For small businesses, one major challenge is trying to run every aspect of the business with just one small team. This can become ever trickier when it comes to bookkeeping and finances, as many owners don’t have a sound understanding of key financial concepts and obligations.
That’s where hiring an accountant comes in. While it might seem like an unnecessary expense, accounting is especially important for small businesses, as it provides you with a strong understanding of cash flow, tax obligations, and financial reporting needed to keep your business afloat. By outsourcing an accountant, you’ll be able to track and record your finances effectively, as well as gain insight into how you can scale your business to ultimately turn more profit.
In this blog, we’ll talk about what accounting is needed for small businesses and how outsourcing an accounting can help your small business.
What is Business Accounting?
First things first, what is business accounting? Business accounting is a general term for the process of tracking, analysing, and reporting a company’s financial transactions. While the accounting responsibilities are similar for both large and small businesses, some legal requirements may change according to the amount of revenue your business earns, the number of staff, and so on.
In Australia, a small business is defined as a company which employs fewer than 20 people, and has an annual turnover of less than $10 million.
How Can Accounting Help a Small Business?
Accounting is an essential aspect of running any business. But having the help of a professional accountant can be particularly helpful for saving money and saving yourself some stress.
Did you know that nearly half of small businesses fail within the first five years? That’s not for lack of trying. It’s because small business owners struggle to manage their finances effectively enough to grow their business and make it through the economic challenges that almost every new business experiences.
By outsourcing an accountant from the get-go, small business owners are able to benefit from actionable advice on their exact financial situation. Particularly for small businesses that may be family-run or only operate with one or two staff, an accountant can save you significant amounts of time from having to learn about the ins and outs of bookkeeping, such as tracking and analysing expenses, tax accounting, and payroll.
Plus, an accountant can help small businesses by tailoring their services to your specific business structure. Whether you’re a solo entrepreneur or a seasoned small business owner, the right accountant acts as a strategic partner. They can do everything from streamlining your finances to maximising tax benefits, all the while giving you the financial clarity and support to make smarter decisions faster.
Tailored services depending on business needs:
When you outsource accounting, it doesn’t necessarily mean you have to work with them everyday. You can work alongside them with flexibility according to your specific needs. Some common services include:
- Basic Bookkeeping: This may be particularly helpful for startups or solo operators needing help with transaction tracking, invoicing, etc.
- Full-Service Accounting: Includes payroll, tax prep, monthly reporting, and financial advice.
- Hourly Accountant Support: Perfect for small businesses needing one-off help, such as for BAS lodgement, or advice for structuring your business.
- Annual Tax Returns: Some businesses may just need support with tax preparation.
What Accounting is Needed for Small Businesses?
There are many facets of accounting that businesses of all sizes need to understand. It can be a lot to break down in one blog, but here’s a simple overview of the different kinds of accounting needed for small businesses:
Bookkeeping & Expense Management
This is about tracking and categorising all business transactions, monitoring spending, and analysing expenses to stay on budget. This also helps businesses uncover saving opportunities. Check out this blog for more info on what does a bookkeeper do.
Invoicing & Payment Tracking
Sending invoices, following up on outstanding payments, and maintaining a consistent cash flow are all essential for keeping small businesses running smoothly.
Payroll Processing
For any business which employs staff, payroll is the process of accurately calculating and processing employee wages, managing tax deductions, and meeting obligations like superannuation or PAYG withholding.
Tax Accounting
From BAS and GST to annual tax returns, tax accounting ensures you stay compliant, avoid penalties, and maximise the deductions you’re eligible for. If you’re wondering what tax accounting can do for a business, large or small, read more about it here.
Financial Reporting
Financial reporting is the process of creating key financial statements including profit and loss, balance sheets, and cash flow reports. These provide valuable insight into how your business is performing financially, and ultimately help you make informed future decisions.
Inventory Accounting
If your business deals with physical products, you’ll need to track stock levels, calculate cost of goods sold, and manage inventory value correctly.
Budgeting and Forecasting
Budgeting and forecasting is a great way to plan for the future with clear financial goals, projections, and data-driven strategies to support growth and stability.
How Much Does Accounting Cost?
The cost of small business accountants can vary depending on the exact services you need, the scope of the work, and your accountants fees or hourly rates. For example, you may be charged an hourly rate for a one-off task such as a BAS lodgement. However if you opt for full service accounting on a monthly basis, which may include more time consuming tasks like payroll, tax prep, and financial reporting, you’ll likely pay a larger monthly sum.
When it comes to how accounting can help a small business, it’s important to note that outsourcing these services is significantly cheaper than hiring a full-time in-house accountant. And, with their knowledge and expertise, you’ll be able to make smarter financial decisions which save you time and money in the long-run. Small businesses can benefit from huge cost savings while still receiving personalised accounting services and advice.
Discover First-Hand How an Accountant Can Help Your Small Business
Ready to find accounting services that work for you? There’s no need to keep banging your head against the wall when it comes to bookkeeping. Spark Accountants offer an all-in-one services for small businesses so you can gain tax support, accounting, and personalised financial advisory all under one roof.
We won’t just look at how your business has performed in the past, we take a proactive approach and help your business plan for the future. Take the next step toward finding your spark today and give our team a call on (07) 2111 8147, or send us an email to get in touch.
