Having a small business has its perks and knowing what to do about your finances can pose some sort of a challenge especially when you’re attempting to set up a business for the first time. So when you think of how you’d handle money in your business what comes to your mind? Have you given small business accounting service a thought when planning for your business?
You know, small business accounting services play a crucial role in the success and sustainability of small businesses. Many business owners may not realize the full extent of the benefits that these services can provide, because most times, the concept of accounting services for small business is not widely known.
In this blog post, we will uncover what you need to know about handling the finances in your small business as well as seven small business accounting service providers that you may not have known and would need to know.
Whether you are a small business owner or an aspiring entrepreneur, understanding these facts will give you valuable insights into the importance of proper accounting for your business.
Key Takeaways
- Business finance involves the planning, organizing, and controlling of a business’s financial operations to achieve its objectives.
- Many small businesses need to find a reasonable funding model and this can be made very simple with the help of organizations within the small business accounting service sector
Table of Contents
What Is Business Finance?
Business finance refers to the management of a company’s financial resources and activities. It involves the planning, organizing, and controlling of a business’s financial operations to achieve its objectives.
Managing financial resources includes the effective allocation and utilization of the financial assets a company has, such as cash, investments, and other financial instruments. It also involves making decisions on how to raise, use, and manage the company’s capital to support its operations, investments, and growth plans. It’s important to carefully manage the financial resources of your small business because it would ensure the company’s financial stability, profitability, and long-term sustainability.
The planning, organizing, and controlling of financial operations stretches out to various aspects.
In the area of planning, you have to go through the process of forecasting, budgeting, and setting financial goals and objectives for the business.
In organizing the finances of your small business, you structure the company’s financial functions, like accounting, treasury, and risk management, to ensure that there are efficient and effective financial operations.
On the other hand, controlling deals with the processes and systems used to monitor, measure, and evaluate the company’s financial performance, and to make adjustments as needed to achieve its objectives.
The ultimate goal of business finance is to support the strategic objectives of your small business, which may include growth, profitability, market share, or other key performance indicators. By managing financial resources and operations effectively, business finance helps the company access the necessary funding, make sound investment decisions, and maintain financial stability, all of which contribute to the achievement of its overall objectives. Effective business finance ensures that the company’s financial activities are aligned with and support its broader strategic goals and initiatives.
See also: 25 Amazing Small Business Ideas for Teenagers Who Want to Make Money in 2024
What You Need To Know About Finances in Small Business
Many businesses especially the small and medium-sized ones, frequently require access to funds through business financing. Even large corporations may seek capital injections to achieve short-term objectives. These enterprises need to identify a suitable funding approach. Employing an unsuitable source for business financing may lead to the loss of a portion of the company.
Some firms also experience challenges relating to repayment terms with improper business financing. Most companies with such problems often have issues with their growth in the future. Funds from business financing may be useful in hiring additional employees, equipment financing, paying for an office, and purchasing equipment.
The key aspects of business finance include:
- Securing Funding: This includes raising capital through sources like equity, debt, or other financing options to fund the company’s operations, investments, and growth.
- Financial Planning and Budgeting: This involves forecasting, budgeting, and managing the company’s cash flow, revenues, expenses, and profitability.
- Investment Decisions: Business finance helps analyze and make decisions on capital investments, such as purchasing new equipment, expanding facilities, or investing in research and development.
- Working Capital Management: This involves managing the company’s current assets (cash, accounts receivable, inventory) and current liabilities (accounts payable, short-term debt) to ensure efficient use of resources and liquidity.
- Financial Risk Management: Business finance helps identify, assess, and mitigate various financial risks, such as market risks, credit risks, and operational risks, to ensure the company’s financial stability.
- Reporting and Analysis: This includes the preparation and analysis of financial statements, such as the balance sheet, income statement, and cash flow statement, to evaluate the company’s financial performance and make informed decisions.
Significance of Securing Adequate Finances for Your Small Business
As a business owner, securing business financing is crucial for several compelling reasons. Most small and medium-sized enterprises often need access to capital through business financing. Even large-scale companies may look for capital infusions to meet short-term goals.
They need to find a reasonable funding model and this can be made very simple with the help of organizations within the small business accounting service sector. Let’s look into all that you need to know to secure business finance properly and the advantages it poses to your small business.
Initial Capital
Every emerging business requires a strategy for developing and delivering its products or services. Business financing is essential for acquiring the necessary funds to facilitate these operations. Typically, entrepreneurs must decide between debt and equity financing. While loans provide small business owners with a degree of control over their company, they also come with specific financial obligations.
Debt-to-Equity Ratios
Securing suitable business financing from the right channels aids in reducing debt ratios. Throughout business activities, it’s essential to maintain higher revenue and assets than debt, unless this creates undue strain when meeting loan obligations. Additionally, a poor debt ratio can hinder a firm’s capacity to attract investors when seeking business financing.
