Why are business owners around the world so interested in cloud accounting? The fact that 77% of businesses worldwide say that cloud technology gives them a competitive advantage must have something to do with that.  The unfortunate reality, however, is that most small and medium businesses within Trinidad and Tobago and the wider Caribbean region are yet to implement cloud accounting technology and reap its benefits.

If you’re still trying to wrap your head around the concept of cloud accounting, we understand entirely. That’s why we took the trouble to comprehensively explain what cloud accounting is and how it works.

However, if you’re still not entirely sold on the idea of implementing a cloud accounting solution for your small business, you’re setting yourself up for a big loss. Here are 8 reasons why cloud accounting makes total sense for your small business.

#1: 24/7 Remote Access

The first real benefit you will quickly derive from cloud accounting is the virtually universal access you will immediately gain to your data and crucial accounting resources.

Since cloud accounting enables you to store all of your data on external servers, you can recall and work on them no matter where you are. And there will be no need for downloading either. All you’ll need to do is log in to your platform and you can have everything you need at your fingertips, anywhere and across all devices.

So, rather than be tied to a physical location or a few dozen terminals in your office, you and your employees can access crucial data, on-the-go. This is a huge advantage for work at home arrangements with employees. 

#2: Real Time Reporting

If you thought on-the-go data access was great, this one’s even better. Cloud accounting solutions such as Xero Accounting (which is our #1 choice here at FirstLink) give you a clear view of your financial position and performance, in real time.

Wondering how that works? Here’s how. With the integrative capacity of cloud-based applications such as Xero, you can set up third-party integrations to complementary software applications such as Point of Sale and inventory management software as well as crucial data sources that serve your business financial data.

As a result, when developments occur, you don’t have to call up Bob at the office to set them up in a spreadsheet and share with the team. Instead, updates are instantaneous and can be set to take place at whatever intervals you desire. This is one of the reasons why Verizon found that cloud technology gives 77% of businesses a competitive edge.

#3: Lower Capital Investment

One of the biggest concerns that business owners have about cloud-based accounting is its subscription cost model. Fully 20% of organizations raise this at some point in time, wondering if it makes sense to shell out $40 monthly on accounting solutions in the cloud.

But when you consider that the comparison between traditional accounting and cloud accounting is based solely on access costs, you’ll see that cloud-based solutions actually cost less in the long run.

Apart from access fees, traditional solutions often require a lot of value-added expenses. These include an investment in IT hardware and maintenance as well as server solutions to house both application software and the related data. You will need the help of an IT expert to help maintain both the server and the office network.

This translates to much more than $40 a month in the long run. But with cloud-based accounting solutions, you outsource all those functions and costs. You only pay for the exact capabilities that make sense for your business and not a dollar more.

#4: Enhanced Security

It’s also surprising that many businesses hesitate over cloud accounting due to security concerns. After all, since your sensitive data is being sent over the internet (which is notoriously prone to hackers and hijackers), as well as being housed off-premises, what’s to stop a security breach?

Well, plenty, actually. Apart from providing access to enable you to utilize their cloud solutions, the second thing that most vendors spend time on is refining strategies to keep your information safe. This is why most employ military-grade security and encryption measures to keep your data from being compromised.

In this way, it’s no overstatement when we say cloud-based solutions offer far more in the way of security than your business can provide. This is why, according to RapidScale, 94% of businesses witnessed an improvement in security after switching to the cloud.

#5: Greater Collaboration

One of the biggest problems that employers and their teams face is the annoying inability to collaborate on-the-go. Most often, with traditional systems, teams have to wait for a face-to-face at the office or employ inconvenient channels to share crucial data, and even this is on a limited basis.

But cloud technology makes collaboration a ridiculously simple process. With technology, all your team members can view and access information immediately after it becomes available.

Many include social spaces where you and your employees can connect, analyze and deliberate on information as it comes in, no matter where you are in the world. So you can even do much more with less, saving time on resources such as office space and making your business leaner and more agile.

