Regardless of the size of a business, not taking it seriously is the worst thing you can do. A lot of people starting a home-base, small-scale, business are tempted to put its finances to the side. They are more focused on what they earn and do not pay much attention to the minor investments they make and expenses they have. Perceiving your business as a hobby is one of the worst mistakes you can make. Whether you should write a business plan and keep books, is not a matter of discussion. The question is who should do it for you.
A bookkeeper vs an accountant
If you are running a single-person startup from home, you can keep your own books. If you do not feel confident enough, or if your business starts growing, you should hire at least a part-time bookkeeper. Once the taxes are due, you should hire an accountant to assist you with it. No business can afford to do their taxes wrong, so if you are serious about making this your basic source of income you will afford this extra expense.
You need someone with the right experience
Most accountants probably possess theoretical knowledge about every type of business. If they do not, they can certainly get the right information and learn. However, as with everything else, you are better off finding the ones whose specialty is businesses such as yours. If not a specialty, then at least make sure that some of their clients are similar to you, or the accounting firm itself is. It is not only the matter of the size and the type of business you run, but it is also about the niche. Being familiar with a specific niche means that they know the rules and regulations which apply. They also know what items and tasks they can expect and they can even use other people’s experience to advise you.
Outside vs inside accountants
If I asked you this, you would probably tell me that small startups hire accounting firms and that mid-size and big companies have their own accountants and accounting departments. Outsourcing your accounting can help you with your taxes, different types of financial statements and assistance in resolving certain issues. Once you start hiring they can do your payroll as well. An inside accountant is so much more than this. Apart from using their basic accounting skills to do the same type of work an outside accountant would do for you, they also assist you in growing your business. They will take care of all the bookkeeping for you and handle the everyday transactions. They can help you issue invoices and quotes as well as chase payments and collect debts. They will help you with analysis and reporting and make forecasts. They understand the trends of your business.
A CPA vs a CMA
A certified public accountant can offer a lot to your startup and help you cover all the grounds. They are able to communicate and take care of the work done related to your suppliers, creditors, and shareholders, as well as banks and taxation office. A certified management accountant is the one that can give you more insight on where the company is heading. They possess financial acumen related to your business’s conduct. They know exactly how your campaigns affect your balance, as well as how current economy impacts your market.
Having to work and share confidential information with a person you know nothing about can be difficult. Since knowledge and trust are the secret ingredients here, you have to be ready to look for the right person (people). Speak to other business owners to see who does their accounts and whether they would recommend them. If you are looking to hire, check with your employees, or even friends to see if they can recommend a trustworthy person and you can have a look at their references. Do not be afraid or embarrassed to speak to anyone’ references as your business depends on it, and that is the price reason they exist. Each reference will tell you something good about the accountant, but your questions will reveal the truth. Pay attention to the impression an accountant leaves on you. Being able to maintain a good relationship and communicate well with them is essential.
An inside accountant probably has more to offer, however, an outside accounting firm may be more affordable for a small business. A lot of firms offer fixed rates to small startups. If this is you, you should not miss the opportunity.