When you start a new business, you know you are creating a large time investment. Entrepreneurs have to prepare to forego regular work hours, free time, and possibly stable income while trying to make their business go afloat. It’s all worth it in the end when you work for your passion.
Passions need money, however, and sustainability. You can sell shares in your business, but investors will want a return on the capital they provide. They want results.
You have to do more than merely break even. To keep control of your cash flow and assets, you need to do accounting. Or you need to have an expert do it. Either way, you need someone who watches out for you, understands the business and can incorporate the financial perspective to the business. So you can keep control, try out our Financial Wingman™ Service.
The Business Accounting Process
Accounting and bookkeeping have overlap. Both give financial advice based on the numbers that they see. Regardless, while all bookkeeping is accounting, not all accounting is bookkeeping. Check out these resources for what an accountant does and the primary differences between them and a bookkeeper.
Accounting is also looking at accounts in payable and receivable categories, calculating payroll, auditing, forensics, and tax preparation. In short, the processes become complicated. They have to manage multiple processes.
When an accountant looks at money, they tend to look at balance sheets, incomes, and assets. Then they offer advice on how to increase profits and identify red flags. An ethical accountant will also note if scandals are buried in the numbers and save your company a heap of legal trouble. Consider how Enron may have avoided censure and legal consequences if a CFO had steered them in the right direction.
Accounting software and services can help you skip the middleman and avoid the costs of an in-house expert. You can get an objective, inexpensive perspective on your business’s health, and recommendations on how to improve and grow.
Budget Versus Services
Before you choose any software, you need to figure out the size of your business, the budget and the specific services you need. If the office manager is handling payroll, for example, then you won’t have to seek that service.
You should set aside 3% of your annual revenue to create your accounting budget. Prepare to pay by the month for any service, so divide that 3% over twelve months. Adjust if you have fluctuations in revenue.
Within the $500-1500 range, you can get decent automated accounting services. They will perform basic functions such as bookkeeping, balance sheets, and filing tax returns. Every business needs to perform these functions to break even and follow the law. You should start here when your business is new, to have an extra pair of automated eyes.
The higher your three percent of revenue becomes the more expertise that you can afford. Once you are willing to pay about $1500, you should get people for your outsourced accounting. Services expand to financial analysis of cash flow and balance sheet analysis; the experts should sit with you to explain the numbers and allow you to make the decision.
$2000-6000 range means that you should expect high-quality analysis into your systems and providing steps on how to make improvements. Reporting becomes more detailed and you get the equivalent of a CFO.
The $6000 and above budget is when you have to decide if you want to stick with outsourcing or hire an in-house accounting team. While we always say outsourcing reduces costs, an honest expert will advise if you should make the decision.
Best Accounting Software Available
For all-around basic accounting, we like Xero. The program uses cloud-based software to manage multiple clients 24/7, which is always accessible due to not requiring a login. Xero is all about flexibility and integration, providing automated bank statements and customized invoicing.
If you just want to focus on bookkeeping, consider Bench. The service offers a team of expert bookkeepers, and charge a minimum of $119 a month. They have a reputation to back up their rates, and flexibility to increase or decrease back to $119 as your business grows.
For Payroll, we love Gusto. Choose a platform based on the size of your team. On top of full-service payroll, Gusto offers health insurance, 401ks, and compensation management. Gusto also has a one-month trial so that you can test out services.
Find Out More From DeepSky
DeepSky has the expertise to help you find the right service for your business. We want to help you crunch the numbers, and help them grow.
Reach out to us today to learn about our services and recommendations. DeepSky will assist in reaching into your finances, and into supporting your business.