It’s probably a good idea for most business owners to focus on the core of their business, such as selling fishing lures or designing websites, and use experts to help them in financial matters. According to the IRS, more than 80% of small businesses use accountants to prepare their returns, something you may be acutely aware of during tax season. But tax return preparation isn’t the only reason to use an accountant.
Here are five areas to discuss with your accountant:
(1) Cash flow
Cash flow, which is the cycle of money in and out of your business, is the lifeblood of any company. If you fail to monitor cash flow carefully, you may run short and, in the worst case, be forced out of business. You can learn what cash flow is and how to manage it from the SBA. Unfortunately, many small business owners don’t understand the importance of cash flow or how to monitor it.
There are some online options, such as *MyBizHomepage.com (it’s free), that help you track your cash flow easily. However, it’s a good idea to work closely with your accountant to find sound ways to improve cash flow and address problems that you detect. Your accountant can:
- Review your budget and suggest items that can be trimmed and other ways to reduce overhead; the less you spend, the better it is for cash flow.
- Help you with collection policies so you’ll get your money from sales faster and easier.
- Review your pricing policies; you may be undercharging and missing an opportunity to boost your cash flow, and consequently, your profits.
(2) Theft protection
According to the *Annual Report to the Nation by the Association of Certified Fraud Examiners, the median loss by fraud in small businesses (fewer than 100 employees) is $200,000. The most-named reason for these losses is fraudulent billing schemes. The best way to detect this and other problems early or avoid them entirely is to have adequate internal controls in place, and the best way to do this is to work with an accountant.
As a privately-held business, you don’t need to have annual audited financial statements prepared by an accountant. You do need to have a professional review your numbers regularly as well as suggest ways to safeguard your financial information and your money as theft protection measures. Safeguards can include simple steps such as better password protection or controls over access to the company’s financial data; you may also want to use more sophisticated monitoring.
To continue reading about area 3-5 (Financing, Taxes, and Inventory), click the link here: https://www.sba.gov/blogs/5-things-talk-your-accountant-about
