Essential Accounting Services for Small Businesses – A Complete Guide

A quality accounting firm can save a small business time and money by providing valuable services that are difficult to perform in-house. NerdWallet’s list of best small business accounting firms includes top-rated companies with comprehensive offerings, excellent customer support, and reasonable pricing.

All small businesses need tax and bookkeeping services to stay compliant and have a logged record of their financials. Savvy entrepreneurs also seek out strategic accounting services to increase profitability.

Invoicing

Whether you are running a small business with just one employee or several employees and contractors, keeping detailed financial records is vital for tax season. Thankfully, today’s best accounting software used by an accountant in Chicago, for instance, makes the process of logging, reconciling, and reporting easy for small businesses.

Look for features like syncing with bank and credit card accounts to eliminate redundant data entry, automatically categorizing expenses, and managing invoices and payables. You should also be able to customize reports like profit and loss statements, balance sheets, and cash flow statements.

Some products provide accountant access so you can invite your accountant to view and review your books remotely. Additional features include:

• Batch invoicing.
• The ability to turn estimates into invoices quickly.
• The ability to track project or job profitability.

Bookkeeping

Bookkeeping services keep track of a business’s day-to-day financial transactions, including invoices and expenses. Miscalculations in the books can lead to misattributed payments, overpaid costs, or revenue needing to be correctly tracked. These mistakes can compromise a company’s future, so it’s essential to have accurate bookkeeping.

All small businesses need tax accounting and monthly bookkeeping services to ensure they’re compliant and have a log of their financials. Savvy entrepreneurs may also seek strategic accounting services like predictive analysis and financial models to boost their competitive edge.

Bench’s affordable online bookkeeping service includes invoice and P&L tracking, bank reconciliation, document management, and expense reporting. It uses the double-entry accounting method and offers a choice between cash or accrual basis. The Essentials feature set’s cheapest plan starts at $300 a month.

Tax Preparation

Accounting services ensure small business owners comply with tax laws and filing obligations. They also help small businesses make sound financial decisions based on accurate data.

212 Tax is a Manhattan-based firm offering comprehensive, personalized accounting for greater New York City small businesses. Its seasoned CPAs provide expert bookkeeping, financial modeling and forecasting, business valuation, and other strategic accounting services.

Bench offers an all-in-one accounting solution, including online invoicing, cash-basis reporting, and accounting software integration. Its pricing starts at $750 monthly for its Essential plan, designed for startups and smaller businesses that use cash-based accounting. The company’s Growth plan starts at $1,250 a month and provides accrual-basis accounting and more advanced features.

Auditing

Running a small enterprise calls for lots of effort and time. These efforts include customer service, employee control, and everyday accounting tasks like paying payments, invoicing customers, and retaining a healthy cash glide.

An external audit ensures that all financial information is recorded according to generally accepted accounting principles (GAAP). This helps to avoid errors that may hinder future planning and enables business owners to discover trends in their current financial data.

For example, an audit may additionally find fraud, that could devastate a small commercial enterprise. It also can screen terrible accounting practices and fail to hold special facts of an agency’s transactions. Sometimes, those mistakes can trigger a tax audit, doubtlessly leading to fines or consequences.

Financial Statement Preparation

Financial statements are a crucial component of small business accounting. They are used to communicate the economic stature of a company to stakeholders and help with decision-making. As such, their accuracy and integrity are paramount. Besides the regulatory framework of Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), these documents must also comply with specific guidelines set by the accounting firm preparing them.

This includes ensuring the correct balances are used to create each statement. The three most commonly used financial statements are the balance sheet, income statement, and cash flow statement. A balance sheet is a snapshot of the company’s assets, liabilities, and equity at a particular point in time. An income or P&L statement lists a company’s revenue and expenses to indicate net income or loss.

Budgeting

Keeping track of financial information manually can quickly become cumbersome, but accounting software solutions are designed with small businesses in mind. Many offer budgeting features to help streamline your accounting processes and eliminate manual data entry.

A detailed business budget helps you set achievable financial goals and allocate funds judiciously. It can also enable you to make informed strategic decisions that position your business for growth in a competitive market.

You can create a realistic business budget for future periods using accurate bookkeeping records and cost data. This allows you to forecast expenses and income, anticipate changes in inventory levels and production costs, and identify cost reduction opportunities. Moreover, it promotes accountability and a sense of responsibility for all stakeholders. This, in turn, leads to better expense management and improved financial health.

Cash Flow Management Accounting

Managing cash flow is an essential task for small businesses. Effective cash management allows a company to run smoothly, making payroll and paying expenses.

Effective cash flow management requires budgeting, forecasting, monitoring, and planning. A budget should include planned bills, cash flow projections, and a buffer for unexpected expenses. It should also factor in seasonality, sales cycle, and inventory needs.

inDinero offers a simple and affordable solution to cash flow management for small businesses. Its bookkeepers use QuickBooks to categorize bank transactions and produce financial reports for your business. Its lowest-cost plan offers up to three users; higher plans include a human review of your forecasts. Additional services include profit-first cash management, bill tracking, and a business valuation.