The Importance of Accurate Bookkeeping
As a small business owner or sole proprietor, it can be tempting to skimp on typical back-office support such as human resources or bookkeeping. This is especially true if you are relatively new to working on your own or if you are trying to contain costs.
However, as your business grows and begins to scale, you will be in a better position to attract new clients and potential investors if you have a set of accurate financials that you can rely on.
Accurate financials aren’t just important for funding. They are also necessary for tax purposes. The amount that you pay to the IRS and your state government will be determined by the income that you earn from your business. If the records you keep are incorrect, you could potentially underpay or overpay in taxes.
Should the IRS decide to audit you, a set of incorrect financial records could lead to fines or penalties that could potentially run into the thousands of dollars.
While it’s understandable that you may not have the funding or the need for a full-time bookkeeper, there are other solutions available that can help you maintain your books while keeping your overhead low. One of those solutions is choosing an accounting services company.
What Are Accounting Services Companies?
An accounting services company typically works with small business owners on an outsourced basis. They can track all of your business revenues and expenses to make sure that you have a solid set of financial statements each month.
When you decide to hire such a company, you’ll gain access to experienced bookkeepers and accountants who know how to record transactions and can handle the invoicing and collections part of your business.
Working with an accounting services company is generally cheaper than hiring someone on a part-time or full-time basis since you won’t need to pay for employee benefits.
Many companies charge a flat rate for their services monthly; others charge by the hour. This may vary depending on the company you choose and how much work will need to be done.
Accounting service companies can also help ensure that you remain compliant with your taxes. Most offer tax advisory services (to help you minimize your company’s tax liabilities) as well as prepare your tax returns for you.
This can eliminate any potential problems with overpaying or underpaying your federal and state income tax. For business owners without an accounting background, this can help to reduce stress and ensure that your company is in good standing.
What Are the Benefits of Outsourcing Accounting Services?
There are several benefits to outsourcing your accounting services. A few include:
As a small business, it’s not always necessary to have a full back-office staff handling administrative activities. Outsourcing can eliminate the costs of hiring employees and retaining them. Keep in mind that employees can always leave, and if they choose to do so, they take their knowledge with them.
Outsourcing allows you to have access to an entire team of knowledgeable bookkeepers and accountants who will oversee your books.
Accounting service companies often have a variety of team members from all sorts of accounting backgrounds, including bookkeepers, CPAs, and tax experts. You’ll be able to talk to all of these individuals about your business without having to hire them on your own.
Since many outsourcing companies specialize in small business accounting, they’re often knowledgeable about specific tax deductions that are available to you and potential funding opportunities, should you need an investor.
Working with an outsourcing company can expose you to a variety of networking opportunities that could potentially benefit your business. They may be able to recommend a legal counsel or a benefits administration firm if you have employees.
You may also meet potential clients that can increase your revenue. For example, if you run a landscaping company, your outsourced accounting firm may be able to connect you with potential clients who require landscaping services.
Are You Looking for Outsourced Accounting Services?
The Tax Planning Pros offer both accounting and tax services designed for business owners and sole proprietors. To find out more about their services, schedule a free consultation today.