For a small family-run business, outsourcing any aspect of the business management is often challenging both financially as well as addressing the issue of giving up some power and hands-on management of their love, their passion, their livelihood. But there are simply times when a business owner must recognize that they have limitations in their skill sets or lack the time required to undertake these activities. One area that many business owners find themselves lacking is in the area of bookkeeping and accounting services. Outsourcing these services may be the difference between financial challenges and financial health.
More than Just Bookkeeping
Bookkeeping is the recording of financial transactions which may include purchases, sales, receipts and payments by an individual or organization. A bookkeeper focuses on recording the day-to-day financial transactions and has very limited access to the full organizations’ financial picture. Accounting services are broader than bookkeeping and include providing services such as account open, account update, account balance, account detail, account close, account discounts, account bill/usage tally, account payment settlement, tax considerations, etc.
Many individuals mistakenly consider bookkeeping and accounting to be the same thing. This confusion is understandable because the accounting process includes the bookkeeping function, but is just one part of the accounting process. The accountant creates reports from the recorded financial transactions recorded by the bookkeeper and files forms with government agencies.
Types of Accounting Services
Let’s look at little more closely at the types of accounting services that a small business may require to outsource. A large accounting services firm may provide services in the following areas: audit and assurance; consulting; deals; human resources; legal services; and, taxes. Specific to audit and assurance, small businesses may require both internal and external audits, regulatory compliance and reporting, corporate reporting improvement and streamlining or improvements office / bookkeeping efficiencies.
Accounting firms also have expertise in the field of consulting. They are able to understand the business market and work with the small business owner, sharing strategies to create growth and sustainability. Many firms will be able to suggest technologies to help streamline operations and processes while addressing governance, risk and compliance considerations. Some businesses may be in recovery mode from the weak market of late – they may require assistance on restructuring, addressing financial due diligence, working with government agencies to address financial accountability, or looking at internal human resources management challenges. Other accounting services firms can provide legal services, mediate dispute resolutions, real estate, etc.
Probably one of the most common accounting services provided is tax support. Many people think of tax support as something provided just before the filing of our annual taxes.
This is not the case.
Most businesses, including small family-run businesses have monthly tax payments due, they have payroll taxes to address for each employee, and they may have the reporting of taxes both paid and collected. This is a very time consuming aspect of a business and requires both time and expertise to be aware of all the current tax trends, changes and considerations that might impact a business. Filing and paying taxes with errors can lead to large penalties for a company and will require more time to fix. Have the right resources in place such as accounting services to address these reporting requirements right the first time will alleviate both added frustrations and resources down the road.
Accounting for Small Businesses
Accounting for small businesses needs to continue to be front and centre throughout the lifespan of the business and particularly through the ebb and flows. An accountant can be a significant resource in managing the growth process or streamlining financial procedures during tight times. During challenging times such as audits, or to assist with financial forecasting, having an accountant on retainer can take away the stress and unknown elements to allow small business owners to concentrate on running their business.
For a small business that requires assistance with filing, and managing the daily books, it might be more relevant, and less expensive, to hire a part-time bookkeeper. However, for assistance with more detailed financial accounting, more intense accounting services and financial expertise, hiring an agency that provides detailed accounting services would be more beneficial. When it comes to the financial health of the business, an accounting firm can be an integral member of the team.
- Image source: SmartPhotoStock
This article was written by Sylvester Veles, who believes that there are different kinds of accounting services, and that bookkeeping is just one of them.