#6: Go Paperless

Even if you’re not worried about the effects of paper use on the earth’s environment, it should bother you that you have to print crucial data in order to share it or jump through hoops to share electronically.

Through the collaborative capabilities in cloud-based accounting software, all the information you need to share can be at your fingertips and share-ready in seconds. Your business will end up saving money and resources because you no longer use as much paper in your operations.

And as a nice cherry on top, you and your business get to do your part towards saving the earth and its environment.

#7: Interoperability

With cloud accounting, you gain better control of crucial financial processes in your business. Every step of the process can be easily seen, extracted and analyzed in the same format and from anywhere, even in real-time.

This helps eliminate the possibility of omissions or errors as it drastically cuts down on the possibility of re-keying data. This also saves your business time and lets you and your employees spend your time doing more productive things.

It will also help you quickly meet business demands, as 65% of businesses agree, since your accounting and IT solutions will only take up a fraction of your time and resources. Good deal eh?

#8: Achieve better insights

It only makes sense that we end with the biggest long-term benefit your business will gain from cloud accounting. If knowledge is power, which it undoubtedly is, cloud-based accounting puts you in the league of Champions with the insights it delivers.

This is because it allows you to integrate more sources of information, access them quicker and from anywhere, and do far more than you could have thought possible with that information.

It gives you a bird’s eye view of crucial information about your finances and helps you predict or react with optimal speed and accuracy. The ultimate value of adopting a cloud accounting solution is the foundation it builds to provide real time information which can be used to make data driven business decisions.

Conclusion

These reasons and more are the impetus driving the increasing acceptability and praise for cloud-based accounting systems. Now that you know what your business stands to gain, you have a bit more insight into why you should be seriously considering an upgrade.

If you would like to discuss the specific benefits that cloud-based accounting will have for your business or if you’d like to know how we can help you implement a solution for your business, schedule a free consultation today. We’ll be delighted to help.

Well, you don’t need to imagine much longer, because software that can do exactly this and more is already available. With cloud accounting, businesses around the world, and in Trinidad and Tobago, are now able to simplify, automate and de-stress their accounting processes.

If you have heard about cloud accounting at one time or the other but are still having difficulty wrapping your head around what it does, much less the concept of an electronic “cloud”, this article is for you.

We will explain exactly what cloud accounting does, how it works and how it stacks up against the traditional accounting software you know. Cloud accounting is already changing the way businesses operate for the better. Your business deserves a chance at this too. Here’s what you should know.

What is cloud accounting?

To really get your head around the concept of cloud accounting, it makes sense to start from what we mean by the “cloud”.

The cloud gets its name from what is called cloud computing. It simply means the practice of storing and accessing applications and programs over the internet instead of your computer’s hard drive. Essentially, it outsources things like computer space and access to certain programs, files, or documents to a remote server, instead of hosting them locally on your hard drive.

The use of the word “cloud” itself came from an industry quirk that viewed the internet and its vast network of servers as a cloud. But in reality, your information and computer programs will be hosted remotely (in a physical location). This saves you the concern of always needing more memory or space on your computer and lets your computer function solely as a gateway.

Flowing from this, cloud accounting refers to accounting software that you access and utilize from a remote server rather than from your computer. It is essentially internet-based accounting.

Cloud accounting versus traditional accounting

Accounting is done by most businesses in Trinidad and Tobago by means of locally hosted software such as Sage 50 or QuickBooks Desktop. But this software will often have to be updated and if you have to operate them on more than one computer, you must do this across a network system. It gets more technical when this network consists of different physical locations requiring what is called a VPN to bring them all together.

Traditional accounting software create a lot of manual and time-consuming processes. They tend to limit what you can really do with the data on your hands. For instance, it will be more difficult to get broad insights and cross-reference data across several sources. For example, integrating your website sales with inventory management or point of sales with your accounting software.

Perhaps most importantly, it is much harder to automate tasks on locally hosted software. This means that you have to intervene physically more often than not, taking valuable time you could have spent elsewhere.

