Limited Accounting Skills? Let a Professional Accountant Add Value
6 min. Read
Last Updated: 03/05/2015
Table of Contents
Financial Statements Prepared by An Accountant
Many entrepreneurs come up with an amazing idea, then struggle to establish a business due to their lack of business experience. For those with limited accounting skills, a trusted relationship with a professional accountant can be a huge benefit. Aside from basic bookkeeping and tax preparation, accountants also add value by acting as an overall business adviser.
Not Just Tax Preparation, But Tax Planning
A good accountant will do more than simply compile the proper tax forms. They will also assist with tax planning throughout the year to ensure their clients take advantage of tax credits and maximize deductions. Accountants should not simply meet with clients at year-end, they should also sit down with them periodically to discuss tax strategies and new laws that can be beneficial to the business.
Help Secure Debt or Investment Financing
Companies looking to expand may wish to apply for a small business loan or attract new funding from outside investors. To successfully attract new investors, businesses must have a good credit history and updated financial statements detailing the company's assets, revenue, and income. Potential investors and loan officers may also request pro forma statements to evaluate future projected growth. Aside from preparing financial statements when requested, accountants can also recommend ways to improve a company's credit and financial position. They can also prepare financial reports to meet requests of outside parties.
Manage Cash Flow
Accountants understand the importance of cash flow for small businesses. Based on experience gained from years of working with small companies, they can add value by examining a company's cash flow cycle and comparing performance to others in the same industry. A good accountant will also point out when a company has accumulated too much cash and offer suggested ways to put liquid investments to good use.
Evaluate Internal Controls
Accountants understand the essential need for separation of duties and can work with companies to devise policies and procedures surrounding internal controls. For small businesses this often means setting policies regarding the separation of duties surrounding the receipt, recording and reconciliation of cash. Accountants may recommend the use of lock boxes or establish dual signatures on checks when appropriate.
Getting the Most from an Online Accounting System
Although online accounting software for small businesses is generally designed for users with basic accounting skills, a professional accountant can help maximize the benefits of an online system. A professional accountant can add value by customizing built-in reports to meet managements' specific needs. Data can also be exported directly from the system to prepare tax forms or year-end statements, thus saving time and limiting work required to compile data for outside accountants. Year-end performance is also evaluated by accountants. They may sit down with clients to let them know where their company stands compared to prior years and to their competitors.
When small companies lack full-time accounting and finance staff, a professional accountant can fill in information gaps and assist with everything from basic bookkeeping to tax planning and financial management. Combined with today's accounting technology catering to small businesses, it's easier than ever for entrepreneurs to evaluate performance and profit.