Understanding the numbers in your business is essential to small business success.
If you are not good with accounting, one of your first business advisors should be a good accountant. There are three levels of accounting experts you can hire to help you: a bookkeeper, an accountant and a certified public accountant, or CPA. The main differences between these providers are their hourly rates and their level of expertise.
A Bookkeeper records your receipts and expenses in accounting software either weekly or monthly. They are typically an outsourced vendor to your small business. Bookkeepers are primarily accounting clerks responsible just for recording accounting transactions and reconciling your bank statements. They will set up your initial accounting software and enter data regularly and print your monthly financial statements. Bookkeepers do not do business taxes. They also will not analyze your financial position or advise you on tax planning. Their focus is your monthly reconciliation.
An Accountant is someone who might work as an employee of your company. They are qualified to handle the day-to-day bookkeeping needs of a small business. They set up accounts payable and accounts receivable and your accounting system. They provide management and reporting of financial records. They also handle payroll, and some do business taxes. Accountants generally have college degrees and are trained to interpret financial data. They have a higher skill level than bookkeepers.
A Certified Public Accountant (CPA) is a licensed accountant who has passed a rigorous state examination. They can do the full range of accounting services, but many specialize in taxes and audited financial statements. Only CPAs can certify an audit. CPA firms will often refer bookkeepers and accountants to their customers as they focus on providing business consulting and tax planning services in addition to providing tax services. They are highly qualified experts in accounting, and as such, are expensive.
When you are hiring an accountant, you want a professional who has experience with small businesses. Your accountant should be easy to talk to and good at explaining terms like depreciation, chart of accounts, cost of goods sold, balance sheets and other terms, which may be new to you. You may want to consider a smaller accounting firm or a solo practitioner over a large accounting firm because costs are generally lower. Shop around until you find the right fit. New tax laws are passed every year, so your tax professional may not be the same person who does your monthly accounting and reconciliation of your accounts.
One of the first things you will need your accountant to do is help you create your operating budget and sales projections for your business plan. Your accountant will make a recommendation for what kind of accounting software you should purchase. If you are comfortable with computers, there are a wide variety of computer programs on the market to help you manage your accounting. You should ask your accountant which software makes the most sense for your business. None of the programs will work, however, if you do not input your financial information on a regular basis.
One of the best ways to find a good accountant is to get a referral from your attorney, your banker or a fellow business owner. Or you can also check in with the Society of Certified Public Accountants or the National Association of Black Accountants in your state, which can make a referral.
And while using do-it-yourself accounting software can help monitor costs, the benefits of hiring a good accountant extend far beyond accurate monthly financial statements and taxes. Potentially, they can be your company’s financial partner for life.
Bookkeeping With Calculator courtesy of adamr / www.freedigitalphotos.net
Even small businesses needs a professional accounting service and its always best to hire one that can be trusted.
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Excellent and easy to understand info on Accounting services. Thanks for using plain language and not getting wrapped up in techno speak!