When you start a business, you do not necessarily consider the need to grow your company’s accounting functions. Accounting is a vital task that companies perform to record, gather and analyze financial data. This information is helpful in performing daily business operations effectively. Historical financial information can also be used to develop new ways to expand your business operations. A growth strategy based on the available financial information helps business managers make important decisions in their current business scenario and for future endeavors.
Based on experience, the accounting functions for a business tend to progress step by step. You will likely not need a Chief Financial Officer on the first day of business. However, there is always a need to grow your company’s accounting functions as the scale of your business widens. Some of the guidelines mentioned below will assist you in deciding when it is time to put your foot on the gas.
Part-Time services or outsourcing
When your business starts operating, you are probably unable to hire a full-time finance professional. However, it is indispensable to keep accurate financial records from day one. If you do not have the expertise to perform this task on your own, a part-time professional or an external service provider can do the job for you. Below are some of the tasks that are needed to be looked after.
Setting up an accounting system – Grow your company’s accounting
QuickBooks is an accounting tool preferred by many new businesses as it’s easy to operate. Your company needs to set up the format of your financial reports and decide on SOPs to be followed by accounting practices. During your initial phase, you will encounter many issues regarding handling accounts. However, the situation can be avoided through better organization of the work.
Bookkeeping
The day-to-day accounting functions need to be recorded in your books as soon as they occur. It is not something that requires a lot of expertise, and anyone with basic financial knowledge can do this. You can even handle it yourself or hire someone to prepare checks, invoices, or any other related issues. However, as your business operations foster, you will need to grow your company’s accounting management which is best handled by a professional, and you should consider outsourcing the bookkeeping.
Another valuable way to manage your books is by avoiding cash and running all your transactions through a bank account. This way, you will be able to get a record of every transaction you make, and it will also help you to cross-check all of your entries.
Protection against fraud
In the earlier stages of any business, it is more susceptible to fraud and theft because there are no defined Standard Operating Procedures, and you are also getting familiar with how to manage your accounting efficiently. When you decide to grow your company’s accounting functions, it helps you against these frauds and thefts because you will be better equipped to manage your money. Research has proven that almost half of small businesses are affected by such fraudulent activities, either by employees or external factors.
Tax preparation
As your business grows, you will need to prepare yourself to pay all taxes. Depending on your business type, you may need to pay sales tax, property tax, payroll, and so on. It is best to consult an expert to file your taxes as many complications require a deep understanding of the taxation system. The outsourcing agency handling your books may also provide tax services, so it is better to consult them first before moving on.
Grow your company’s accounting with full-time professionals
With time, your company will grow, and you will realize that your accounting tasks are far more complicated now. This is an ideal time to either convert your part-time employee to full-time or hire permanent employees for the job. You may not only require a bookkeeper but a CFO or a professional who can oversee the completed work. A CFO must be capable enough to handle all questions and must be able to work with you to construe the financial statements, deal with banks and investors, confront taxation issues, forecast future budgets, and protect your company’s assets.
Once your business is at a scale that outsourcing professional services and hiring an internal CFO would cost you the same, it’s better to do the job internally. A CFO is an employee of the company and will sincerely make an effort for its success as your interests are aligned. This is the right time to hire a full-time CFO to grow your company’s accounting functions.
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