And you’ll be losing all the extra advantage of deeper insights that will seem almost like a whisper from God telling you exactly what steps to take in your business.

Accessing all your information from wherever you are in the world and on any device will be much easier. Essentially, with cloud accounting, you will be able to do more with less, freeing up more time to spend of income generating tasks and creating  better chances at growth.

How does cloud accounting work?

The most important cornerstone to cloud accounting is the Software as a Service (SaaS) functionality that certain vendors provide. SaaS simply means that cloud accounting software vendors such as Xero, sell you access to their cutting edge software as a service. So, instead of paying a one-time fee to buy this software, you pay periodically to access the software on the remote server usually on a monthly or annual basis.

When you subscribe to one of these services, you will have your own exclusive interface/portal through which you can conduct all your accounting. The software will work faster, smoother and will require no updates from your end since it is hosted remotely.

All you have to do is enter your data, which will be sent over the internet, and choose how you want to organize it. SaaS vendors usually provide data backup services as well. This way you know that your data is safe and accessible from wherever you are.

Most vendors also provide integrations with third party applications such as point of sale, inventory management, ecommerce, payment processing, and customer relationship management (CRM) software. This can provide one of the biggest advantages to your business. Essentially, you’ll be able to aggregate several data sources in one centralized location so you can more quickly determine the state of your business, and make decisions faster.

Is cloud accounting safe?

Since data is sent over the internet and hosted remotely, there may be concerns over whether your data is safe. But there are often various rigorous measures put in place to prevent your data from being compromised.

Most vendors use multi-factor authentication, encryption and several other measures to ensure the integrity of sensitive data. In fact, these measures far outstrip anything you can provide on your own while your accounting software is hosted on your local drives.

Nevertheless, it is important that businesses take necessary steps to protect their sensitive data from unauthorized access and use. We’ve compiled several tips for protecting your cloud data as a business owner. 

Does your business need cloud accounting software?

Cloud accounting has disrupted and transformed many small businesses by enabling them to operate more efficiently, cutting costs and reducing time spent on repetitive tasks. This is why, according to research from Intuit, 78% of businesses will rely on cloud accounting in 2020.

Although you may feel your locally hosted Sage 50 or QuickBooks Desktop accounting software is “just fine” as it’s doing the job for you, it is important to realize that the world of accounting is inevitably changing. More businesses are adopting leaner and faster technologies to maintain a competitive edge and stay ahead of the curve. This is even more important now than ever before in a world where copycat businesses and competitors are rising rapidly. Your business needs a chance to differentiator itself, and cloud accounting allows this from the automation of systems and processes perspective.

The question you must now ask is: can your business afford to get left behind? I am always weary to make blanket statements that recommend one option over the other without understanding context. Whether cloud accounting is right for your business will depend on several factors including its size, the nature of business, its existing systems, controls and culture. But you cannot make the decision based solely on a reluctance to change.

Conclusion

In conclusion, cloud accounting is a great opportunity for small businesses to reduce the costs and hassle of maintaining a physical, on-premise IT infrastructure. While there are disadvantages to adopting the cloud, the benefits far outweigh it. Small businesses are now recognizing the benefits of cloud accounting and how it can impact on achieving real time financial reporting, improving cash flow and driving data-driven decision making.

We recommend that all small businesses consider the adoption and integration of cloud accounting technology into their day to day financial operations to automate and streamline their business processes.  Financial recording and reporting are tedious tasks which can be easily automated with the right cloud accounting software.

If you have any questions about how to effectively adopt cloud accounting for your business or how to integrate it with complementary third-party software applications, schedule your free consultation today. We will be happy to answer any questions you have and support you for a painless and stress-free transition.

Imagine running a business without keeping tabs on what money flows into and out of the enterprise. Financial Statements represent a formal record of the financial activities of a person, business, or entity. These are written records of the financial situation of a business. A Financial statement is what you get from documenting masses of data obtained primarily from the accounting system of a business.

