Myth: Small Businesses Don’t Need Bookkeeping at First: Or as we like to call it, “I do not have to learn to swim, unless I am drowning”. Many small business owners are very busy trying to growth their businesses. They are spending so much time trying to keep everything going, developing products, customer service and making money that bookkeeping ends up being an afterthought – until there is a problem. As a small business owner you need to budget, forecast financials, know about trends in your business, and know about the latest, greatest tax advantages. This is true whether you are a “one man band”, or you have hundreds of employees working for you.
Every business needs an accountant watching their back. You cannot effectively run a business based on whether or not there is cash in your bank account at any given moment. If for nothing else, you need to know for tax purposes if you will be reporting a loss or income to the Internal Revenue Service? And if you are reporting a loss, you need to report as much of a loss as you legally can to reduce your tax burden – otherwise you are just hurting yourself and your business. Because of this, once you hire your accountant he or she will be follow your financials the entire year so at tax time there are no nasty surprises.
Myth: An Accountant is Very Expensive: This really depends upon who you hire and what you need them to do for you. Much in the same way as if you hired a big expensive law firm, if you use an large, expensive accounting firm then you are going to pay large, big money dollars to them. But it does not have to be that way. You need to find the right firm or individual for you.
The first step is to ask other business owners in your area who they use, and if they would recommend them to you. Once you have developed a short list of candidates, then call each one and set up a brief meeting – just so you can get a feel for the person and if you believe you could work together. Make sure at this time to ask for references, qualifications, services, etc. Don’t be afraid at the end to bring up the subject of their fee structure. Once you have completed your round of meetings, compare the information, and make sure the fee structures match the industry standards in your area. Once you have done this legwork you should be able to narrow down your list to the one person you feel with give you the attention and services you are going to need, for a price you believe is fair.
Myth: Paying Business Expenses from Your Pocket is Fine: WRONG. Never fall into this trap. It is all too easy to quickly pick up something you need for your business, pay for it out of your personal funds, and then either forget about it or lose the receipt. If possible make sure to always pay for those little expenses out of your petty cash fund, and treat them as if they were larger, more important expenditures. Remember to always get the receipt and record it, or file it so that you can tally it up against your petty cash balance.