|Rich Best has spent 28 years in the financial services industry, as an advisor, a managing partner, directors of training and marketing, and now as a consultant to the industry. Rich has written extensively on a broad range of personal finance topics and is published on several top financial sites. Recent books include The American Family Survival Bible and Annuity Facts Revealed: What You MUST Know Before You Invest.|
Time is Money: 5 Ways to Save on Your Accounting Bill
Most small businesses begin with rudimentary accounting procedures, usually a ledger, maybe a simple spreadsheet program from which they may progress to more advanced methods.
As the business grows and its accounting needs expand without adopting more advanced procedures, the amount of time and expense involved with keeping the books increases disproportionately.
In any business situation, time is money. However, for your small business, it is one of its most valuable resources. The sooner you can find ways to save on your accounting bill, the better your cash flow will be.
Here are five ways to save on your accounting bill:
Organize Your Files
The most time-consuming and potentially costly aspect of business accounting is keeping track of all the paperwork that flows in and out of the business on a daily basis.
Between sales invoices, purchase invoices, billing statements, bank statements, receipts, payroll records, customer orders, the paper piles up quickly. Without a system in place, down to the color-coding of manila folders, the time spent organizing, compiling, and reconciling quarterly financial statements or annual tax filing will be costly, especially if the mess is turned over to a CPA or an accounting firm.
These days most of your documents are or can be digitized so they can be stored in the cloud, using bookkeeping software. That allows for automatic categorization, easy retrieval, and linking to a monthly ledger.
As part of your newly organized system, you need to make sure that you keep all personal finances separate from your business finances. Separate checking accounts and credit cards for business will save you a substantial amount of time in your recordkeeping.
Invest in Bookkeeping Software
You can computerize most of your accounting procedures for less than a hundred dollars either through a software program or online.
Most programs, such as QuickBooks, allow you to continue using your own spreadsheet software to input your records and then import them.
Once this is done, these programs will then compile, categorize, and crunch all of the numbers according to your needs. They can even manage your payroll with attention to tax withholding and FICA issues. Some programs will upload data from your checking and credit card accounts, so manual inputting is no longer necessary.
There is a startup cost in terms of time; however, once up the learning curve, the time and expenses saved on accounting procedures are significant.
Most vendors and creditors allow for automatic monthly drafts of your bank account or credit card. Payments to your health insurance provider, your utilities, and, in some cases, your suppliers can be made automatically, and, again, your accounting software will be able to import the transactions and categorize them.
Hire or Outsource Your Bookkeeping
One of the commandments of small business management is never do yourself what you can pay someone to do for you. Because it will cost you less to have someone input, compile, reconcile and generate reports and payroll than if you were to do it yourself.
Find a bookkeeping firm that uses the same software or wait to buy the software until your bookkeeping firm recommends one. In some cases, they will assist you in setting up the system in a way that best meets your needs. Unless you’re generating hundreds of invoices each day, your bookkeeping needs can be managed on a part-time basis, and it is probably cheaper to outsource rather than hire.
Hire a CPA
Yes, it sometimes takes spending money to save money. You probably already use a CPA, but if you don’t, you should consider getting one, preferably one who is referred to you by a trusted friend or adviser.
CPAs, when utilized properly, can actually save you money, but you need to take the steps outlined here first. CPAs become expensive when they are asked to organize your records or go back and reconcile monthly statements. If their utilization is limited to what they do best, and that is review and file your taxes, they are not only affordable, but they are also invaluable.
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