When you started your business, what motivated you? Maybe you had an idea for something the world needed. Maybe you just wanted to be your own boss. Maybe you wanted some flexibility in your schedule to accommodate for your family. Whatever the reason you worked hard and are proud of what you have been able to accomplish.
Often, as part of the growing of a new business, the decision to do "as much as I can for myself" happens. Some of it is financial -- new businesses aren't generating much cash yet. Some of it is pride, that feeling of "it's my business, I can do this". When it comes to the accounting/bookkeeping role of your business, it is often clear to business that "filing tax returns" needs some outside help. But the day-to-day accounting (keeping track of receipts, invoicing customers, payroll and just the general keeping track of your financial health) does not get the same attention as those yearend taxes. But the day-to-day is a critical process for ensuring that the tax returns can be done with ease.
There are many parts of our business that we would not even consider trying to do ourselves. We ask lawyers to review our contracts. We hire a courier to ship our products. We engage other businesses to provide the supplies that we need. For these types of services, there is comfort in driving the business process but still engaging some expertise to pull it off successfully.
When you hire a lawyer to review contracts you spend time considering all of the things you need protected from in the agreement and you seek his/her professional opinion on what you may have missed. The lawyer then drafts the agreement to your needs.
When it is time to ship your product, you don't buy a truck, insurance and other things to make you road worthy so that you can deliver your product yourself? But why not? You have a driver's license. The answer is that even though it is possible for you to manage the shipping yourself, it is not practical to do so. Your time is better spent at growing your business. A company that can manage many company's needs can do so more cost effectively than you can do it and you maintain control of the process by setting the parameters for what you need.
When you are looking for companies to supply your company (whether that is something as the materials for the product you are going to create, business cards or advertising promotion) you set the criteria you need and find the perfect match for your business. You maintain control by being very particular about what you need and not settling for anything less. When businesses started using assembly lines, we recognized that we are stronger when we specialize and do the parts that we are experts at and ensure that all the other stages adhere to the standard so that the overall process can be successful.
Yet, many businesses keep the accounting (bookkeeping) elements as a part that they can manage themselves. But this decision is contrary to what we do in all other elements of the business.
Like our lawyer example, being able to know in real time "if you have missed anything" is key to ensuring that you maximize all of your tax and business potential. Waiting until you file your tax return (with an accountant who has not spent the year learning your business) is too late. Knowing how to organize your finances and knowing what questions to pose to you, the business owner, is critical to getting all you can from this process. There is more to this than just compliance with tax laws. The information an accountant can provide you is critical for the health of your business.
Like our courier example, finding a way to share the expertise is critical for saving you costs. You maintain control by setting the parameters for what you need. Just like you decide if you want to ship outside of Canada or North America. You decide if you want same day or next day shipping. In the world of accounting, you decide the parameters of what you need to have done. The relationship with your accountant, as I have described in other blog posts, is a partnership. You need to know what you need, but that does not mean you have to do it all yourself.
And as with any other suppliers, we are stronger when we specialize. Even if you have the basic bookkeeping skills, you have a business to manage. Your time is far better spent on sales and marketing strategies than it is on whether you should record a discount directly in the gross sales account or show it as a contra-account.
Finding an accountant who has many clients (many are small businesses just like you) who can manage your accounting with ease is a cost saver over time. It is less expensive (when you are first starting out) than hiring a full-time accountant for your payroll. The savings at tax time for having good records to share (and finding possible other savings)!