by Elle Morena

Created on: May 22, 2008   Last Updated: May 29, 2008

Accounting to any business is like having a credit rating for an individual who requires a mortgage loan, you absolutely require it, and its a cost to any business from huge multinationals to single owner home base business. No matter how small a business, you have to keep accounts, even if you are making losses. As long as you are in business, accounting is what you need and yes, its a pain especially to non accountants, for accounting is a set of rules to keep score of whether you are succeeding or failing in your business and believe it it or not, once you come to understand the basics of accounting, you would understand how to make money and scrimp on cost.

Now, qualified accountants are not not only generally boring bean counters, but they are also expensive to hire, as such it is not in the best interest to your small business if you are making very little profits to hire an accountant as a full time employee, especially if there are very few transactions in your small business, alternatively you could hire a free lance or part-time book keeper or you could outsource your accounting to a professional accounting firm to keep accounts for your business and to also complete the year end financial statements for audit and tax purposes, depending on where or which country your small business is operating.

Since it is in your best interest to monitor how your business is doing, it is always good to learn the basics of accounting, which is called book keeping, and it is more than sufficient for your small business. Today with the availability of a variety of accounting software in the market, you should be able to use the software for the simple transactions that are required. Some accounting software vendors also provide training and support if you purchase their software.

Now there is no benchmark as to when your growing business would require more than just a simple software, it all depends on the rules where your business is operating and at which defining point where your accounts would need a full fledge accounting system. If your business reaches this point, it will no longer be called a small business, so for the time being, learning the basic of book keeping is an asset to all business entrepreneurs and if it is beyond your capabilities, hire part-time bookkeepers whom are not necessarily qualified accountants, who could for instance be either be part qualified accountants, business students or retired accountants to keep your accounts.

With the ease of communication and in view of the globalization of business today, you could even possibly outsource your bookkeeping and accounting needs to service providers outside your country to save cost. Countries such as Philippines and India are popular outsource service providers, used even by multinational corporations.

Finally, before deciding on the options discussed above, do some research on the rules of small businesses and the legal implications on accounting requirements, as the definition of small business varies considerably in the location and domicile of the business and the country it is operating in.

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