The small business owner needs to have a good understanding of all aspects of business, including the finances. Running a business is difficult, but keeping track of the financial compliance can be overwhelming for some owners. Even for small businesses the compliance required is often complex and time consuming, yet outsourcing can be expensive.
So what is the ideal option. It all depends of the specific business, the skills of the business owner, and how much can be spent. There are several accounting options for small business, all with there own advantages and disadvantages.
* Going it Alone
Keeping up with compliance, and managing the accounting function of any small business, no matter how small is not easy. To efficiently keep control of the finances of a business, it is necessary to not only be organised, but also have an understanding of basic accounting concepts and the compliance required to be lodge with the various government departments. All of this can take a considerable amount of time, and there is no guarantee it will be right without having a professional look over it.
The key advantage of going it alone is that as a business owner, you should have a good understanding of how your business is travelling financially. This is extremely important for small business owners, as poor financial records is often a significant reason why small business fail. In addition, although most owners may try to avoid the financial activities of its business, it is important to have an understanding of how to manage the finances of a business well.
* Bookkeepers and Accountants
If time is an issue, hiring a bookkeeper or accountant to manage the accounting aspect of the business, will enable you to have more time to work on other aspects of the business. Although similar in nature, there is a significant difference between hiring a bookkeeper verse an accountant.
A bookkeeper, should have a good understanding of basic financial concepts, and will no doubt be able to input and compete basic financial statements, and prepare some compliance related tasks. However, not all bookkeepers have professional qualifications, keeping this in mind, always try and get a recommendation from someone that has had a good experience with there bookkeeper.
An accountant on the other hand, has professional qualifications and generally a significant amount of experience dealing with business similar to your own. This additional knowledge can be a huge advantage and will further assist with the efficient management of the business. Unlike bookkeepers, accountants can often also assist with budgeting, pricing, and the management of costs and overhead expenses. In addition, many accountants are qualified tax agents who can also assist with lodgement of any necessary taxation documents.
Another significant difference between a bookkeeper and an accountant is the cost. In most cases, both bookkeepers and accountants will charge by the hour. Comparing the hourly rates between a bookkeeper and an accountant, it is easy to see that the bookkeeper is less expensive then an accountant. However, the additional costs associated with an accountant is for the additional knowledge they hold, and the likely hood that any tasks a bookkeeper can do, an accountant could most likely complete in a more efficient manner.
* External verses internal Assistance
Rather then hiring someone internally, another option is a combination of the above two options, thereby reducing costs. The initial data entry would be in putted by yourself, however on a regular basis, either a bookkeeper or accountant checks over the work, and deal with any of the more complicated issues or transactions.
This option is the best of both worlds. As the owner of the business you have the connection with the business finances, but also the peace of mind that the accounts are reasonably accurate to make good business decisions. Costs are also substantially reduced because the external assistance is limited to a review and supervisory role rather then providing general data inputting which in many cases is relatively straight forward.
* Software Options
From receiving external assistance to doing the accounts yourself, it will be necessary to consider some sort of software option. There are endless options when it comes to accounting software.
There are several free options, which are great for small business. An example would be Saasu which also has the benefit of being available on line and therefore access can be achieved any where there is an Internet connection. This product is available for those business using either a cash or accrual basis, however once the minimum transactions are exceeded it will will be necessary to contribute a small some of money to continue to use the product.
If you would rather purchase something off the shelf, then the most common accounting software for small to medium business is either QuickBooks or MYOB. Both are good products, however do require some knowledge of basic accounting concepts such as double entry bookkeeping. Its highly recommended to get the best out of either of these products to obtain some training from either a qualified trainer, or directly from your accountant who should have a good understanding of both these products.
The financial aspect of a small business can be very overwhelming for many new business owners. There is plenty of assistance out there, however it is important to determine what the best option is for your small business based on your own availability, costs associated with each option. Consider the options above, but always when starting out in business consult your accountant and utilise there experience.