Accounting Tips for Small Business Owners
With increased e-commerce across several industries, many people discovered they could start a small business. Indeed, about 4.4 million new businesses start each year in the United States, a rate that outpaces business failures year over year. One thing is clear, e-commerce and technology have improved business success rates, at least according to data collected by the U.S. Census Bureau.
As you think about starting a business or expanding an existing business, questions might come to mind. For example, do you register your business as an LLC? Will you need employees? What about a sole proprietorship? These are just some key questions your local CPA can answer for you.
Some accountants can help you with more than just your taxes, such as retirement planning or business planning. You should ask yourself what kind of support you need from your accountant before choosing one so you don’t waste money on someone who can’t do what you want them to do.
How a Local CPA Can Help Your Online Business Thrive
A local Certified Public Accountant (CPA) can be a valuable resource for any online business owner, particularly if you own a retail business. As such, a CPA helps you separate personal and business expenses and provide valuable advice, like separate bank accounts and credit cards for your business, to avoid confusion.
Tax Planning and Compliance
Local CPA Peter B. Scala can help you navigate the complex tax laws and regulations that apply to your online business. This includes planning and managing your taxes, filing your tax returns accurately and on time, and minimizing your tax liability.
Financial Planning and Analysis
Accountants who understand the role of a CFO help you develop and implement financial plans that align with your business goals. They can analyze your financial statements and identify areas where you can improve your financial performance.
Bookkeeping and Accounting
Your local CPA can help your online business stay organized with bookkeeping and accounting services to help you manage your finances effectively. A CPA lets you set up and maintain accurate accounting records, track your income and expenses, and prepare financial reports.
Business Strategy and Growth
A local CPA can be a trusted advisor and help you develop a business strategy promoting growth and success. The CFO-focused accountant can provide insights and guidance on financial decisions that impact your business’s profitability and help you make informed decisions. With strategy come risks. CPAs provide risk management from a financial perspective.
Know the Costs Involved in Using a CPA
The costs of using a CPA professional will vary depending on the size of your business and the complexity of its financial statements. For example, a small business that uses QuickBooks to track basic expenses may find it more economical than hiring an accountant to prepare its taxes. Otherwise, the accountant would need to learn how to use QuickBooks before they could begin working on preparing tax returns.
Does Your Business Need Financial Accounting or Management Accounting?
Financial accounting and management accounting are two distinct branches of accounting that serve different purposes. Which one is best for your online business depends on the accounting services. First, we’ll define both types and list corresponding services.
Financial accounting is concerned with preparing and presenting financial statements for external users such as investors, creditors, and regulatory agencies. It involves the recording of financial transactions, the preparation of financial statements, and the communication of financial information to external users. Financial accounting aims to provide accurate and reliable information about a company’s financial performance and position to external stakeholders.
What is the difference between CFO services and financial accounting? A chief financial officer is an executive-level role that knows the business and the industry. The CFO has a strategic role that keeps the business profitable because they can sometimes take on the financial risk because they are stewards of the cash flow and company assets. Your local CPA Peter B. Scala can walk you through your options.
On the other hand, management accounting is concerned with providing information to internal users, such as managers and executives, to support decision-making, planning, and control. Management accounting involves the preparation of internal reports and analyses that provide insights into a company’s financial performance and position. Management accounting aims to help managers make informed decisions by providing them with relevant and timely financial information.
While financial accounting and management accounting deal with financial information, their focus and audience differ. Financial accounting is focused on external reporting, while management accounting is focused on internal decision-making. Financial accounting is governed by generally accepted accounting principles (GAAP), while management accounting has no governing rules.
Overall, financial accounting and management accounting are both essential branches of accounting that serve different purposes in supporting the financial management of a company. Which one you choose for your business depends on the type of assets and the industry.
Conclusion
While e-commerce has revolutionized how businesses operate, it also presents some unique challenges regarding accounting. E-commerce businesses are subject to different sales tax laws depending on the state, which can make sales tax compliance challenging to manage.
E-commerce businesses must pay payment processing fees for online transactions, which can affect profit margins. CPAs must ensure the security of their customer’s financial data, which can be costly and time-consuming.
Overall, e-commerce accounting requires careful attention to detail and a thorough understanding of the unique challenges of online business. If possible (and especially if it’s not), try to get a reference from someone who has used their services before. That way, when they come back with glowing reviews about how wonderful their experience was with this particular accountant, lawyer, financial planner, or whatever else it may be that interests you right now, you’ll know whether or not those reviews are genuine!