Most small businesses typically start with you, the business owner, doing your own books.
This is acceptable at the very earliest stages of your business, but as your company starts to grow you need to hire a professional.
Let’s face it, small business owners hate doing bookkeeping, for good reason. It’s not their expertise. And yet they fight against spending the money to hire someone to do them for them.
For some reason, they think it’s not that important enough and they can muddle through for now. I get it – it’s not the sexiest part of the business to most entrepreneurs, those boring, tedious numbers.
But the fact of the matter is – you’re in business to make money.
How can you possibly do that if you have no idea what is going on financially in your business????
And when you need funding, this puts you at a great disadvantage as well.
So many businesses never were able to get access to pandemic funds because they had no decent books and records to use to be able to fill out an application and so they lost out big time… to the point where some lost their businesses because of that.
In reality, accounting is one investment you can’t afford not to make. Because keeping accurate financial records (and understanding how to interpret them) can be the difference between success and failure for a business.
Since the first thing I do when I start with a new client is to review their financials with them, I often find that they either don’t have good records or they’re not up to date and are in need of bookkeeping services.
That’s when I discovered that many of my clients are not sure of who they really need to hire to help them or understand the differences in the various types of accounting professionals.
NOTE: If you are in the Construction Industry – you need to use professionals with that industry-specific knowledge and background. Same for ECommerce and Manufacturing.
All small businesses need someone to do the bookkeeping (in-house or outsourced depending on business size and volume) and then a CPA to do their taxes and tax forecasting among other things.
Once you get a larger operation going, it can make sense to hire a Comptroller. I held that position for many years, prior to becoming a full-time entrepreneur when I first came out of school and worked in the construction industry and wine-importing industries.
Here is a brief overview of the three most common professionals small to medium business owners use.
Bookkeeper
Bookkeepers handle basic accounting functions such as accounts payable and accounts receivable and payroll. They can complete monthly reconciliations and enter transactions into your accounting software.
Controller/Comptroller
Known by both titles, Controllers oversee all accounting operations of a business. They are responsible for compiling financial reports, monitoring cash flow, budgeting and implementing policies and procedures for financial reporting, and more. They will often oversee the administrative staff, IT functions, and HR.
Accountant/CPA
Accountants or CPA provide tax planning strategies and tax preparation services to businesses. They also analyze financial records, ensure that they comply with laws and regulations and conduct financial reviews and audits.
The Takeaway
As a business owner, you don’t have time to manage your business’ books, and the more your business grows, the more time-consuming the financial aspect will become.
Whether you outsource or hire in-house, keeping your financial records up to date might be the most important aspect of keeping your business afloat.
You’ll have a better idea about the money coming in and out of your business – the all-important cash flow – and you’ll understand what you are spending so that you can better price your products and services.
If you’re not sure where to start when it comes to accounting for your business, or if you’re looking for ways to improve your current system, schedule a free consultation.
