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Business Guide to Accounting

Managing finances is one of the most difficult and important aspects of business. Without well-kept records and a solid understanding of your income and expenses, you stand to lose a significant amount of money each year. Financial losses occur because of mistakes on taxes, failure to identify unnecessary expenses, faulty business plans, and more. Hiring an accountant is one way to prevent these troubles. A person who specializes in accounting can help you with your business plan as well as your records and taxes. You have to keep a few things in mind when searching for accounting firms, though. Some of them may not be worth the cost.

Benefits

According to Manta.com, there are 131,934 accounting companies in the United States as of October 2011, and 16,926 of these companies have generated between $500,000 and $1,000,000 in revenue. Accounting firms provide services that are beneficial to business owners, and the demand for these services has been high for many years.

Financial counseling

An accountant will obtain a financial overview of your organization to determine your company’s financial status. Once your company’s status is determined, an accountant can help you develop a financial plan, which generally involves setting financial goals. They assist you with making changes to these plans as your company’s revenue increases or decreases. Also, accountants are generally available to clients who have financial questions that require immediate answers. 

Avoiding costly mistakes

Business owners who create their own financial plans can have members of an accounting firm review them. Accountants can detect flaws in your plans that you may have overlooked, which can save you a lot of money. If you do not have an accounting background, you can use the services that accounting firms provide to avoid mistakes that can put you out of business.

Effectively managing finances

If you are busy managing other aspects of your business, you can hire an accounting firm to keep track of your finances. An accounting firm that has the best intentions for your company will keep close track of your income-generating assets, sales, and revenue. They typically use accounting software to generate daily, weekly, and monthly reports for your review.

Tax benefits

Countless business owners unknowingly commit financial fraud because they are unfamiliar with the process of filing and paying business taxes. Accounting firms can keep track of the taxes you owe and submit tax payments for you. Also, many entrepreneurs are unaware of the various business deductions they qualify for. Accountants are knowledgeable professionals who will know each deduction you can claim. When accountants file your taxes, they will input these deductions, which can drastically minimize the amount of money you owe in taxes.  

Pitfalls

Avoid legal problems

Some of the world’s largest companies rely heavily on accounting experts to ensure their financial records comply with all legal guidelines at the state and local levels. Using inexperienced or untrustworthy accounting firms can lead to severe legal repercussions if errors appear in financial documents. These legal problems can lead to thousands of dollars in fees and even the dissolution of some business enterprises. Avoid legal problems by working only with reputable firms or certified public accountants trained to handle the specific concerns of your company.

Be aware of data discrepancies

Errors in data can cause problems throughout your service or supply chain. Regular audits from accounting professionals allow you to locate accounting issues before they cause problems to your business as a whole. Data sources can include inventory tracking, human resources management, and information gained from customers or clients. Accounting firms can help audit your books to locate any discrepancies.

Seek confidentiality

Accounting firms hired by your business may have access to some of your company’s most vital or sensitive documents and financial reports. Watch out for disreputable firms that may attempt to steal financial information, ranging from client credit card numbers to company accounts, or sell customer demographic and contact information to outsiders. A confidentiality breach can ruin a small business and may even harm the largest of companies in any industry.

Watch for unexpected costs

Many accounting firms list their fees before signing a contract for service. Read such contracts carefully to avoid unexpected costs. Expenses for basic supplies, such as postage costs or ledgers, may fall on the company instead of the firm. Should the contract stipulate unspecified miscellaneous charges, ask the firm for more information on what charges may be expected. Many accountants may be unaware of all charges prior to engaging in service, but experienced professionals should be able to provide a rough estimate.

Pricing

Out of 9,000 job offers reported, accounting firms offered the most positions to the 2010 accounting student graduates, according to businessweek.com. Accounting firms have an average starting salary of approximately $50,000.

The Cost of an Accountant

If your business would like to hire an accountant to have on staff, you can plan to spend approximately $50,000 on his or her salary. If you break this down, you can say that your new hire will bring in between $900 and $1,000 per week. Per hour, this would place the new employee at $25. This could be more or less for your business, depending on the skills and experience of the accountant you hire. 

Conclusion

Accounting professionals can lift some of the burden of managing taxes and finances. With their help and expertise, you can save a lot of time and money. A reputable accountant can also serve as your confidant on business matters while helping you lower your expenses and increase your profits. However, you must first ensure that your chosen accountant is, indeed, reputable and reliable. Failure to hire a scrupulous firm can cause you more problems than you would have without an accountant. Researching the firms and asking for recommendations will help you avoid those that would compromise your business or charge unnecessary fees.