Keeping accurate business records is imperative for any business. Especially, if you own a small business you have to be able to know at any time how your business is doing in order to improve areas that need possible improvement and maintain profitable the areas that do really well.
Accounting to any business may also be costly if you don’t make the right decision. And the right decision is almost always related to affordability. Do you afford to pay an accountant to keep your business records up to date? This is perhaps the best choice for you because you will always file your taxes on time and you eliminate the possibility of penalty and interest rate charges by the IRS. Besides, by letting the accountant do the job, you have the time to focus on other aspects of your business.
On the other hand, if you cannot afford an accountant, you would need to keep your accounting records using a computerized accounting package. It easy, straightforward and you can save both time and money into learning it and using it, while ensuring accurate business records.
a) Hiring an accountant
Qualified accountants are generally expensive to hire. If your business is small with few transactions and you are not making big profits, it doesn’t make sense to hire a full-time accountant. After a while, the accountant’s salary will be 2-times your business’ profits. Alternatively, you can hire a part-time bookkeeper or a freelancer to keep your books. Another option is to outsource your bookkeeping to a professional accounting firm. These options will guarantee complete financial statements at the end of each fiscal year and timely filing of your tax return to the IRS.
b) Using an accounting software
Nowadays, many small business owners do their own accounting due to the existence of computerized accounting packages. If you consider setting up an accounting system in your business to get accurate reports on your business performance, you need to consider the cost of initial setup and the training that will be necessary. The key in taking full advantage of the software’s potential is to input correct information. Besides, most accounting packages come with telephone and email support to anticipate any unexpected problems. Also, it is to your best interest to have back-up support for a monthly or annual fee in order to get instant help for any inquiries you might have.
Depending on the size of your business and the type of reports you need to issue at the end of each fiscal period, you have to choose the right accounting system. If your business is really small, you may require a simple book-keeping accounting package, which allows you to enter sales, bank transactions, expenses and purchases that you make for your business. You may download such simple accounting packages from the Internet, but make sure they are accredited by the American Institute of Professional Bookkeepers (AIPB).
A more detailed accounting system will integrate stock control, credit control and payroll features or even standardized business stationery that would be compatible with a particular type of printer. Some of the most broadly used accounting packages are Intuit QuickBooks, AccountEdge, MYOB, and PeachTree, which all range from the basic package to a more detailed accounting system depending on your business requirements.
No matter what your final decision will be, it should be based on real facts. If you decide to keep your book records on your own, make sure that you regularly input information in your Excel spreadsheet of your income and expenditure. Also, make sure you keep receipts of all business expenses incurred to use them at the end of the financial period. Good record keeping is vital in the event of any IRS checks or audits. If you decide to computerize your accounting system, you will definitely minimize human error and you will save time and money. But, make sure that the accounting package you buy is 1) the one that matches your business needs, and 2) accredited. Do your research before buying an accounting package that doesn’t meet your business requirements.
Finally, before deciding on the options discussed above, familiarize yourself with the rules of small businesses and the legal repercussions on accounting requirements as the definition of small business varies significantly in different locations and countries.
Christina Pomoni has acquired her MBA Finance from the American College of Greece. Her advanced familiarity with financial statement analysis, capital budgeting and market research has been acquired through her professional career at high-esteemed organizations. Besides, having lived at Chicago, IL, Boca Raton, FL and Paris, France has helped her, not only to be a successful professional, but mostly to see life under a more creative and innovative perspective.
Since 2005, Christina provides high quality writing services to Helium.com where she is also appointed as a Channel Steward of Economic Values (http://www.helium.com/users/edit_show/279681). Besides, she contributes her knowledge and expertise to several websites and research companies. Her areas of specialization are Business, Finance & Investment, Society, Politics & Culture. She also has a very good knowledge of Entertainment, Health & Fitness and Computers & Technology.
Christina recently launched her own writing company (http://analysiswriting.com).