Minding the books is time-consuming and detail-oriented work and, unless you love doing it, you'd just as soon hand off to someone else. The trick is putting your sensitive financial information in the right hands. Common accounting tasks include:
- Entering and updating daily account ledgers.
- Running and maintaining computer accounting systems.
- Performing periodic audits and checks.
- Producing monthly and quarterly reports.
- Running payroll functions.
- Filing income taxes.
Find a bookkeeperEntering transactions in a ledger as they occur is probably the most basic accounting function in any business. Every small business needs a bookkeeper, even if it means you do the task yourself. In a traditional mom-and-pop business, one spouse usually takes the bookkeeping job. If you're going to hire outside the family, you'll need to find someone both capable and trustworthy.
Hire an accounting professionalWhether or not you hire a bookkeeper, you'll still need an accounting pro at least, to help with your annual income tax filing. As your business grows and becomes more complex, you'll need more accounting services like monthly reports, income statements and audits. Certified Public Accountants have passed an exam testing their knowledge on the most rigorous tasks like audits. Enrolled agents are accountants who have passed an IRS exam and are licensed to practice before the IRS.
Add or upgrade accounting systemsComputers and software have automated much of the more tedious accounting work. The problem is that you have to know what to buy and how to use it. Basic, off-the-shelf PCs and software will do the trick for most small businesses. But bigger businesses need more sophisticated solutions that may require consultants to evaluate your needs and recommend solutions.
Add a controller or chief financial officerYou know you've arrived when you need a finance czar to look after your company's money. A controller or the even loftier CFO provides strategic and long-range financial organization and planning. They should understand all aspects of business finance as well as computers and software. At this level, the person should be highly trained and experienced in business and will expect to be compensated accordingly.
- Hire expertise: Look for certificates, licenses or other evidence of proper training when hiring accounting professionals.
- Keep it simple: New and very small businesses don't need expensive and elaborate accounting systems. Watch out for advisors and consultants who try to upsell you with systems designed for larger and more complex organizations.
- Monitor security: Remember to establish checks and balances in your accounting system. Small businesses are especially vulnerable to theft and fraud when a single accountant or bookkeeper handles every aspect of an accounting system.
- Stay involved: Even if you hire top-notch advisors, the ultimate financial manager of any small business is the owner. Read and understand the ledgers and reports that your accounting professionals provide.