According to an October 2018 study published by the Small Business Accounting Report, small business owners already hold accountants in high regard. Most agreed with the statement that hiring an accountant was even more important than a lawyer, banker, or information technology specialist. Despite this, many small business owners don’t understand the range of services an accountant can provide for them beyond preparing their annual business tax return. We outline three other services accountants can provide to small businesses below.
Selecting the Most Appropriate Business Structure
When you first started your business, you may have worked alone and not given much thought to which business classification would be most advantageous from a tax and legal perspective. With 70 percent of small business owners choosing to operate as sole proprietors, this is a common choice. However, it isn’t necessarily the best one as your business grows. That is because sole proprietors don’t have personal legal protection for debts, lawsuits, and other financial losses of their business.
By hiring an accountant, you can learn the advantages, disadvantages, and qualifications of various business structures. Some possibilities in addition to sole proprietor include limited liability company, limited liability partnership, S corporation, or C corporation.
Create a More Effective Cash Flow Strategy
Maintaining consistent cash flow is one of the top challenges of all small business owners. Without positive cash flow, you can’t meet expenses, hire more employees, expand the business, purchase inventory and supplies, and much more. This could eventually cause your business to fail. It’s a fine balance between collecting revenue in a timely manner and keeping expenses as low as possible. Here are just a few ways an accountant can help you improve cash flow for your small business:
- Predict cash flow by studying previous periods of high and low balances in your company’s cash reserves.
- Organize your cash reserves to make financial statements easier for you to understand.
- Determine a spending plan that ensures your small business always has funds available in its bank account.
Establish a More Effective System for Accounts Receivable
At least half to two-thirds of small business owners report issues with slow-paying customers according to the results of several industry studies. Just under half indicate late payments with invoices due in 30 or 60 days while those who give customers a full 90 days to pay still receive late payments one-third of the time. Even though small business owners desperately need the money owed to them, they often don’t have the time or resources to chase down payments. This is when having an experienced accountant help them find a better method comes in handy.
One simple way to speed up collection efforts is to invest in a simple accounting software program. This allows you to set up an automated invoicing system along with overdue payment alerts. With programs such as FreshBooks and QuickBooks, you can view your dashboard and see what’s overdue with a quick glance. Your accountant can help you establish a system or provide additional ideas if this isn’t viable for you.
If you’re ready to enjoy the benefits that working with a professional accountant can bring to your business, please contact Palmetto Payroll today to request your initial consultation.