There are many misconceptions about small businesses. One of them involves the need to secure the services of good accountants. Many small business owners feel that they should minimize the accounting services they ask for, primarily because they are small and can only spend so much. But what many people don’t realize is that small businesses are usually start-ups and the first attempt of their owner to venture into commerce. That means that these small business owners may not be equipped to handle the intricacies of running a business.
A small store looks simple enough to run. There are people who would actually say, “you buy low and you sell high” and that’s all there is to it. In the old days before cities, health and sanitation department, trade and industry regulations and revenue agencies, that would be correct. But now, such seemingly simple commercial pursuits involve regulations, requirements and licenses that are complex enough to be daunting to many first time business owners. This is where accountant Toronto earns his living, and makes life easy for the novice small business owner.
New small business owners may not be experts in bank reconciliation, but that does not excuse them from the need to have their bank transaction details correctly. An incorrect bank balance record can expose them to the possibility of penalties for insufficiently funded checks, going below the allowable cash balance, and making incorrect business decisions. Bank reconciliation is also a good way to detect and prevent embezzlement; it is also designed to provide warning flags about checks presented to the bank for unauthorized expenditures/fraud. Having an accountant handle bank reconciliation, at least until such time as the owner masters it, is a big advantage. This allows the business owner the time to concentrate on his core business activity, to concentrate on making profit.
While most business activities are established to generate profit, not all of them manage to do that; some fail miserably. The worst part is that many of those who fail are small businesses whose owners find out they are losing money too late to be able to take corrective measures. That is one of the advantages of a professionally prepared income statement. They allow the owners to know whether he’s making money or losing and by how much. An income statement also helps identify improvements which can be undertaken to increase revenue. Accountant Toronto helps the small business owner file accurate income taxes thus avoiding unpleasant encounters with the Canadian Revenue Authority. Visit www.srjca.com to find some of the best accountants in the Toronto area.
There is also a need to maintain a properly maintained balance sheet that provides a value of the business at any given time. It provides view of payables, receivables, collection rate, and cash flow. This document also helps the owner make sound financial decisions like expansion, downsizing or even closing.
There may not be enough appreciation of the value of a clean general ledger prepared by accountants. Members of professional associations like the Certified Management Accountants Ontario can make sure your ledgers are properly maintained and do not invite scrutiny from the authorities, banks and business associates.
Therefore, it can be argued that small businesses need the services of good accountants just as much as big ones.