Being one of the essential components of business information, Financial Statements showcase the financial strength, performance and liquidity of a company. They are also the primary means of communicating financial information to external (outside) parties.

Components of financial statements

There are five main components of financial statements. Together, they operate to give an accurate picture of the overall health of your business. These components are as follows:

• Income statements
• Balance sheets
• Cash flow statements
• Statements of shareholders’ equity; and
• Notes to financial statements

To help you better understand what financial statements are and what they do, we will explain each of these components.

Income Statement

The income statement is the most commonly used instrument of a financial statement. Also known as the Profit and Loss Statement, it is a report that shows the financial results of a person or business over a specific period of time whether monthly, quarterly or annually.

The Income Statement highlights the financial performance of an entity in terms of net profit or loss over a period of time. It also comprises two elements:

• Income: This is the totality of revenue. It includes earnings over a period of time. These includes sales, revenue, rentals, royalties, dividend income etc.

• Expense: These are the costs incurred by a business. These often include selling, general and administrative expenses, wages and salaries, depreciation, rental charges, etc.  

Eventually, it is by deducting expenses from income that the overall net profit or loss is calculated and determined.

Balance Sheet

The Balance Sheet, also known as the Statement of Financial Position, indicates the financial position of an entity at a given date. It is typically of essence to lenders, investors, and creditors to estimate the liquidity of a business. This is because the Balance Sheet is a report that summarizes the assets, liabilities, and equity of an entity at any particular period. It is often stated at the end of the reporting period.

The specific type of business operated will determine what items should be included in the balance sheet. These items are often presented in their order of liquidity. Thus, the assets most easily convertible into cash are listed first. Likewise, the liabilities due for settlement soonest are also listed first. Typical line items included in the balance sheet (by general category) include:

• Assets: The list of ‘things’ owned by a person or entity. These include cash, inventory, marketable securities, prepaid expenses, accounts receivable, and fixed assets.
• Liabilities: The list of ‘things’ that is owed. Usually, these covers accounts payable, accrued liabilities, customer prepayments, taxes payable, and short-term and long-term debts.
• Equity: This basically covers the interests of the owners. The Equity in a business represents the amount of capital that remains after assets are used to settle outstanding liabilities. In essence, Equity represents the difference between the assets and liabilities.

For a balance sheet to be considered ‘balanced’, the total amount of assets listed must equal the total liabilities and equity listed on the balance sheet. Thus: Assets = Liabilities + Equity.

Statement of Cash Flow

As the name implies, the statement of cash flow is the financial statement that describes the flow of cash into and out of your business. The Cash Flow Statement showcases the movement in cash and bank balances over a period of time. Cash flows in a financial statement are typically classified under the following headings:

• Operating Activities: These represent the cash flow or revenue-generating activities of a business. Cash received or paid out for product sales, supplier and lender invoices, payroll, etc., are examples of operating activities.

• Investing Activities: These are cash flows from the procurement or sale of assets other than inventories. Investing Activities constitute payments made to acquire long-term assets. They also include cash received from the sale of assets.

• Financing Activities: Cash flow generated or spent on raising and repaying share capital and debt including, the payments of interest and dividends are regarded as Financing Activities. These generally cover activities that will alter the equity or borrowings of a business. Sale or repurchase of company shares and dividend payments are typical examples of financing activities.

A Statement of Cash Flow can be used to detect trends in business performance that are not readily visible. In fact, many investors feel that the statement of cash flows is the most transparent of the components of financial statements. This is because it can be used to determine the sources and uses of cash.

Statement of Changes in Equity

Equity is the value of an asset minus the value of all liabilities on that asset. The statement of changes in equity, also known as the Statement of Retained Earnings, is used to showcase key information about equity reserves.

Statement of Changes in Equity provides details on the movement in the Equity of the business owner over a period of time. The statement of changes in Equity is usually derived from the following components:

• Net profit or loss during the period reported in the income statement attributed to shareholders;
• Share capital issued or repaid during the period;
• Payment of dividend made to shareholders;
• Changes recorded in accounting policy; and
• Changes in accounting policy or correction of accounting errors.

