Being a business owner or starting your own business is going to be the most exciting yet challenging thing you will ever do. Try and learn from the mistakes of others, instead of making your own and there really is no limit to how far you can go. I remember when setting up csb group in Malta, many years ago, it was even harder because technology was not there. We did not have any accounting software, not even a calculator!
However one area of your business that you don’t want to make mistakes is when it comes to accounting. Mistakes can deeply affect your business and the consequences, such as being accused of tax evasion, can mean criminal charges. For a business that is fairly new and still trying to grow, accounting mistakes can lead to closures. If you don’t have enough money to adequately meet your tax obligations you will close.
Who Needs an Accountant
Your business needs an accountant right from the very start. There are plenty of business owners who mistakenly believe they don’t need the services of an accountant because their business is small or they only take cash. This is a mistake, and it can be an expensive one. It is critical for every business no matter the size or scope to start accounting from the beginning. Keeping receipts and invoices isn’t enough anymore. You can setup a simple to use system, but you need to record every transaction and the ability to produce reports at will. Getting your accountant to get you started will make your life easier in the long run.
When You Do Your Accounting
Right from the beginning after you register your business you should open a separate bank account for it. Sole proprietors will often just use their checking account for their business needs. This makes it near impossible to reconcile business accounts and separate your work expenses from your personal expenses. Reconciliation means you have accounted for all of your transactions and to verify that you have the right amount of money in your account. Here is a video explaining reconciliation for you.
Regular Accounting Procedures
If you reconcile your accounts and books regularly, weekly or monthly will help you avoid errors. That way if you run into a situation where the numbers don’t add up, you can correct the mistake quickly and easily. If you only update or reconcile your accounts quarterly or annually you will have a heck of a time trying to find and fix your mistake. The last thing you want to be doing at tax time is scrambling around at the deadline looking for receipts.
It is a misconception that an accountant can do both. If you want someone to manage your funds and wealth like your cash in the bank, stocks and shares you must hire a fund administrator or financial planning officer. They have more expertise on whats going on in the market and should be able to give you a better return on your investment. CBS Group does a great job doing just that.
If you do your accounts diligently and you produce monthly cash flow statements this will benefit you when tax time rolls around. It will make your life and your accountant’s life much easier when you have all the documentation in place. You can also keep a hand on your expenses, and see where you are when it comes to profits and losses. You will be able to see trends, like seasonal rushes, when profits decrease which you may not have noticed.
Working with an accounting firm will help you find any tax credits you’re entitled to, many small business owners are either confused about what they can claim. There are tax deductions you can use such as travel, home office expenses and in some cases childcare. But talk with your accountant and do your research, you need to pay your fair share of taxes but you do not need to overpay.
Working with a Local Accountant
As a small business owner you have two choices when it comes to doing your accounting. The first being you can leave most of the day to day bookkeeping in house and turn to your local accounting firm for tax submissions and document preparation for you bank. You can get some online accounting software and easily communicate with your accountant without either of you ever having to leave the office. Online accounting software is relatively cheap and easy to use, but the reports are only as good as the information you put into them. Errors can still go on unnoticed and cause you problems down the road.
The second option, if you are not comfortable looking after your accounts by yourself, then your accountant can do that for you full time. Bear in mind there will be additional costs to this but you can rest assured that your accounts will be taken care of properly.
No matter the size or scope of your business, every business should work with a business accountant right from the beginning. It will give the accountant time to have your books and processes set up long before tax season rolls around. You need to work with an accountant who understands your business goals and specializes in small business bookkeeping.
If you live in a large city there will be no shortage of accountants who are willing and able to work with you. You will find over the course of your business that your accountant will be one of your best business assets.