Tracking incomes and expenses, maintaining financial records, handling accounts, and performing other money-related tasks can be challenging for a business. Small businesses, in particular, need to pay special attention to these things to understand where they stand and what they could do to increase profits and grow. If a business owner needs help, they can contact an accounting firm. Many firms provide accounting services for small businesses in exchange for a fee.
Bookkeeping
The process of recording financial transactions, called bookkeeping, ensures a business knows how much money it is earning and spending. Bookkeeping is one of the most fundamental financial services a small business can outsource to an accounting firm. Experts at these firms can help record, categorize, and organize every financial transaction, making it easier for the business to assess its performance.
Bank reconciliation
Another important accounting service a small business requires is bank reconciliation. Here, an expert compares the firm’s financial records with its bank statements to ensure the balances match. The expert reviews expense reports, client payment receipts, customer invoices, and other transaction data to ensure they are reflected in the bank’s records. While businesses can perform a bank reconciliation on their own, the chances of making mistakes are high. A trained expert can help the organization carry out the task more precisely and quickly. Bank reconciliation is important as it helps identify discrepancies and errors by the business’s in-house accounting team.
Internal auditing
Every business, big or small, must follow certain rules and regulations. An internal audit, done by the organization itself, ensures it follows these rules and does everything right in the eyes of the law. It is an important process, as failing to comply with the regulations can lead to penalties and fines. Small businesses can consider hiring an expert to help them perform an internal audit. The auditor may perform different types of audits, such as financial, environmental, and operational audits. Contacting an expert is cheaper than hiring a full-time internal auditor, especially for a small business, as this service may be required only occasionally. Several accounting firms offer auditing services, so one will not have trouble finding help.
Accounts payable and receivable
Sometimes, a business may buy inventory on credit and promise to pay the supplier later. Such a translation is termed as accounts payable. Similarly, the firm may have customers or clients who owe it money, called accounts payable. Businesses need to track both types of transactions thoroughly. Making timely payments will help the organization strengthen its relationship with suppliers. On the other hand, following up with those who owe money can help streamline cash flow. An accounting service can help businesses track their accounts payable and receivable more efficiently.
Payroll
Payroll is one of the most tedious accounting tasks for businesses. Small businesses must be diligent with payroll to ensure employees are paid on time and taxes are properly applied. Most accounting firms assist small businesses with payroll to save time and ensure accuracy. While taking care of the payroll, accounting firms carefully classify the individuals being paid into contractors and salaried employees. Each employment category has its own benefits, tax brackets, and payment frequency that needs to be followed.
Financial reporting
Small businesses need to generate financial reports frequently to understand their performance. They also need to ensure their reports are accurate, as any discrepancy can cause them to make bad decisions. Small businesses can outsource this task to a financial firm. The firm will review income statements, balance sheets, cash flow reports, and financial records to create a reliable report. The report can be used to make positive changes in the business and ensure its financial standing is solid.
Segregated transactions
Mixing personal transactions with business transactions is one of the most common mistakes people make when running a small or self-funded business. Failing to maintain separate records of business expenses and personal finances can lead to problems while filing taxes. To simplify things, business owners can maintain separate checking accounts, savings accounts, and credit cards for both purposes. An accounting service can also help categorize transactions and paint a clearer picture of the organization’s cash flow.
Financial statements
Small businesses need to generate profit and loss statements to assess their performance. Generating these statements can be challenging as one needs to assess several reports. Business owners can consider outsourcing this task to an accounting service to make things easier and save time. The professionals working at the accounting firm can help create different types of financial statements, such as balance sheets, income statements, and cash flow statements while ensuring all the information presented is accurate. By reviewing these statements, small businesses can assess their financial position and take necessary measures to grow.