The Role Of Accountants In A Small Business

Accountants play a key role in the financial aspects of a company and it is not exceptional even for small companies. Below are some of the ways through which accountants can help increase profits margin in a company.

1. Bookkeeping & Accounting Services

This refers to the art of keeping records of the financial activity of a company or business. This encourages transparency and also through this there is proper understanding how money is being spent, as well as transactions that are carried out. Accountants are trained in bookkeeping, hence are in a position to do proper work, as lack of professional services when it comes to bookkeeping can lead to several errors and eventually the collapse of the entire business. Small business needs a proper financial foundation in order for the business to thrive, and in the case of a loan need for startup are in a position to pay up in proper time.

In order for this to happen the business should be making more profits, than losses, and granted, business growth is often slow and takes times, and at this point is where the small profits or losses really bring about the make or break differences. Hence comes another need for a small business accountant, a skill that has to be done or taught by them, balancing of the books: this is usually fine after a fixed amount of time, either daily, weekly or sometimes monthly.

Check out this accounting firm based in Melbourne that provides these financial planning and accounting services. As SMSF accountants, they also help independent business owners maximize their superannuation funds.

This refers to closing accounts and balancing out the debit and credit side and making sure the totals are in agreement in order to determine where a profit or loss has been made. This is a very important aspect of any growing business, and if done consistently will ensure the success and growth of it.

2. Planning And Decision Making

Planning for the future is a necessity when it comes to business, and along the way, there are several tough decisions that have to be made, this is where an accountant comes in. They provide the required financial advice, accompanied by properly done research, and the fact that they are have been doing this for a while, their advice is essential.

By looking at the books they can best advise what next step a business should take, according to their individual books and not for a selfish or risky reason. Through them, financial decisions are made easier and proper planning is done. They also warn and help the small business owners distinguish between the needs of the business and their personal wants, which more than once has brought about the collapse of a business. It helps to have accountants who can also help their clients with mortgages and act as independent mortgage brokers as buying property can be one of the biggest financial decisions in many of their clients’ lives.

Investments opportunities are also available, but knowing which best fits your needs, and which amount of money one can invest, and following up is usually the issue. Unfortunately, some happen to be a con, and this discourages business owners from ever investing again.

The accounting firm, however, is the perfect financial advisor who has their best interests at heart and wants their growth the most. Therefore it is important to get the advice of a professional before investing in anything, no matter how good it may seem.

3. Payroll

With every new business, comes the need for employees, as one is not in a position to do everything. Granted small startup requires just a few employees but even they need to be paid. The accountant will be in a position to advise the adequate salary for the employees that will nor bring harm to the growing business, and from the growth, their salaries can increase with time.

Pros & Cons of Outsourcing Vs Hiring Local Businesses

The Internet has made communication so much easier and effective. Businesses are now able to harness that power to outsource even the smallest tasks of their business to other countries for cheaper rates because labour is cheaper in these countries than in Australia (source: Trading Economics)

Within the past decade, we have seen businesses outsourcing certain parts of their operations to companies both overseas, with the bulk of the outsourced work going to known outsourcing hubs like India and the Philippines.

So what are the pros and cons of outsourcing your business tasks overseas? There are certainly 2 sides to the equation. On the one hand, this can be an effective solution for business owners (especially independent contractors) who do not have a lot of funds and would like their work to be done on a budget. On the other hand, communication issues can be quite common when outsourcing to countries where English is not the spoken language. Additionally, you are also running the risk of quality, which is a bit of a hit or miss in these situations.

This video explains why outsourcing is something you should consider carefully and how it is not almost the best way to scale a business:

While outsourced telephone support for customers started the outsourcing industries in both countries, outsourcing is not limited to that aspect of business. And you will find that there are outsourcing companies that headhunt, do accounting work, and make programs for their clients, among other types of work.

Outsourcing has led to the cutting of costs and consequently, an increase in profits, as salaries for workers in the Philippines are only a fraction of what workers in the United States and other countries are paid.

But the low cost is often offset by the challenges set by outsourcing. And what are these challenges? One is communication. You might think that as English speakers the people in the Philippines and India would be on the same page with their counterparts in the United States, however, the truth is that there are times when frustration gets the better of clients because ideas are not as well communicated as they would have been if the one handling them didn’t work the night shift (to adjust to the time zone of the customers), and the customer service representative had the language skills of an English native speaker.

picture of a frustrated business owner

Communication skills aside, though, there is the matter networking. Working with an outsourcing company means that the relationship ends when the work is done. This is so unlike when you are working with a local company where face-to-face conversations can lead to an ongoing long-term business relationship that opens to new networking opportunities.

Hiring local companies and businesses will always fare better in the long run, especially for services where communication is important for the end delivery. Furthermore, when you hire a local business as a business owner yourself, you are expanding your network and building relationships with other businesses that may pay off in the future, by way of referrals and connections. Business owners are always looking for referral partnerships and a great way to build these is by doing business with others!