Notes to Financial Statements

Notes to Financial Statements are a crucial component that most people just forget about. These notes however contain other details relevant to the financial statements.

It is important to note that Notes to Financial Statements is a requirement mandated by the International Financial Reporting Standards (IFRS). According to the IFRS, entities have to disclose all information that matters to financial statements. This will no doubt enhance better understanding.

For instance, detailed information on those fixed assets is not included in the balance sheet. The Notes to Financial Statements however contains further information on those fixed assets that may be relevant to the overall financial statement.

What is the purpose of Financial Statements?

Financial Statements have already been identified as the records that outline how a business functions. The 5 components discussed above have also been used to identify the importance of Financial Statements. However, here are some other reasons that highlight the necessity of financial statements:

• Financial statements show an accurate state of the economic assets and liabilities of a business.
• Financial Statements are often relied upon to make financial decisions and predict the capacity of a business to earn profits.
• Financial statements depict the effectiveness of its management. The records are used to determine the profitability of a business or company.
• Readers can discern the accounting policies of a business by going through its financial statements.
• Importantly, financial statements also explain the social impact of a business. This is because it shows how external factors have affected the functioning of the business.

Who are the users of Financial Statements?

It is already obvious that a business owner needs to have financial statements. Financial Statements are not however only required by a business owner. There are other entities to whom it may be required or useful. These are divided into Internal and External Users.

Internal Users refer to managers or employees of a business directly involved in making decisions related to the operations of the company.

External Users are not directly involved in the operations of the company. Nonetheless, they hold some financial interest in the business. External Users may be further classified into:

• Users with direct financial interest (owners, investors, creditors); and
• Users with indirect financial interest (Government, employees, customers and others).

Financial Statements are often required by several categories of people falling under these two groups, including:

• Lenders (banks and other financial institutions) interested in the ability of the company to pay liabilities. It is important to note the most banks require a minimum of three years financial statements for credit facilities applications. In addition, once ongoing credit facilities (whether commercial mortgage, term loan, overdraft, or credit card) are enjoyed by a business the bank will request annual financial statements for review.

• Trade creditors or Suppliers interested in the company’s liquidity and its ability to pay short-term obligations. There are certain suppliers who as apart of their process to grant credit accounts request a copy of the company’s financial statements for review.

• Government, especially the tax authorities, interested in the financial information of an entity or business for taxation and regulatory purposes. Both individuals and companies are required to disclose both their profit and loss statements and balance sheet with their tax returns.

• Customers interested in the ability of the company to continue its existence and maintain stability of operations.

• General Public (researchers, students, analysts and others) interested in the financial statements of a company for reasonable purposes.

Conclusion

There can’t ever be too much ado about Financial Statements. They are the summation of the financial performance and position of a business at a given time.

Financial Statements are in fact the primary source of financial information for business owners and decision makers. That is why financial accounting and reporting emphasizes the importance of accuracy, reliability, and relevance of the information provided in financial statements.

That’s because, second to actually having a business that is successful, nothing is more important than preparing financial statements for your small business. Think that’s a little over the top? Wait until you read through this article on 4 reasons why your small business needs financial statements. 

For a business, financial statements are a formal record of the business’ financial activities over a specific period. They essentially provide you an accurate snapshot of everything you need to know about your company financially, knowledge that should never be more than a fingertip away from you as a business owner. Here are 4 reasons why preparing financial statements are important for your small business: 

#1: To evaluate the business’ performance

Financial statements are invaluable because they give you an accurate overview of your business. In fact, what they do is similar to giving you a high-definition snapshot of your company’s financial position. 

They are basically the scorecard by which your business is measured. Since Venetian merchants first invented double entry bookkeeping in the 15^th century, financial statements have been the most important tool that businesses use to gauge their own performance. 

