If you're a small business you're busy running your business and may not have time to pay attention to financial matters. Yet deep down you know it's critical for the success of your business. You know you need an accountant to help you.
As a small business you have money coming in from the solutions you provide and money going out for your expenses. Knowing the difference between the two may seem like an easy process but of course it isn't. Knowing the difference between your Gross Income and your Net Income can be tricky. It's not as simple as balancing your checkbook at the end of the month and knowing what you made. Expenses can often be subtle or even hidden in that checkbook. There may be problems that you cannot see until it's too late.
For example, your borrowing has a cost that is not readily visible. You pay interest on loans for buildings, equipment, services, and many more functions. You have banking fees. You pay for business meals and transportation expenses like gas and repairs.
These are all the cost of doing business. But sound tracking and management of these expenses can mean the difference between making money at the end of the month and perhaps even success or failure at the end of the year. That's where a good accountant can help.
Create A Solid Business Plan
Now take your business plan. You do have a business plan don't you? Without a business plan that includes budgeting, forecasting, and contingency planning, you are just guessing and probably guessing wrong.
A solid business plan will help you anticipate growth and... yes the opposite. You must plan for downturns as well as growth. Knowing what to do during bad times will do several things.
1. It will give you the tools to survive
2. It will lower your stress level because you know you have a plan
3. Proper tracking will tell you when you are failing before it's too late
And beyond your Business Plan you should also have these types of management reporting tools in place...
Profit and Loss statementBalance sheetStatement of cash flowSub-ledgers and journalsSales reportsGeneral ledgerPayrollBank reconciliationsA/P and A/R aging reports
And Don't Forget About Taxes
Taxes are one of those things that can bite you when you are least expecting it. Adequate tax planning can be one of those things that you don't think of until it's too late. Are you paying your estimated income tax on time. Are you paying the right amounts. If your business has grown or shrunk you could be paying an incorrect amount.With the help of an accountant who can help you setup these types of financial management tools and answer those important questions before it's too late. Once you have these tools in place you'll have your finger on the pulse of your business. And whether you do it yourself or hire a good accountant you'll be prepared for whatever the economy throws at you.
Rick Hart is a business consultant. He provides tools for accountants in Clearwater and for many businesses in the area.
http://www.accountantclearwater.com/
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