Chances are that you’ll not perform cart-wheels if I mention the words virtual accountant or accounting!
Unless you enjoy working with numbers or you’re either a bookkeeper, accountant or virtual accountant, you’ll probably turn your nose up at the very sound of the word.
That’s okay. You’re not alone. A high percentage of small-business owners dread accounting.
But it’s a fundamental area of your business that you can’t overlook and requires some of your attention.
Let me offer a definition for accounting. It’s simply a process to record accounting data and then turning it into information and reports.
This is useful for two key reasons. Firstly, we need accounting to help us calculate and report our tax obligations to the tax authorities.
The second reason is often overlooked. When done correctly, accounting is an important strategic tool. Regular, quality, reports help entrepreneurs make key medium and longer-term strategic business decisions
Regardless of whether it’s done for tax or decision-making, both examples deserve your attention. It’s important to maintain complete and accurate accounting records on a regular basis.
Let’s discuss four tips you can adopt to keep up to date with your accounts.
# 1 Accounting Software
Choose one of the well-known accounting software packages to help you record your accounting transactions.
It doesn’t really matter which software you choose. If you need help choosing one, ask your accountant to help you. They probably have a preferred one that they recommend to their clients. At Business Advisory Services we recommend Xero as it’s easy to use and generates good reports.
# 2 Use a Virtual Accountant to Record and Track Everything
The next one is one that many small-business entrepreneurs frequently ignore. You must record and track all of your income and expenditure in your accounting software.
For many small business owners, this task is worse than visiting their dentist. If this also applies to you, I strongly recommend that you outsource this task to an accounting professional.
You probably don’t need anyone full-time or even employ anyone. Hire a virtual bookkeeper to record your transactions and hire a virtual accountant to help with more advanced accounting and reporting. You can slash your accounting fees by up to 50% with many virtual accounting service providers.
#3 Financial Reports
As an entrepreneur and small-business owner, you should be interested in two key financial reports.
Your profit and loss (P&L) report will highlight how much profit you’ve generated. Your balance sheet will illustrate if your assets (what you own) exceed your liabilities (what you owe).
I recommend either you or your virtual accountant prepare these reports monthly. This way you’ll be able to react much sooner to any negative trends. Or better still, exploit any positive trends.
#4 Tax Returns
Use your accounting software to help generate your tax returns. How frequently you must prepare and file your tax returns will be driven by your business’ size and the business sector you operate in.
Typically, bigger businesses and those in highly regulated business sectors need to file more frequently. If you’re unsure, ask your accountant to advise you.
Accounting or bookkeeping may seem a tedious chore for many small-business owners. But it needn’t be.
A good virtual accountant will be worth their weight in gold as they alleviate much of the pressure by processing and recording your transactions for you.
You’ll be left with more time to focus on the areas of your business that you enjoy most.