Imagine that you fail to keep track of accounts receivable, accounts payable, accruals and cash flow. How do you tell who is owing your business, how much they’re owing and where your business is falling short of money? All of this information can only be gained and understood by preparing an accurate financial statement. 

If you ever thought your business was ailing and you’re wondering where things have gone wrong, financial statements are the perfect tool to do a complete troubleshoot on your business’ financial health. 

#2:  To use as a decision making tool

How would you feel if you woke up in the middle of the night in your distant relative’s house and everywhere is pitch black? Without a source of light, what are your chances of accurately finding the bathroom? Not very impressive, we’d think. 

Trying to make financial decisions without relying on your business’ financial statement is a bit like that. Apart from giving you an accurate report of what your business’ finances are like, they help you illuminate what moves you need to take to keep your business as a going concern. 

Financial statements show crucial business trends, how much you’re selling, how much you’re earning and any cash flow problems underneath. They empower you to not only take rapid decisions about your business, but also help you make the right decisions. 

By preparing a balance sheet, you get an accurate understanding of your business assets, liabilities, equity and debt. This lets you know if your business is in trouble, how much trouble it’s in and where you need to focus on in looking for a solution. If you had an employee that could tell you all this with accuracy, you’d probably promote them to general manager. 

At FirstLink, our philosophy is to act as a wingman to you the business owner by creating a foundation whereby we can gain insights into your business and make data driven decisions.

#3: To obtain capital from a bank or investor

No investor will take two looks at your business if you’re not in the culture of preparing financial statements. Why’s this? Just as much as you need an accurate picture of your business’ financial health, investors need an even more accurate picture so they know what they’re investing in. 

Financial statements and the accountants that help you prepare them are described as being invaluable to carrying out the function of providing “the conditions of trust in a modern market economy”. If investors are to trust your business and do business with it, you must be able to provide accurate financial statements for at least a few years. 

The same thing applies to getting a bank loan. No bank will approve your business for a loan or any type of credit unless they have painfully accurate information about the financial health of your business. That information is crucial for them in determining how much of a risk your business is and the chances that you’ll be able to repay the loan. 

What’s more? Having accurate financial statements decreases the cost you have to pay for your business. Yes, it can save your business money in the long-run and help you attract investors of the caliber that will leave you whistling to the bank. Why’s this? 

Nobody knows more about your business than you do yourself. In order to encourage others to take a punt on your business, you need to not only share that knowledge with prospective investors, but must be seen to have shared all. If potential investors begin to happen upon holes caused by infrequent financial reporting, they will assume the worst and turn tail. 

By having all your books laid out with lines straight as a razor, your business assumes an unimpeachable light in their eyes, and this can influence them to invest more. At the end of the day, you’ll have only yourself to blame if investors are wary of putting their faith in your business simply because your books are not straight. 

And the kicker? You never know when an interested party will walk through the door. Contrary to what most think, it’s not all the time that you attract an investor with a colorful presentation. Sometimes, just seeing how your business operates may be enough to pique their interest. But you’ll never get them in the door if you’re not armed to the teeth with the requisite financial statements. 

#4: To ensure compliance with tax authorities

If the previous reasons were for the health of your business, this one is important, so you don’t end up in jail or losing your assets. Put simply, not having financial statements for your business means you risk getting into serious trouble with the tax authorities such as Inland Revenue Division. Here’s why. 

Every business is liable to file tax returns, no matter where you’re based. In Trinidad and Tobago, businesses are liable to file tax returns on worldwide income. It doesn’t matter whether you had no profits. Every single business must file returns and you can only file these returns based on your financial statements where trading is occurring.

Now here’s another twist. If you do end up being assessed to certain taxes, you will be required to prove to the tax authorities that you have paid exactly what you owe in taxes. If you claim you had no profits for the year in question, you must prove to the tax authorities that truly, you had no profits. How do you provide this proof: why, by giving them copies of your financial statements and accounting source documents, of course. 

