In part three of our series, we continue our exploration of how a small business CPA can help you get better control over your finances. As a small business owner, there is nothing more important than the financial health of your operation. But with so much on your plate, giving financial matters like bookkeeping your full attention can be challenging.
Research shows that the vast majority of business owners outsource tax preparation, but few realize how much more help they could be receiving. In this article, we’ll explore the multifaceted benefits of getting help with your bookkeeping.
A small business is only as vital as its budget. Budgeting is an ongoing process of small decisions that accumulate over time. Make enough poor budgeting decisions, and the well-being of your business starts to tank. Make enough positive decisions, and you’ll be paving the way to a thriving business for years to come.
To budget effectively, you’ll need clear records of how you budgeted in the past. Having information at your fingertips puts you in the best position for success. For example, a small business owner might keep an eye on how their budget for supplies has increased over the past two years. Or they might find that sales have steadily increased over the past four years. All of these pieces of information should inform how you budget and plan. A small business CPA can help you determine whether you are over or under budget and what to do about it.
A Bird’s-Eye View
Perhaps one of the most valuable but overlooked benefits of upgrading your bookkeeping system is having a bird’s-eye view of all business functions. If you want to find out how much your business spent on marketing, office supplies, or travel last year, how easily can you pull up the data? Do your team members who need financial data access have that access, or is it difficult to find things? Having a birds-eye view of your business from many different angles helps you see its overall health and where changes need to be made. With a robust bookkeeping system, financial issues won’t sneak up on you, and you’ll have plenty of time to pivot when needed.
Another result of solid bookkeeping is the ability to make confident decisions faster. Accurate bookkeeping is crucial when hiring new staff, applying for a loan, or making any other financial decisions.
When your books are organized and precise, you know for sure whether you can afford certain investments. A well-timed investment can change the game for any small business, whether it’s improving products, remodeling a storefront, or upgrading technology. Rather than taking a gamble, you can know for certain what the financial implications will be.
Smooth Sailing at Tax Time
One of the most obvious reasons to keep a close eye on your books is tax season. Rather than scrambling to organize receipts, expenses, assets, and other vital information, you can have it ready to go in advance. Without the help of a small business CPA, it’s easy to overlook specific credits that could help you pay less in taxes.
According to the IRS, the most common small business tax mistakes include filing late, failing to separate business and personal expenses, underpaying, and depositing employment taxes. Reporting information inaccurately or leaving out information puts you at risk of a fine. In the event of an audit, you’ll be thrilled you opted for organized small business bookkeeping.
Working with Investors
Are you working with investors? This means you’ll have to get used to these professionals having a critical eye on your finances. Investors want to make sure their money is being used as wisely as possible. With organized records and bookkeeping, you can instill confidence in your investors and keep the relationship running smoothly.
Planning for Growth & Sustainability
A surprising study by Fundera showed that with each passing year, the risk of small business failure increases:
“20% of small businesses fail in their first year, 30% of small businesses fail in their second year, and 50% of small businesses fail after five years in business. Finally, 70% of small business owners fail in their 10th year in business.”
Rather than feeling unsettled by these numbers, small business owners can be proactive in the face of ongoing financial risk. Not only should you think about growth, but about what is going to sustain your business in the long haul.
It’s incredibly easy for a small business owner to get wrapped up in day-to-day tasks. However, many of these tasks may be better off delegated. Rather than working in your business, it’s essential to be able to take a step back and work on your business — to be the leader of its trajectory. This means having a clear vision of what you want the future to hold. A small business CPA can help you make that vision into a concrete financial plan.
Better Bookkeeping, Stronger Business
While it may seem like a single task, bookkeeping supports your business in a number of critical ways that go beyond tax prep. With sound bookkeeping, you never have to worry about your budget, cash flow, or trouble at tax time. By choosing to outsource to a reputable financial services provider, you can clear your schedule to complete the tasks you do best. Leave the rest to a team of highly experienced financial experts and watch the health of your business soar.
Consult with your BradyRenner CPA for more info. With years of experience and knowledge of various types of software, we’ll help you upgrade your financial management across the board. Our CPAs focus on consistency, so you get sustainable business growth and accurate bookkeeping for years to come.
In part four of our series, we’ll discuss the value of outsourcing your accounting department as a growth-focused small business owner.