Steps to Success
Accounting is an essential part of operating a profitable business and the importance of keeping complete, accurate records cannot be overstated. Even if your business operation is very simple -- one product or service, no employees and a short list of expenses, for example -- you should still set up a bookkeeping system to maintain accurate records for tax purposes and so you can monitor the performance of your business compared to your goals.
But accounting is more than just bookkeeping. Monitoring your sales figures not only provides you with the raw numbers but helps you spot trends and understand customer behavior. Setting up a detailed budget helps you identify inefficiencies, hidden costs, unnecessary expenses and other factors that affect your bottom line. And having a clear picture of your financial position is important when it comes to making decisions about financing, expansion, or other strategic steps. Payroll is also an important part of the accounting function if you have employees. Finally, recordkeeping for the preparation of tax returns and related documents varies to some extent based on your business structure but is a key component of accounting in all cases.
The decision to handle accounting on your own versus hiring a bookkeeper or accountant is an important one that should be considered carefully. There will certainly be differences in cost and expertise but you should also consider how much additional time you will spend on accounting tasks that could be invested in growing your business. If you are not in a financial position to get some assistance with the accounting function at first you should revisit this issue from time to time. Consult with your SBDC advisor, a fellow small business owner or a local accountant to discuss the best solution for your business. (See the sidebar for a Quickbooks discount for SBDC clients.) If your business is located in Champaign, financial assistance is available for accounting services through the Small Business Incentive Program.
The helpful resources below include a video from the SBA Learning Center that provides an overview of accounting and introduces you to the cash flow statement, income statement and balance sheet, and an important article on the importance of accounting for small businesses from accounting.com