If you are unable to provide proof that you have paid exactly what was due from your business in taxes, you risk enforcement action against your business. The tax authorities will be within their rights to come right down to your business and demand to see all of your books. When they start to see holes left because of incomplete or poorly prepared statements, they have a tendency to suspect tax evasion. 

And the penalties for tax evasion are often stiff. These range from substantial fines and penalties and even imprisonment. 

Conclusion 

The bottom line is: financial statements are extremely key for your business. If you have not been in the habit of preparing these statements or having them prepared, you cheat your business out of so much. Worse, not having them means you have a time bomb ticking beneath you. 

While there’s absolutely no reason why you cannot prepare your own financial statements as a business owner, the simple truth is most don’t know how to. And even for those who have an idea, it can be too easy to make mistakes. 

It is often best to allow a professional take charge of your books and help you prepare your financial statements. Besides, remember we said financial statements lay the condition of trust in a market economy? Fewer people will trust your financial statements if you do them by yourself. 

Rather than being suspected of having “cooked the books”, take advantage of the services of an accountant today. At First Link, we are a full-service business outsourcing and advisory firm which provides specialized Finance, Legal, Human Resource and Technology solutions designed for Startups and SMBs. We directly work with business owners to fulfil their bookkeeping, accounting and audit needs. If you would like to discuss your business’ financial health with us or explore our accounting solutions, please schedule your free consultation today. 

From the moment you start your small business, however, the odds are pretty much stacked against you because most small businesses fail within the first 5 years. However, the major reason most businesses fail is because they aren’t able to keep up with the financial obligations required of them.

Cash flow problems and poor financial management has been identified as one of the major and recurring reasons small businesses fail. Considering the cash flow problems that most small business owners face, should you as a small business owner really be doing your own accounting?

Should You Be Doing Your Own Accounting?

If the failure rate is this high, not hiring an Accountant sure plays an important role in the statistics. Indeed, almost half of all small business owners (45%) fail to hire an accountant.

Too many small business owners try to handle all matters on their own and neglect to hire an accountant. In truth, most business owners are only trying to cut what they perceive as unnecessary expense. But this later proves to be their greatest undoing.

When it comes to the problems and uncertainty of owning a business, consulting a professional accountant can often be the best solution. It is one that proves to save money in the long run.

This is no doubt why it is now trendy to have an accountant as one of the co-founder or partners of a business. For businesses not fortunate to have an accountant among their rank, hiring one is proving to be of high essence.

Whether you’re a start-up or an existing business, you should engage the services of an accountant. The decision to employ one may be the only thing that saves you from costly errors and keeps your business safe in the future. Hiring an accountant to look after your business is always a smart move. Here are 9 reasons why your business needs an accountant:

#1: To Select a Business Structure

When you’re just starting up, one of the biggest problems you’re going to face is deciding the right business structure for your venture. Deciding whether you should operate as a sole trader, partnership, limited liability company or some other form is a decision better reached with an Accountant. An Accountant can advise your business on which structure will be right for you base on its nature, size and complexity taking into consideration legal, tax and financial implications of one structure over the other ensuring you get off on the right foot.

#2: To Manage Your Cash Flow

Of course, you’re in business to make money. You’re however most likely not going to be making a whole lot if you don’t keep track of the money that comes in and out of your business.

You need someone to maintain the financial records or books for your small business. Among the dozens of things that this will do, it will importantly ensure that you keep an updated book. This is going to come in handy for reports, tax purposes, or future planning.

An accountant will also help you plan ahead to ensure you can continue paying suppliers, employees, and other bills even in periods when the cash flow is low.

#3: To Monitor/Reduce Your Tax Liabilities

Do you have some taxes you’re exempted from paying? How do you legally reduce your tax liabilities? Of course you already know that if a business fails to calculate and pay the correct amount of taxes owed to BIR, serious problems may arise.

Depending on your business and the structure you operate, there are a series of tax deadlines to beat every month of the year. Each deadline comes with corresponding fines and penalties for late filing or payment.

