- Adam Taylor
Why Accounting is Critical for Small Businesses and Entrepreneurs
This guest post was written by Adam Taylor of TaylorandNoel.com
The books. Is there anything less worth your time?
Actually, yes. Accounting can seem like a time drain with little return on investment—especially when you're a small business owner or entrepreneur with a to-do list that doesn't quit. But having the right accounting infrastructure can make or break your venture.
If you want to scale from small startup owner to successful business owner, then consider accounting worth your investment. Here's why.
The Role of Accounting in a Small Business
Accounting is collecting and organizing vital information on cost and earnings, loss and profits, liabilities and assets.
The main aim of accounting is to enter financial transactions in your accounts' records to determine, calculate, and communicate economic data. Additionally, tax reporting agencies require you to keep records at a minimum level with evidence of the income and expenditure.
Accounting is more than just keeping track of the money you're making—it helps owners make decisions, plan, and evaluate a company's financial achievements.
How Important Accounting Is and How It Can Save Your Business
According to The Blueprint, long-established startups seek assistance from accountants for several reasons. Accountants can and should be a reliable business partner that can offer their expertise and outlook in your sector to help your venture grow. Here are some of the ways that an accounting professional can help your business stay successful.
Preparing and Saving on Taxes
An accountant can help you set up your bookkeeping to maximize savings. For example, they might help you develop a banking system distinct from your personal finances. Not only will separate banking make bookkeeping easier, but it will also prevent missed payments and improve your tax return.
Inaccurate records can also cost you on your tax return, so it is better to prevent that from the beginning. Again, accountants can help you ensure that everything you submit to the government is accurate.
Helping You Choose a Legal Structure
Many small businesses and entrepreners operate using a sole proprietorship legal structure—the business is tied to you and your name. It's a useful legal structure because it's easy to set up.
But other legal structures may actually be better for your business—and an accountant can help you decide. For example, an accountant can explain the tax benefits from using a Limited Liability Company (LLC) structure. Some of those benefits include limited personal liability, flexibility, and various tax deductions. Choosing the LLC model—or other model—for your business is a difficult decision, but an accountant with expertise in taxes and business structures can help you make the decision.
Evaluating Your Business' Performance
Your financial books show the performance and financial position of your small business. Not only will these books help you keep track of your expenses, possible debt, and gross margin, but they will also help you compare your current status with previous records. Done properly, your accounting data can help you analyze your business decisions and help you understand which decisions created the most value—and which fell short.
Knowing Your Business' Worth
Knowing the value of your business is critical. It helps you understand the growth potential of your business, work with potential lenders, and even prepare to sell your business. You can use accounting metrics to predict future revenues, compare yourself to your competition, and establish a track record of your own successes.
Proper accounting processes give you the data you need to know its worth.
Helping You Focus Your Time Efficiently
You know better than anyone that you're busy. Entrepreneurs and small business owners are often responsible for every aspect of their venture—from advertising and digital content marketing, to sales, to employment and HR, to logistics and procurement.
Committing to all these duties can become overwhelming—if you're not careful, they can lead to burnout. Hiring freelancer accountants service can take some of those responsibilities off your plate, leaving you with more time to focus on the other essential tasks on your list.
[Editor's note: Hiring freelance content writers can help with this, too!]
Finding a Professional Accountant
Great, an accountant could be helpful. Where can you find one?
Well, you could do it yourself. (You do everything else yourself, right? What's one more skill to learn.) There are several university-level accounting courses that you can find online. These can teach you the basics.
But if you're not looking for more responsibility, you may be better off turning to a staffing agency. You can find local agencies in your city, or use an online one like Upwork. These have the benefit of being both easy and affordable. And who knows? Those temporary freelancers could become full-time employees who help drive your business toward success.
Accounting for Entrepreneurs and Small Business Owners
Can your business survive without the expertise of a professional accounting service? Probably, but the different perspectives, guidance, and expertise an accountant can offer could be the spark that sends your business on to new levels of success.
Adam Taylor left his corporate jobs to work as a freelancer, chasing a balance between the work he loved and the life he wanted. He's been on a mission to work on his own terms. He's taught himself how to work smarter, not harder. He's committed to separating work and home so that he can enjoy both. Now, with TaylorandNoel.com, he's sharing his best practices with other freelancers, in hopes they can do the same.