It is a myth that a small business does not need an accountant, or the services of an accounting agency. Every company, big or small, needs to have their own accountant, or the services of one. This is a basic requirement for any business, big or small. There are several reasons for this, including:
- Hire a Certified Accountant For your business. This is the first order of business. Some would say that this should be done even before the business has started. A Certified Public Accountant (CPA) makes sure that the business operates and handles money according to rules and guidelines set by the government. It also helps the business keep within the law, specially with regards taxes.
- Use an Invoicing System. An invoicing system helps the accountant understand the cash flow. Invoices come in many forms, all of them related to how the money moves from one station or process to another. Tracking money, whether income, payables, receivables and actual collection and payments, becomes much easier with invoices.
- Planning the Budget. A company has to have a budget. This forecasts the expenses for the coming period, as well as the expected revenue collections. The business owner can make an opinion or plan regarding the budget, or he may disagree with it. However, the budget is not there to be a restraint, but a planning tool. It also serves to motivate the owner, sales team, and production to deliver during the period of else the company will not meet its targets and will have to borrow for the shortfall. Alternatively, a forecasted budget with a shortfall can result in deferred expenses, or different spending priorities.
- Keep Your Accounts Separate. For a business owner, it means that the money for the business should be separate from the personal finances. There are several ways to do this, and the accountant knows them all. Separate finances helps the owner to determine if the company is earning or losing money.
- Set Money for Taxes. There are several times in the year when taxes are paid. It is not a daily activity, and the deferred nature of payment means that you can use the money for other purposes before the deadline of filing. An accountant like CPA Mason would not advise this. The nature of taxes is that of implementation, and a lot of people have gone to jail for not paying their taxes. It is better to set aside money to pay for taxes before the deadline. Otherwise, the money might be tied up or collections might be late, resulting in late tax payments. Of course, late tax payments would have penalties, which are to be avoided.
- Keep Online Backups of Your Files. This should be an operating standard for all computer files. However, for tax and accounting purposes, files should be kept for more than six years. There are several problems with this. First off, is the fugitive nature of ink, and of thermal paper. This means that original receipts will be blank pieces of paper in less than a year. For another, due to safety and security reasons, physical files should be scanned and stored electronically. As office policy, computer files should have backups, preferably these should be kept away from the office. Keeping backups online is the best choice for accounting files.
