Outsourcing?
What’s your plan for 2020?
As you consider your accounting strategy, review your company's financial goals; whether you are a solo entrepreneur or you employ staff, your survival hinges on clearly stated financial objectives. You may be in business to reap as much profit as you can; Or you may be interested in sharing your profits with the group but either way experts agree that one of the most important reasons that businesses fail is because cash flow runs dry. To prevent this disaster you must take immediate steps and establish policies for efficient record keeping in a sound financial strategy.
Taxes are unavoidable, depending where you operate and the nature of your business. The IRS has very specific requirements about the documentation you're required to file. Submitting improper or inaccurate documentation can get you into trouble, and it can be extremely costly in terms of fees and penalties. Preparing the required tax documentation has its benefits though, and it can give you vital information about the health of your business.
Monthly or quarterly financial statements, cash flow statements, and asset and income statements can provide a clearer picture of your business then your bank balance.
Understanding IRS requirements and how you can make them work for you can give you a deeper understanding of your company's financial health period. This takes a lot of tracking, a lot of reading and a lot of knowledge something that you may not have time to do if you haven't had formal training in accounting. If you are more interested in running your business then keeping track of meticulous records of financial data an accountant is your answer. Having said that, in house businesses must keep track of certain metrics. It is quite common for small business owners to have a spouse or family friend to do the books. However their qualifications may not be what you particularly need. Successful business owners consider outsourcing their accounting needs or investing in accounting software. There are pros and cons to this and many startup companies have tight budgets. It be might be tempting to pursue the cheapest method because your legal requirements are only once per year and you may choose to ignore it all until tax time every spring. But that can be a dangerous practice as well. The short-term solution may not be the best one and it pays to do your due diligence when making this critical decision.
Probably the best solution for a small to growing business would be to hire an accountant that you feel comfortable with. An interview is certainly necessary and a clear scope of what the accountant can do for you needs to be outlined and itemized. Waiting for the end of the year is definitely not the best case.
Business owners can now securely transfer companies financial management to another individual i.e. the accountant, utilizing new and easy software, for a fraction of the cost. For a business owner who lacks accounting skills or detest crunching numbers outsourcing the company's financials can be an attractive choice. Many business owners find an accountant's expertise in tax knowledge to be the biggest draw towards outsourcing a qualified accountant.
He/she can assist in numerous ways outside of managing day-to-day finances.
For example:
Advising on how best to structure company before it's formed.
Consulting on the financial details of your business
Identifying potential cost savings in operations • Managing your tax
Managing payroll
Developing a financial safety net in case of catastrophic events or struggling with growth
There are many small businesses that start out with the owner as the sole employee. There comes a point during their growth when it's wisest to hand over accounting functions to a professional. In this situation, businesses may choose to hire an inside accountant or an outside accountant. For younger growing businesses using an accounting firm offers some flexibility. Keeping a firm on retainer for consultation can be particularly useful for the business that only needs their expertise a few times per year. This is a cheaper option that still delivers high level knowledge. Accounting firms generally charge by the hour though some analytic functions will be priced higher than others. If you're unsure weigh the costs against what such a firm can save your company over time versus having a full-time accountant in your business. Outsourcing has become much cheaper.