can acquire an experienced accountant without worrying about training or maintaining credentials.
Your Guide to Quality Accounting Services
You are now ready to start looking at accounting services for your small business.
Quality accounting creates the foundation for which a good business is built.
There is so much risk involved with starting a small business.
By bringing on an experienced accounting team, you can mitigate the many financial risks posed to your company.
If you are looking to hire quality accounting services in Arizona, contact us today to speak with a professional.
If you are running a small business, you can minimize your financial risk by partnering with a qualified accounting firm. As a trusted accounting firm in Mesa, AZ, Master Accounting is here to help you with your accounting, tax, and payroll needs. Contact the experts at Master Accounting for a free initial consultation! Call (480) 456-4999 or submit your request online here.
