When a small business opens its doors the realities of limited budgets often mean trying to do everything in-house. While that approach may work for some areas of the business it is not advisable to adopt this approach with accounting. Owners of a new business should not view hiring of an accountant as a luxury – it should be viewed as a requirement for success. The right accountant can be a wealth of information and experience to assist in structuring processes to ensure that you are getting the most out of every dollar – from day one!
New businesses should consider hiring an experienced and certified accountant as an investment, not an expense. ‘If only I’d come to see you sooner… I would have saved so much time and money!’ is a lament that we have heard often over the past 25 years working with entrepreneurs. There are several problems that can arise quickly and unexpectedly for new businesses, but these can be avoided through knowledgeable guidance by your accountant such as: missing tax breaks, falling behind with invoicing or getting in trouble with the government for tax issues.
Here are the ABC’s of why small businesses need an experienced accountant…
Always set up your books correctly from the start:
The fiscal restraints of being a start up usually begins with business owners having the best intentions of doing their own bookkeeping when they find some spare time. However the reality of the demands of starting a new business leaves very little spare time, or energy, to sit down and focus on bookkeeping. Playing catch up is a common state for business owners. The problem is that the longer it is before capturing the bookkeeping data the more likely there will be data-entry errors, lost documentation (such expense receipts), books that are out of date and a lot of time lost searching for missing items.
An accountant can help you properly set up your books on one of a variety of online accounting software, such as QuickBooks. This software will make it faster for you to send out invoices, record expenses, follow transactions and organize bank statements. Being organized and having all the information at hand will make it much easier to track things like outstanding invoice payment from clients and the taxes your business owes.
Be sure to pay your taxes on time:
Late filing or payment of taxes results in penalties and interest can cost you thousands of dollars! By working with Chartered Professional Accountant (CPA) you will have all your data organized and won’t overlook tax filing deadlines. An experienced accountant will be proactive with your tax files so that your tax filing is smooth and stress-free.
Tax laws are complicated and can change each year. A knowledgeable accountant can often save you money by understanding how to reduce the amount of taxes you must pay. By working with an accountant at the start of your fiscal year and using them for your tax planning services, you will be able to keep more money in your business so you can keep growing!
Cash flow is everything:
This is especially true for smaller businesses. Your invoicing system is critical to the overall strength of your business. When you don’t bill on time, you won’t get paid on time and that’ll leave you short of money – it’ that simple. Unfortunately, it is this factor that undermines a lot of newer businesses.
Let’s just sketch out how this can happen… You do work for a client and send the invoice for that work at the end of the month. Usually businesses give their clients 30 days to pay the invoice. However, the employees that did the work, the resources they used, and your office space expenses will need to be paid for by the end of that month. It’s a delicate cash flow balancing act and if you fall behind in your invoicing or payments by clients then you can find yourself in a very tight spot!
And that’s where the accountant you have hired to help you can make all the difference in the world. With the invoicing system your accountant set up for you you’ll be able to efficiently send invoices and track which ones have been paid. Your accountant can also advise you on things like invoice payment terms and your own office expenses, to help reduce potential areas for cash flow slow downs.
By hiring a good accountant, you are building a strong foundation for your business upon which it can survive and thrive. As we like to say to our clients: It’s good to dream but it’s even better the live your dream!
The KMPC team specializes in helping companies grow via strategic financial management practices. Since 1993, KMPC has been helping businesses in Whitby, Oshawa, Ajax, Durham Region and the Greater Toronto Area (GTA) to reach and surpass their profit goals.
If you would like to speak to us regarding Business Accounting, financial retirement or tax planning, tax returns, bookkeeping or any of your other please contact us anytime – we’d love to chat with you.
KMPC– Chartered Professional Accountant, CPA 11 Stanley Ct, #13 Whitby, ON L1N 8P9 (905) 666-5071
Email: email@example.com Web: https://kmpc.ca