Two Ways to Do Accounting in Small Business

If you talk to a few people ‘in the know’, most will tell you something to the effect of ‘small business and self-employment is where it’s at’. It is true that these options are becoming more popular throughout the developed world, as regulations around starting up a new business are eased or streamlined, entire new industries spring up that require a smaller overhead threshold, and modern technology allows more people to work from home (or from any location, for that matter). Small and medium-sized business grows in popularity and in numbers, and so do the financial transactions between such enterprises. As the taxation systems and other government rules and regulations still struggle to catch up with this new reality, many entrepreneurs may find themselves spending more time than necessary or advisable on the accounting their small business requires instead of actually running the operations and meeting new potential clients. This is where the question of hiring professional accountants comes to the fore.

Two basic approaches available

When it comes to hiring accounting for small business, there are two basic ways to go about it – having an accountant or accountants internally or contracting this work out. In the past, as outsourcing and contracting out were frowned upon or ignored as options, most small businesses appeared to have no choice but to follow the larger corporations and setting up their own internal finances and accounting departments, which would often become significant expense lines in the budgets without truly being necessary on a permanent basis. While it is advisable that an internal resource be available to handle some of the day to day accounting of the small business, many experts will agree today that outsourcing accounting is no longer a regrettable or unwise decision to make. In fact, more and more small businesses are doing just that: putting their trust in small business accounting professionals, so that they can focus back on doing the things that they enjoy. Some of the areas that have the greatest growth in such services are service-based companies, non-profits, franchises, and real estate companies.

What to look for in a contracted accountant

If you decide to follow this newly emerged best practice, you would need to do ample research to ensure that the company you deal with is, in fact, proficient in accounting for small business. They should have a significant number of years and clients in their portfolio that would demonstrate their knowledge, skill set and dedication to helping small businesses streamline their accounting practices in the best way possible. Your external accounting services provider should be able to advise on industry standards in documentation, innovative approaches to cash collection management, the use of technology such as cloud computing for handling confidential and sensitive information. Researching the service provider would certainly be in the best interests of your company, as key parameters to a successful business, such as financial integrity and operational efficiency, are at stake. Once you have found an external accounting for small business service that meets these criteria, you should be on the right path for your business future.