By Ben Kinsey
|Image courtesy of Pixabay|
The first job or any business owner is to get paid. The second is to make sure that he or she is getting paid enough to turn a profit. Last but not least, if you want your business to grow, you need to make sure you aren’t wearing so many hats that you wind up running yourself into the ground. When it comes to charting, planning and optimizing the metrics of a growing business, two of the most important profit builders are the company bookkeeper and accountant. While neither of these individuals are responsible for driving profits, they are both key when it comes to deriving business profit. That being said, their jobs are quite different. To give you a leg up on what it is that they do, I thought I’d take the time to give you my short list that charts their responsibilities.
1. Bookkeepers are all about collecting, noting and organizing. When it comes to charting financial transactions as well as organizing and categorizing financial matters, nothing beats a bookkeeper. Keeping the company books has been a longstanding bookkeeping tradition that has lasted for hundreds of years. The difference in the 21st Century is the ‘books’ today are digitized, whether they are kept on a computer or online.
|Image courtesy flickr|
3. How are we doing, coach? Without reports, how do you know if the business is profitable? Monthly, quarterly and yearly reports are a lot like the logbook of a ship. They let the captain know if the vessel is on course or on the rocks. A good bookkeeper is adept at creating and explaining financial reports that lets the business owner know how the business is doing as time goes on.
4. How is your time best spent? Many small business owners try to do the bookkeeping themselves in order to save money. While this might work in the early stages of a business, once it has evolved past the startup phase, the owner needs to ask if this is the best use of their time. Since time is money, there comes a point where the added expense of hiring a bookkeeper is far less than having a business owner spend hours performing bookkeeping tasks.
5. From good to great - While anyone can be trained in bookkeeping, there are differences between good bookkeepers and great bookkeepers. A good bookkeeper will learn the processes that are vital to running a business. A great one will ask questions that will help them help you streamline your business to make it more profitable.
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6. Accountants are not bean counters – While a bookkeeper helps you count the beans, an accountant helps you analyze how they got there and how to get more. These analyses include everything from your company’s cash-flow and cost projections, to budgets, inventory and payroll. This helps keep busy owners apprised of business trends that can mean the difference between success or failure.
7. Up or out? - Being in business is like being in the army. It’s either up or out. Accountants are adept at producing Profit & Loss Statements, Balance Sheets, Cash-flow Statements and other metrics that not only show where a business is heading, but they can prove instrumental when it comes time to seek a business loan or woo investors.
8. What kind of corporation is right for you? – This is a kind of trick question, since the correct answer can change over time. While an S-Corp or an LLC could be just the ticket for starting a business, there could come a time when a C-Corp makes more sense. Your accountant will be instrumental in not only telling you when it is time to change your corporate structure, he or she will also be vital in helping you make the transition without disrupting your business.
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9. The Taxman – One of the most important reasons to work with a seasoned accountant is to find and exploit every legitimate tax shelter possible. While any competent accountant can help you prepare your business tax filings, a great one will tell you how to shelter your income, how to maximize your compensation while minimizing your tax burden and even when it’s time to buy an office instead of continuing to pay rent. A great accountant will also help you stay within the guidelines established by the IRS whenever you use independent contractors.
10. Which accountant is best for you? - When it comes finding the right accountant, it all comes down to asking the right questions. Just like most doctors, many accountants specialize. That means that most accountants are more comfortable working with one or two business sectors as opposed to others. Before you sign up with an accountant, it’s a good idea to find out how much experience the firm has with businesses like yours. Since finding the right accountant could be one of the most important business decisions you make, take the time to check out their credentials, clients and reputation before you trust your financial future to anyone.
Ben Kinsey, CPA of Small Business Group works with owners of closely held corporations in the Northeast Florida region. If you work in the North Florida area we offer a FREE initial Consultation at our office, please contact Small Business Group if you would like to know more about strategies for your business.