The experienced & professional accountancy team at Allsquare are here to help your company through the common Accounting Challenges For Small Businesses
Any small-business owner can confirm that, despite their lesser size, small businesses have to deal with many of the same challenges faced by larger firms. The difference is that, unlike their larger counterparts, many owners of small businesses lack the resources necessary to employ professional services.
Large corporations tend to outsource operations such as payroll and accounting, but small-business owners themselves are often forced to take care of these matters. The following are some of the primary issues faced when handling small-business accounting – and how to avoid them.
All small-business owners, even those who do outsource aspects such as accounting and tax affairs, should learn the basics of these issues. Having a basic understanding of what is involved will help you to plan more effectively for the future, as you’ll have more knowledge about where the business is currently. You’ll also gain a little peace of mind – naturally, you’ll have chosen a competent and reputable professional to manage your finances, but being able to understand the numbers presented to you will allow you to notice trends and allow you to ask better informed questions. And, of course, don’t be afraid to ask your accounting professional for an explanation when you still don’t understand.
Balancing Your Cash Flows
Another concern for small-business owners is that major purchases must be balanced by a positive cash flow. Particularly in the first few months of a new business, many owners are faced with immediate upfront expenses alongside limited cash flow. Instead of paying for new stock or important equipment with money from the business, small-business owners could consider alternative sources of capital, such as a short term overdraft facility, business credit cards or a small-business loan. This has the additional advantage of allowing you to spread out your repayments over a year or more, allowing you to save up cash reserves for those expenses that financing won’t help with.
Understanding the tax rules, regulations and deadlines that apply to your small business is a must. First-time business owners may be overwhelmed or surprised at the level of complexity of business taxes compared to the no-fuss PAYE system that employees use. Tax is one of the most serious challenges that small businesses must face, especially given the potential for large fines from HMRC. Therefore, any small-business owner who feels unsure or would like advice shouldn’t hesitate to bring in professional help to clear up any issues and produce an accurate tax return.
Get the Right Tools for the Job
As your business grows, the operations of your accounting system will have to change with it. Choosing the right software platform that will grow with your business is essential as you move from start-up to established small business. Factors such as an expanded customer base, workforce expansion and increased volumes of custom are all issues that will have an impact on the efficiency of your accounting system. By recognising the future needs of your system, you can ensure that your accounts are being managed with optimum efficiency.
Allsquare are professional accountants in Edinburgh offering financial and business services to help small to medium companies with business growth strategies. For more information, call Allsquare today on 0131 343 1510.