Keys to Successful Small Business Accounting
Bookkeeping, finances, revenue – these are all terms, among many others, that tend to be intimidating for many small business owners to tackle. Keeping track of accounts receivable, billing, collections is also an arduous task for many. The main problem tends to be that a lack of attentiveness in the financial health of the business is detrimental, and leads to many costly errors that are often easy to avoid.
By looking at each individual aspect of the accounting business, and asking yourself some questions associated with each, this is already a big step.
Some questions may seem easier to answer than others. For the ones that pose a challenge, think deeply about why that challenge exists, and what steps you could take to make answering that question easier the next time around – this will become the foundation of your accounting strategy going forward.
Here are some of the areas that should be given careful attention in small business accounting, and important questions you should be asking yourself for each one.
As you probably already know, bookkeeping is all about the details. Revenue tracking may not seem like it is all that important, but those small decisions we overlook tend to snowball into large errors very quickly.
How will you view your books?
How will you get paid? Will you accept online payments?
How will you keep track of your expenses?
How will you keep your business in the black? (Budgeting)
By putting some small measures in place, you are ensuring that the rest of the financial process will become easier to handle.
No business will thrive without proper payroll practices in place. Employees need to be compensated for their time in a consistent manner, that much is certain. However, there are other questions associated with that aspect that must also be considered:
How will you handle payroll?
Will you offer payroll benefits?
How often will employees be paid?
Will they be salaried or hourly?
Payroll benefits are a good incentive for employees, while also allowing you some breathing room when it comes to taxes. Similarly, there are pros and cons to the frequency of payments, as well as whether they should be salaried or hourly that must also be considered.
Taxes are an unavoidable and time-consuming process – and unfortunately, they’re inevitable. There are ways of making it easier on yourself, however. Figuring out what your obligations are to begin with is vital, as well as ensuring that you are paying the right amount.
How will you determine your tax obligations?
How will you know if you’re overpaying or underpaying?
Are there automation systems in place
And if it becomes difficult to manage, consider automating certain processes to make it go smoother, or outsourcing to save yourself some resources in the long run.
Banking is another one of those small issues that tends to grow in size if ignored. Using a credit or a loan comes with obligations, so it is important to work with a bank that is right for your business.
Where will you keep your accounts?
How many bank accounts will you have?
Will you use a line of credit or a loan?
Keeping your personal and business account separate is also incredibly important, so it might be worth considering using different banks to reduce the temptation to blur the lines between the two.
Financial reports are absolutely paramount to a successful business – as is reviewing them regularly. Set up key performance indicators, establish a baseline and then use that to measure success going forward.
Regular financial report reviews will help you spot irregularities and errors early on:
How will you generate reports?
What reports will you be viewing?
How often will you be viewing your reports?
There are many different indicators you can establish that will work with your business needs, and it is imperative to be disciplined in reviewing these. Whether it is monthly, quarterly or somewhere in between – regular financial report reviews will help you spot irregularities and errors early on.
6) Systems & Workflows
Establishing a system and workflow will not only help increase the success of your business, especially once it is streamlined, but it also helps keep employees accountable. Some questions to ask here are:
Who will be entering expenses?
Who will be generating invoices?
Who will pay the bills?
Who will generate reports?
Creating distinct responsibilities for your financial team will help in keeping track of important financial aspects, but will also give your employees a defined scope of work that will help them succeed.
Find A CPA Mentor
A mentor is a person who is older than you and has many years of experience in your field of work or a related area. This individual has faced the same sort of problems and issues that you are confronting and has valuable insights to share.
Having someone who you can turn to when your job is at a critical juncture can provide tremendous benefits. The advice that you receive can help you to avoid making a mistake that could derail your career.
But what if you can’t decide on a mentor?
You don’t have to restrict yourself to one mentor. It is perfectly acceptable to have two or more. One mentor could help you with technical matters related to the accounting profession, and another may have inputs to offer on your career progression.
Try and remember that as a mentee, you need to do your part to nurture and grow the relationship. You may think that you don’t have much to offer to an older and more experienced person who has been in the profession for many years. But it’s important to apply your mind to this issue and try and repay your mentor for the advice and help that you receive, either through networking opportunities of a simple “Thank you!”
Five Secrets To Successful Accounting Services
If you’re a business owner with annual revenue from $5 to $50 million, you know some of the challenges involved with accounting services: finding competent bookkeepers and certified public accountants, managing your accounting department, and going deeper than bookkeeping processes to actually extract valuable, actionable information from your financial statements.
The best accounting services have time-tested strategies in place to deliver the results business owners need every time. We’ve kept these accounting services under our hats as secrets of our trade, but we’re sharing them with you to help you in your search to find an accountant you can trust.
1. Timely bookkeeping is the cornerstone of business success.
This one is simple. If your bookkeeping is not up to date, it’s worthless to you as a tool for financial forecasting, or even to find out if you’re going to bounce a check on a day-to-day basis. From cash flow statements to balance sheets, bookkeeping should be kept up-to-date at whatever frequency you and your accounting department decide, based on the volume of your business.
2. Accuracy is king.
Not only must your financial data be up to date, but it also has to be accurate. Otherwise, any conclusions drawn from financial forecasting will be wrong. In the computer programming world, they call this GIGO (“Garbage In, Garbage Out”). Your accounting services provider should have a financial controller/CPA who oversees the work of every full-charge bookkeeper to ensure accuracy.
3. Timeliness and accuracy are ensured through the right processes and procedures.
Many in-house accounting departments strive for timeliness and accuracy. They know it’s the bookkeeping ideal, but they don’t know how to achieve it. By establishing the right bookkeeping processes and procedures, customized to each client’s preferences, but based on our decades of experience at AccountingDepartment.com, we promise and deliver financial data that is up-to-date, accurate and available 24/7/365 to our clients.
