The importance of maintaining a healthy cash flow is something that every small business owner should understand. After all, cash flow determines the success or failure of a small business more than any other factor. Your financial numbers can make or break a business so you need to make certain that every detail of budgeting and record-keeping is done right. This is why selecting the right accountant is a critical business decision.
As a merchant, you may not have a strong understanding of accounting and how accountants can assist your business. First of all, there is bookkeeping to be done - recording financial information and adding that data into the necessary formats, such as statements and tax forms.
A good accountant does so much more than passively generate documents and record transactions. They actively analyze, interpret and convert that data into actionable business intelligence. This way you can create a roadmap of where you’ve been but also build a plan based on their findings of how you can take your business where you want it to go.
You can count on your accountant to be an excellent resource. Below are some ways they provide assistance:
- Business Consulting: Functioning as a trusted general business consultant, a professional accountant should be able to help your business grow by understanding it inside and out and be highly motivated to see you succeed. They can share advice on risk management, lease versus buy decisions, internal controls, inventory strategy, pricing, and possibly marketing.
- Personal Finance Advice: To be in a good financial position personally and professionally, a good small business accountant understands that your personal finances are integrally linked to your business finances. Though your accountant will manage each separately he or she can offer advice on both. An example would be offering advice on retirement and estate planning that is auxiliary to your small business activities, but equally important.
- Tax Planning: An accountant should be involved in business planning throughout the year, beyond simply preparing tax forms. With regular advisement they can enable the business to function with peak tax efficiency.
- Technological Knowledge: Powerful business software has dramatically improved small business capabilities. A good accountant must be very familiar with the great, affordable small business management software and be proficient in applying gathered business data into strategic intelligence.
- Networking: Your accountant should be a good source of referrals. They should know precisely your business strengths and needs. While the strength of an accountant is still what they know, a true professional is also judged on who they know and how they can leverage their connections to work in your favor.
Every small business is unique, but most small business owners have a lot in common. They have the drive and passion to make a great entrepreneurial idea come to fruition. Often they lack the basic financial skills they need to succeed. By choosing an accountant that master the five categories discussed, you will have more than someone who crunches the numbers — you will have a strong ally that can help your business grow.