Being an entrepreneur doesn’t mean you have to know everything there is to know about business.
One of the most important aspects of running a business that most entrepreneurs don’t know much about is financial management.
Most entrepreneurs don’t know how to manage the money that they work so hard to bring in. This is why many small businesses work with third-party accountants.
An accountant can help you in many ways such as by analysing the financial performance of your business, making sure you’re paying the correct amount of tax and by informing you of new grants and funding opportunities.
What accounting services do you need?
When you start looking for an accountant, it is very important that you start by deciding what services you want from your accountant. This is an important step as you’re going to be paying for these services, so you better be sure that you need them. For instance:
You can divide different responsibilities amongst different people. However, the important thing at this stage is to understand what your requirements truly are.
The difference between Accountants & Bookkeepers
Once you have decided what services you need, you will have to decide whether you need the services of a bookkeeper or an accountant or maybe both.
Bookkeepers tend to charge less as they are normally focused on more mundane work such as posting debits and credits, producing invoices, completing payroll, and maintaining and balancing subsidiaries, general ledgers and historical accounts.
On the other hand, accounting is more of a high-level process that makes sense of previously compiled information (by the bookkeeper). Accounting is comprised of preparing financial statements, analyzing costs of operations, completing VAT returns, aiding the business owner in understanding the impact of financial decisions, and more.
Nowadays the difference between Bookkeepers and Accountants is more blurred than in the past. One reason is because modern accounting software has simplified certain accounting tasks, such as preparing company financial statements (which can now be automated). Another task that many bookkeepers carry out is the completion of tax returns.
As I specified before, when choosing a service-provider it is important to know exactly what you are paying for. If you are a small business owner and you are using user-friendly online accounting software and you are creating your own sales invoices, you’re entering most of your expenses, creating your own reports, then you know that your accounting expenses shouldn’t be too high.
On the other hand, if you require a bookkeeper to do all the mundane work for you, then you are going to have to pay a larger bill.
Finding the right accountant
Once you know what kind of financial professional you need, where do you start looking?
Referrals are always a good place to start. Ask your business contacts who they use and whether they would recommend the services of their accountant/bookkeeper.
It is generally recommended to shortlist at least three different service-providers and to interview each individually. The accountant and/or bookkeeper that you choose should have the necessary qualifications and also the experience of working with similar companies in your industry.
During the interview, it is important to ask about their charging structure and about what accounting software they use. Ideally you want an online solution that you can access at any time and from anywhere with an Internet connection. Considering we are living in an increasingly mobile world, you will want to be able to, for instance, check your sales using a tablet.
Finally, it’s important to choose an accountant that you feel comfortable with. The relationship with your accountant will be one of the most important relationships your company has and this is why your accountant needs to be able to speak your ‘language’.
Being able to communicate clearly with your accountant will help you get more value for what you are paying for, and it will help your business survive and prosper.
To learn more about how to manage your accounting successfully, download our ebook “Entrepreneur Accounting for Success”.