4. Establishing controls helps protect businesses from employee theft and fraud as well as from innocent bookkeeping errors.
No one is perfect. We acknowledge that. That’s why financial controllers oversee our bookkeepers to ensure the accuracy of your financial records. When the books are closed at the end of each month in the presence of the business owner, bookkeeper and financial controller, they are “locked” so no one can change them. This is just one of the many internal controls in place to help eliminate fraud and ensure accuracy in your accounting services.
5. To maximize their success, business owners need accounting services with the knowledge to implement the right strategies.
It’s good to know exactly what goes into successful accounting services. But it’s another thing to know how to execute the right accounting strategies in your business to increase your odds of financial growth and success. AccountingDepartment.com has the extensive experience and knowledge necessary to execute successful, time-tested accounting services to take your business to the next level.
Accounting Skills You Need to Succeed on the Job
The hiring environment has become more uncertain in recent months, to say the least. However, the positive news is that many businesses are still staffing both on-site and remote positions, including in their accounting and finance departments. If you have a well-developed set of accounting skills, that could increase your chances of being a strong contender for jobs you are targeting.
Essential accounting skills encompass more than the ability to crunch numbers, complete expense sheets and depreciate fixed assets. In addition to traditional accounting knowledge, there are a number of hard and soft skills that every accounting professional needs, whether they are working in an office or remotely.
Following is an overview of seven sets of accounting skills — some technical, some not — that can help you to advance your accounting job search, as well as your accounting career.
1. General business knowledge
The scope of accounting and finance positions has been expanding over time, and especially so in recent years. In particular, these professionals must collaborate and coordinate more often with colleagues in other departments.
So, it’s important to know what other functions do and how the work of the accounting and finance organization helps to support their initiatives. The better you understand the overall workings of the business, and how you and your team fit into the “big picture,” the more productive your relationships outside your department will be.
2. Up-to-date technology expertise
Finance leaders are often challenged in finding professionals who have up-to-date technology expertise listed among their accounting skills. But you can be sure that working with finance-specific software programs will be a given in your role, as accounting firms and other organizations continue to expand their use of accounting automation.
Other examples of technology-related accounting skills that are in demand by many employers include:
Advanced Excel ability
Enterprise resource planning (ERP) experience (e.g., SAP, Oracle)
Expertise in big data analysis, advanced modeling techniques and SQL
Knowledge of business intelligence software (e.g., IBM Cognos)
Microsoft Visual Basic capability
Aptitude with Hyperion (for analyst and financial reporting roles)
Microsoft Visual Basic skills
Knowledge of QuickBooks (for positions with small and midsize firms)
If you want to advance in your current position, consider asking your manager about online accounting skills training options that the company may be able to arrange. Or, if you’re currently searching for a job, you could enroll yourself in an online course in one of the skills areas listed above. Being proactive about your professional development could impress a potential employer.
Preparing for a job search? Learn how Robert Half can help you get hired.
3. Communication skills
Stay-at-home orders have put communication abilities front and center among must-have skills as many workers have transitioned to remote jobs. The good news is that accounting and finance professionals have had to hone one of these abilities for years: presenting information in an easy-to-digest manner, especially for audiences that are not as numbers-savvy. Now, it’s time to refine other communication skills.
The ability to relay information clearly and concisely by enhancing your verbal and writing skills is essential. More good news is that you and your colleagues working from home may already have a leg up on this skill, as you’ve had to turn to email (writing skills) and video platforms (verbal skills) for each and every daily interaction, from business requests to simple morning greetings.
4. Adaptability and flexibility
Adaptability and flexibility were also top among the skills accounting and finance professionals needed even before the pandemic. Technological change, like the rise of artificial intelligence (AI) as a critical business tool, was a key driver for that trend, and you can expect that it will remain so. But now, as businesses try to define and operationalize their next “new normal,” the ability to pivot and roll with change is an absolute must.
5. Creativity and a willingness to help others
The best accounting professionals are ambitious self-starters who can develop new insights. You may need to serve as a source of aid when colleagues require help navigating a particular program or managing their first busy-season audit.
Your managers may also look to you for fresh ideas as to how the organization can ensure continuity of service to clients (especially during this time of disruption), improve compliance procedures or address a host of other issues.
Get Timely Information
Successful accounting departments gather key financial information in a timely manner. In today’s day and age transactional information can be accessed almost instantaneously and incorporated into the accounting system quickly.
Without up-to-date financial knowledge, budgeting and other financial forecasting actions cannot be relied upon to be accurate. Additionally, out of date financial information can make investing or decision making a risky proposition. It’s one thing to learn that your plans exceed your budget, but another entirely to learn this through a check bouncing on the technology or service you’re investing in.
Get Accurate Data
Accurate data gathering is essential for a successful accounting department or anyone who wants to call themselves a competent accountant. Without accurate financial data, you will not be able to create actionable business decisions.
When a company is making strategic decisions based on an inaccurate budget forecast or a faulty cash-flow statement, the consequences can be huge and can hinder company performance (or even reputation) for some time.
Process and Procedures
Timely information gathering is the goal for a successful accounting department, but processes and procedures are the tools that will bring this success.
Having clear, appropriate Handling procedures ensures that responsibility for information gathering is clearly defined and divided among the department’s accountants. Having the proper Reconciliation procedures ensures that all information entered into the company’s master ledger or database is accurate. Finally, having the right Review procedures is a failsafe against inaccuracy, ensuring that no moves are made based on the faulty financial information.