Maintaining Preparedness for Business Cycles
Effective business financing aids in readying a venture for economic downturns or adverse market cycles. It’s worth noting that prudent businesses also anticipate challenging economic periods by making strategic investments and maintaining strong credit, cash reserves, and real estate holdings.
Opportunity for Expansion
Business financing offers an opportunity for enhanced success. Enterprises obtain additional funding to invest in expansions, acquire new assets, and address staffing and inventory needs. Some businesses may explore equity capital from venture capitalists. In essence, it is crucial to evaluate funding options that facilitate financial growth without hindering progress.
Ensuring the Robustness of Payroll Accounts
Inadequate payroll accounts can result in staff resignation, potentially leading to business closure. Business financing provides ventures with sufficient funds to manage labor expenses. It is prudent to ensure adequate funding to cover at least two payroll cycles.
Read also: How to Successfully Apply for Amazon Small Business Grants in 2023
What Is Business Accounting Service?
Business accounting service involves a diverse array of financial activities that are focused on managing and scrutinizing a company’s financial transactions. These services include meticulous bookkeeping, preparing detailed financial statements, strategic tax planning, efficient payroll processing, and expert audit support to provide a comprehensive overview of the company’s financial health and ensure compliance with regulations.
By entrusting these essential accounting tasks to experienced professionals, businesses can benefit from the assurance of accuracy, adherence to regulatory requirements, and transparency of their financial information. This, in turn, empowers business leaders to make informed, data-driven decisions and optimize their financial performance, ultimately strengthening the overall financial stability and growth potential of the organization.
The outsourcing of accounting services allows businesses to focus on their core competencies while relying on the specialized expertise and resources of accounting professionals. This strategic approach enables companies to enhance their financial management, improve their decision-making capabilities, and ultimately drive greater efficiency and profitability within their operations.
Companies that Offer Small Business Accounting Service
1. Indinero
Clients of Indinero benefit from its broad spectrum of accounting services, user-friendly platform, on-demand access to in-house experts, and attentive customer support, cementing its status as the premier accounting firm.
Established in 2009, Indinero has continuously refined its all-encompassing accounting solutions tailored for small businesses. Beyond its comprehensive service suite, Indinero grants clients convenient access to a team of staff accountants and financial experts through its user-friendly dashboard or mobile app, cementing its position as the top overall accounting firm for small enterprises.
Although Indinero’s base-level plan may carry a slightly higher price point compared to other accounting firms, its all-encompassing services ultimately save fledgling businesses time and money.
For $750 per month, the Essential plan is packed with features such as seamless invoicing, profit and loss statements, balance sheet creation, accounts payable/receivable tracking and reporting, monthly reconciliations, employee reimbursements, financial reporting, and document management.
Clients also receive a mobile app and a dedicated account manager. The Essential plan is tailored for startups and smaller businesses operating on a cash-based accounting system, but those requiring accrual-based accounting will need to upgrade to Indinero’s Growth plan.
2. 1-800Accountant
1-800Accountant stands out as the best accounting firm for basic plan offerings, providing small businesses with straightforward accounting needs and a solid, flat-rate plan for $139 per month.
Recognized as the best accounting firm for basic plans, 1-800Accountant offers a reliable, straightforward plan for small businesses with specific accounting requirements, priced at a flat fee of $125 per month. 1-800Accountant’s selection as the top choice for basic plans stems from its ability to blend personalized support from a nationwide team of professionals with the convenience of digital technology, all for a flat monthly rate.
1-800Accountant, co-founded in 1999 by two former Price Waterhouse members, stands as one of the more experienced online accounting firms. Its blend of personalized support from a nationwide team of experts and the benefits of digital technology, offered at a flat rate, is the reason we have selected it as the best accounting firm for a basic plan.
3. Paro
Paro emerges as our top choice as the best accounting firm for hiring freelance accountants and bookkeepers, allowing businesses that desire more direct working relationships to connect with finance and accounting experts who closely match their needs.
Unlike the other accounting firms on this list, Paro functions as a marketplace that connects businesses with thoroughly vetted finance and accounting experts, enabling direct collaboration. This distinctive approach is why Paro earns our selection as the best accounting firm for hiring freelance professionals.
To build its extensive database of skilled finance and accounting professionals, Paro employs a rigorous multi-stage vetting process. This includes background and reference checks, skill assessments, interviews, and the completion of a hands-on project. This thorough screening has resulted in Paro accepting only the top 2% of applicants, ensuring its freelance talent pool consists of highly qualified Certified Public Accountants (CPAs), financial analysts, internal auditors, finance VPs, and bookkeepers, many of whom have previous experience at prestigious firms like Deloitte, Ernst & Young, KPMG, and the IRS.
