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so that he can produce for you a balance sheet statement and even to handle the exercise of paying your workers, suppliers and the government (taxes). This is the option that most companies use and as the company grows, this accountant gets more involved in daily transactions until he becomes a full time employee and much later part of the accounting department. How ever as the business owner you will still need to monitor the activities of the business and especially to prevent fraud.

This introduces the concept of accounting software. Since it will be very difficult for you as the business owner to go through the various documents produced by your accountant on paper, using accounting software will make it easier to go through past records and identify any fraud. This is because you will be able to go through the various entries made, confirm with the physical documents (receipts), and finally go through the final reports; the cash flow, balance sheet and profit and loss statements to note any errors and omissions. Accounting software also saves on time especially for your accountant since he is able to handle large volumes of work in the shortest time frame. In fact, through accounting software one can be able to monitor sales, payments, those clients who have balances and suppliers you owe, stock levels and every other activity in the business including payments of staff. Depending on the size of your business, you can start with the basic spread sheet software like Microsoft excel and then as the business grows move into Sage pastel and quick books accounting software, peach tree and MYOB premier. Once the business becomes a large enterprise, you can integrate all your business functions into an E.R.P solutions software.

Finally my advice for any small business owners is to get some training in accounting so as to understand its importance in a business and thereafter use it as a tool to you're your business. By understanding accounts for example, one is able to increase profits by reducing costs without increasing profits, increase cash at hand by collecting cash at a faster rate than making out payments which is basically playing around with the current ratio even to leverage debt and a host of other activities. Also it is by understanding accounts that you will be able to monitor the activities of your accountant to detect fraud. Another option is to hire another accountant to go through the accounting books of your employee accountant which is crudely known as setting a thief to catch a thief or more appropriately in accounting terminology auditing. This is why by law every public company must appoint an auditor to perform that role but over the years, they have colluded with the company accountant to manipulate the accounting documents to either fleece or give a wrong impression of the company status to the owner as was in the case of Enron. My conclusion therefore is that there is no option but to do your accounts and seek to understand as much as possible as a small business owner.

Learn more about this author, Magu Nguru.
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