Owners of emerging businesses aren’t naïve. However, with so many demands on your time, staying focused on accounting needs may be difficult. For example, your first step in building an accounting system may be to locate a manila envelope or a suitable cardboard box to store receipts. Then, within a week or two, you’re going to need a system for recording the information on those receipts. Maybe you’ll do it yourself with handwritten ledgers or off-the-shelf software. Or perhaps you’ll hire a bookkeeper or an accountant to enter the data and organize it.
And depending on how close you are to year-end, you’ll realize that it makes sense to plan ahead for filing your first tax return, rather than dealing with it after the fact… And, while you’re at it, maybe an accountant could also help you plan other aspects of your business?
Alternatively, you could plan an accounting strategy right from the beginning: hiring a bookkeeper or accountant to organize your records, choosing software that works best for your business, and retaining an accountant to help plan your tax and business strategy.
Do you need a bookkeeper or an accountant? The answer depends on your familiarity with accounting principles and the amount of time you have available – apart from the other demands of getting your new business off the ground.
Over the past 20 years, accounting software has been a major boon to small business owners. Without any formal training, it’s now possible for business owners to create financial statements and reports similar to those used by the largest public companies. It’s a major time-saver and a powerful analytical tool.
The right accountant for your business will be someone who 1) understands your industry and has experience in it, 2) likes working with entrepreneurs, and 3) communicates at a level that makes you comfortable and increases your confidence.