4. Bench Accounting
For businesses with uncomplicated financials seeking to outsource their bookkeeping needs, Bench Accounting is equipped to handle it all, making it the best accounting firm choice for bookkeeping services. Bench offers access to a dedicated team of bookkeepers as well as a do-it-yourself digital platform. Pricing begins at $249 per month, with a free trial period available. Bench’s unique approach combines proprietary software with real-life bookkeepers to deliver customized services tailored for small businesses.
Emerging as the premier accounting firm for bookkeeping services, Bench Accounting has distinguished itself as the go-to choice for businesses with uncomplicated financials that are ready to outsource their bookkeeping responsibilities.
Founded in 2012 with the sole purpose of addressing the bookkeeping needs of small businesses, Bench Accounting has grown to become the largest bookkeeping service, with in-house professionals handling the books for more than 11,000 business owners. This comprehensive expertise in serving the bookkeeping requirements of small enterprises, catering to both cash-basis and accrual-basis reporting, is why we have selected Bench Accounting as the best accounting firm for bookkeeping services.
5. Pilot
Pilot, a relatively new accounting firm, was established by former startup founders who secured backing from entrepreneurs. This unique background and understanding of startups and their accounting requirements is why we have selected Pilot as the best accounting firm for startup companies.
Launched by seasoned startup entrepreneurs, Pilot possesses a keen understanding of the challenges faced by other startup founders in managing their books and preparing their businesses for growth. This intimate knowledge is why we have selected Pilot as the best accounting firm for startup companies.
The handholding process begins as soon as you sign up with Pilot, with the immediate assignment of a dedicated bookkeeper to serve as your account manager. This designated point of contact will come to know you and your business intimately.
6. Sunrise
Sunrise offers a free accounting service that provides comprehensive financial insights, covering everything from cash flow management to expense tracking. For those on a tight budget who still want to take control of their accounting needs, Sunrise presents a solid financial services solution.
The free Sunrise platform grants users access to a robust suite of accounting tools and features, enabling them to closely monitor their cash flow, categorize and manage expenses, generate financial reports, and gain a deeper understanding of their business’s financial health – all at no cost.
For those seeking additional functionality, Sunrise also offers a paid subscription plan. This premium tier unlocks advanced accounting capabilities, such as customizable invoicing, integration with bank and credit card accounts, and the ability to collaborate with an assigned Sunrise financial expert. The paid plan is designed to provide small businesses and freelancers with a more robust, full-featured accounting solution without breaking the bank.
Whether utilizing the free or paid version, Sunrise emerges as a solid financial services solution for budget-conscious entrepreneurs and small business owners who want to take control of their accounting needs. The platform’s combination of comprehensive free tools and optional premium features makes Sunrise an attractive option for those seeking an affordable, yet powerful, accounting management system.
7. BookKeeper.com
BookKeeper.com provides a comprehensive suite of virtual bookkeeping services, catering to the diverse needs of small businesses and entrepreneurs. The company offers a variety of subscription plans, each tailored to deliver the appropriate level of support and functionality.
At the entry level, BookKeeper.com’s standard plans start at $399 per month, offering a do-it-yourself approach with access to online tools and resources. These plans give clients the autonomy to manage their bookkeeping, while still providing the comfort of on-demand virtual support from BookKeeper.com’s team of experts.
For those seeking a more hands-off experience, BookKeeper.com also offers plans that include regular monthly calls with a dedicated bookkeeping specialist. These enhanced plans provide an additional layer of personalized guidance and oversight, ensuring clients’ financial records are accurately maintained and their accounting needs are addressed on time.
Beyond the standard subscription options, BookKeeper.com further distinguishes itself by providing an all-in-one bookkeeping solution that can be fully customized to each client’s unique requirements. This bespoke offering allows small businesses to outsource their entire bookkeeping function to BookKeeper.com, freeing up valuable time and resources to focus on core operations.
Regardless of the plan selected, BookKeeper.com’s virtual bookkeeping services deliver a seamless, technology-enabled experience, empowering clients to take control of their finances while benefiting from the expertise and support of a dedicated team of financial professionals.
Conclusion
Understanding the top facts about small business accounting services can greatly benefit your business. From tax compliance to financial reporting, having a solid grasp of these key aspects can lead to better decision-making and financial management.
By utilizing this knowledge, you can make informed decisions that will positively impact your bottom line. Take action on the information you have gained and implement strategies to improve your small business accounting practices, ultimately leading to greater success and stability.
Frequently Asked Questions
What is the essence of small business accounting?
Small business accounting is the process of recording, organizing, and interpreting a company’s financial transactions. It converts financial data into comprehensible statements about the business’s profitability, enabling owners and managers to make informed decisions that support the enterprise’s long-term viability and growth.
References
- www.freshbooks.com – What Is Small Business Accounting? A Beginner’s Guide
- www.investopedia.com – Best Online Accounting Firms for Small Business
