Some people think small businesses don’t need an accountant for several reasons, but these assumptions are often misguided and can lead to financial challenges for the small business owner. Read on to explore a few myths and discover the truth around accounting for small businesses.
Myth #1: Small Business Accounting is Simple
Small business accounting is often complicated no matter how small or simple the business is. Accounting is its own language, filled with debits and credits, reconciliations, and double entry procedures. It’s more than just balancing the books, and even that can be challenging for most small business owners. Take payroll for example. You have a gross amount, a net amount, various withholdings and deductions, and payroll taxes to boot. Which go on the balance sheet and which go on the income statement? Do you record them when the payroll is entered, when the payments are made, or when the checks clear? Accounting is also time consuming, requiring every transaction to be recorded to tell the full and accurate financial story of your small business.
Myth #2: I Am Good at Math, So I Can Do My Own Accounting
As we mentioned above, accounting is its own language. Math is a part of it, but laws and regulations also play a major role. Take meals and entertainment for example. You’re good at math and you’re organized, so you know all the details from your most recent business meeting at the golf course and you’ve already recorded the transactions in your books. However, do you know the deductibility rules around meals and entertainment, when meals are 50% deductible and entertainment is 0% deductible? Did you follow the law changes when certain meals became 100% deductible? Did you miss the announcement when entertainment dropped from 50% to 0% deductible? All of this is to say accounting is more than math. Along with the rules and regulations, there are also accounting strategies you may be unaware of. You may know how to calculate if you can afford that new truck, but do you know how to account for the loan, principal, and interest on the balance sheet and income statement, or which depreciation method is best for you?
Myth #3: Accounting Services for Small Businesses are Too Expensive
For those that think accounting services are too expensive, are you aware of value billing? While some firms still only charge by the hour (leaving you in an uncomfortable position wondering if your small business can afford the ever-changing cost each month), value billing firms work to set your mind at ease with a fixed monthly price you can afford and budget for. In many cases, accounting services cost less than your other operating costs. The value is up to you. What is the value of an accounting service that can help you improve your business performance, grow revenue, or bring more to the bottom line? What is the value of utilizing previously unknown strategies to lower your taxes or avoid penalties? And what is the value of freeing up your time by outsourcing these responsibilities to a reputable accounting firm?
Working with Haworth & Company, Ltd.
At Haworth & Company, we have over 30 years of experience helping small businesses succeed in the Twin Cities and Rochester. Our monthly accounting program and value billing model delivers the information you need at a price you can afford from a team of staff accountants and business advisors that care about you and your small business. Give us a call today to schedule your free consultation and learn how we can help you.