Accounting signs you shouldn’t ignore
Small business owners wear many hats and are busy with little bandwidth for additional tasks added to their daily workload. Especially with small entities and start-ups, owners try to handle their bookkeeping functions themselves and end up at a loss for how to proceed when tax time is swiftly approaching.
No matter the industry, founders usually don’t start a business well-versed in accounting best practices and all the governmental regulations that must be followed.
Involving a specialized outsourcing firm can resolve these concerns. Here are five accounting issues not to ignore:
Your profits don’t reflect how busy you are. Bringing in new business and providing good service to existing clients takes time. If your daily tasks are increasing but your bottom line won’t budge, it’s time to find ways to increase your profit margins. Reporting analyzed and prepared just for your business can help you better recognize ways in which to make you more profitable through strategic planning and outsourcing functions to cut costs.
You’re behind on invoicing, and your clients are behind on paying. Receiving payment from your clients means getting invoices sent in a timely manner. You started your business to get paid to do what you do best, but being too busy to send out invoices means delays that negatively effect cash flow. When your collections are slow even more time needs to be devoted to correcting your accounting practices. On the flip side, maybe you have time to send your invoices but you lack the time it takes to collect payment. Whether clients need a simple reminder, or the situation is more involved, hiring an outsourced bookkeeper may be the best option to free your time to focus on the growth of your business.
Your accounts aren’t being reconciled consistently. To gauge how your business is performing, account reconciliations are crucial and help eliminate errors that may exist in your financial data on an ongoing basis. Without timely and accurate reconciliation, you are in the dark about available funds, which informs decisions like making large purchases or adding new staff. When monthly reconciliations are a burden or pushed to the side, it’s time to outsource.
You’re unsure of your legal obligations. As your business grows and you hire employees or contractors, a whole new level of financial management develops. As soon as new personnel is added, adherence to regulations becomes an issue. Without adequate knowledge of payroll taxes, worker’s compensation, and other responsibilities, managing these areas can be cumbersome. This is where having a dedicated team handling your risks takes the guesswork out of these requirements.
You’re unsure how to manage your taxes. Part of your CFO and accounting team’s job is to process business expenses incurred and categorize them properly. In the process of doing so, obvious deductible expenses are identified. This is something that should be done year-round, not only during tax season. Estimating your quarterly taxes is also a consideration. Accurately calculation your estimate taxes isn’t easy if your bookkeeping is out of date or you don’t have easily accessible statements on hand. An inaccurate estimate can result in fees that could have been avoided. And outsourced team that specializes in tax services and knows the intricacies of your accounting makes certain your estimated taxes are accurate and on time.
This isn’t an exhaustive list of accounting red flags, but even if one of these is a concern, it’s the right time to talk to the experts the evaluate your business needs for the future.