Finance services are crucial to the survival of every business. However, while large organizations hire a financial team, small companies often try to save costs with a DIY approach. Unfortunately, things can be tricky as 60% of small businesses admit they don’t fully understand money matters and needs. If you are a small business and worried about your financial health, we’ve compiled a simple list of the most frequently asked bookkeeping and finances queries. Fingers crossed, it can help you figure out your next step.
Do I need an accountant?
It is the first and most important question every business should ask, regardless of their size. The answer, however, is always YES. Indeed, while you may not need a team of professional accountants 24/7 in the company, you can outsource accounting services to a professional. An expert accountant can be an invaluable help when applying for funds or managing your corporate taxes. Bookkeeping mistakes can also have devastating consequences for small companies. So, an expert on your side can keep you safe and in the green.
How do I finance my business?
When you are considering launching your first business or trying to expand, you will need to figure out the best way to finance your growth. As not every business owner can rely on their personal savings, it’s essential to define the best options for your needs and business type.
An accountant can help you understand your options and prepare the most suitable financing plan. For instance, a professionally prepared application can prevent delays and rejections if you are applying for a commercial loan. Most businesses prefer one or a combination of the following options:
- Commercial loan
- Angel investors
- Business line of credit
- Equipment loan or financing
- Venture capital for startups
- Invoice factoring through a third-party vendor
When do I break even?
The break-even point marks the moment the business is able to repay its expenses through the profit generated by its sales. Reaching your break-even point is not an immediate process if the business launch is expensive. However, once you understand how to calculate the break-even point, you can plan accordingly:
Break-even point: fixed costs / (sales price per unit – variable costs per unit)
What financial records do I need?
One of the most common mistakes for new businesses is to fail to document their financial records. The IRS recommends keeping financial statements that will become relevant for your tax assessment: your income statement (including equities, liabilities, and assets) and your balance sheets (aka the income and expenses of the business).
However, to keep your finances under control, we strongly advise collecting all essential financial information for tax purposes:
- Business property costs
- All the sources of income
- A list of all deductible
- Additional business investments, etc.
When and how should I prepare my business tax?
Ultimately, you don’t want to wait until the last minute to prepare for the tax season. That’s precisely why an accountant can help keep track of your financial transactions throughout the year, so you are ready to send your tax return stress-free and on time.
Professional services from expert accountants do not need to break the bank. On the contrary, working with experts can help you maximize financial opportunities, avoid traps, and keep track of your ins and outs.