It is understandable that you have a business to run and that these deadlines might slip by you. This is one of the reasons you need an Accountant. Having your own accountant means you’ll file your taxes as and when they are due and avoid the last-minute rush.

What you definitely know is that Accountants can help make tax payments easier for you by keeping proper records for tax season. What you probably don’t know is that an Accountant may also help your business by finding loopholes to avoid paying heavy taxes.

#4: To Save Valuable Time

Running your business and doing the work of an accountant is extremely time consuming. If you think about how much time and effort you’ll spend trying to manage your finances yourself, perhaps you’ll have a rethink. Making use of an accountant will allow you to focus on the proper task of running your business and attaining your goals.

With someone else managing and balancing the books, you’ll have more time to do other core tasks like meeting customers, planning growth strategies for the business and formulating innovative ways to generate more sales.

#5: To Assist with Costing Products and Services

The price you charge your customers or clients will have a direct effect on the success of your business. One of the secrets to business success is pricing your products properly. But it is also a tricky thing to do.

Production costs cover direct labor, direct materials, consumable production supplies, and factory overhead. When you put the right price on your products or services, your profit margin will expand and you’ll create a solid foundation for your business.

If you get your pricing wrong or lower than your production cost, then you’re already on the path to failure. A large number of businesses fail because products and services are priced too low and the business owner (for lack of knowledge) has no idea about this.

But this shouldn’t be a problem for you if you have an accountant. With your accountant, you can be able to review your production cost and expenses. You can then use this to determine the best price to keep your business afloat.

An accountant will also help you review prices to reflect the dynamics of cost, market demand, response to the competition, or any other profit objectives.

#6: To Create Internal Procedures and Controls

For your business to run smoothly and successfully, you need these 6 (six) internal control procedures:

• Separation of duties
• Access controls
• Physical audits
• Standardized documentation
• Periodic reconciliations; and
• Approval authority.

Establishing effective accounting control procedures early in your small business helps to create a culture of ethical financial management. A skilled accountant knows these internal controls and procedures and will be helping you out in putting them to practice.

#7: To Acquire Credit Facilities with Your Bankers

When you wish to expand your business and take out a loan, you would need to show your credit worthiness. By all means, the banks would be interested in ascertaining that you are not a liability, and that loaning you the money would be a smart venture.

An accountant is what you need to get your papers in order. With your accounts in order, your accountant will be able to demonstrate the growth rate of your company, estimate future projections, validate assumptions and convince the financiers that you can easily pay them back their money, plus interest. Usually this involves your accountant preparing a three-way projection incorporating projected profit and loss, balance sheet and cash flow forecasts.

#8: To Help Innovate Your Business Model

A business plan requires specific projections of revenues and costs. A business model on the other hand does not. A business model requires that you become ingenious about the way you create, deliver and capture value for your business.

To do this, you would however have a need to constantly re-evaluate how you do things and run your business. Analysing the past accounting performance and history of your business is a great way to go about this. A breath of fresh ideas from your accountant may be all you need to keep your business afloat.

#9: To Help Grow Your Business

It is safe to assume that every business owner wants their business to grow and not end up as one of the statistics of failed ventures.

Your Accountant is going to make use of your financial data to provide a roadmap for the business and plan for the future. Among other benefits, this will help you determine the best time to purchase inventory and budget for big-ticket investments so that you can stay competitive and viable.

You’ll also be needing periodic advice, guidance and counsel on how to achieve your objectives and keep your business in business.

Conclusion

Considering these benefits, it’s little wonder why many business owners now partner with an Accountant for their startups. For businesses not fortunate enough to have an accountant as a founder or co-founder, it has become quite necessary to keep one on the payroll.

While you’re busy with the day-to-day operations of your business, you would greatly benefit from having an accountant that can put your account in order, keep an eye on your blind spots, and make sure that you remain afloat and able to achieve your business goals. Need an accountant to gain real-time financial insights into your business operation? Schedule your free consultation today and speak to one of our advisors.