For small business owners, management accounting can be a tedious chore. Some find that it’s not as exciting as other areas of the business, such as finding new customers or marketing, especially if you don’t enjoy working with numbers.
What many entrepreneurs don’t realise is that investing time in accounting can help them unearth a wealth of information that they need to manage their business better.
Business accounting may not be the most exciting part of your business, but it’s not something you should take for granted.
Importance of Good Accounting
When you have a good accounting process in place, it will save you the hassle later on when you have to undergo an audit or when you have to find investors or apply for a loan.
If your books are not in order, you might run into problems with your tax bureau, and you might have to pay fines. If your records are incomplete, you might also miss out on being able to claim expenses or getting paid for what is owed to you. No business would benefit from any of these.
We’re not saying you have to do everything yourself – if you don’t have the capacity or enough knowledge to do it right, you can always save precious time by hiring someone to do it for you.
What we’re saying is your accounting has to make sense for you. Whether you have an outsourced bookkeeping and accounting service provider or an accountant on retainer, you have to have a way to see how your business is performing through accurate records.
This will not only save you money by helping you identify areas in your business that you can optimise, but it will also help you make better decisions around your finances.
Here are five things you can focus on to make accounting more meaningful for your business:
1. Find areas where you can cut down on spending
Having accurate, up-to-date books, your financial reports (generated by your accounting system or prepared by your accountant) can help you see where your money goes each month.
2. Identify where you’re not making a profit
When you keep your records current, you can monitor areas of the business that you can improve upon or optimise in order to maximise your income.
3. Detect fraud and theft
Accounting helps you find irregularities in your finances that could have occurred due to theft or fraud by employees, customers, or even suppliers.
4. Prepare for tax season
With the right person and process in place, you can simplify the work that you do around tax time when you prepare ahead.
5. Keep track of your cash flow
Having good financial reports can help you identify and address potential cash flow problems. It will also help you develop a sound financial strategy that will keep your cash flow from running dry.
Your accounting process is one of the key areas that you need to work on to help you grow your small business. When you invest time in understanding what your accountant has to tell you, you’ll find that making strategic decisions will be a lot easier.
We simplify outsourced accounting & bookkeeping
If you’re in the market for a professional accounting outsourcing partner, look no further than Amped HQ. We’re an agile team of young, vibrant accounting experts who have worked with many businesses like yours. Learn more about us.
Contact us to learn how we can help you make sense of your numbers today.