Lesson 7: Finding the Right Accounting Resources

Lesson Overview 

Bookkeeping tasks are often pushed aside and pile up as the business owner procrastinates. Without bookkeeping, your accountant cannot do their job. Therefore, either you will pay expensive hourly rates to have an accountant do bookkeeping work or you will go without financial statements. Neither is a good idea.

In this lesson, you will:

Identify different options for professional accounting support, and

Explain what to consider when choosing accounting software.

Getting Professional Support 

As a small business, there are several options for handling your accounting responsibilities:

1. Do it yourself

2. Hire an accountant or bookkeeper

3. Outsourcing

Each option has pros and cons that you should consider carefully.

Do It Yourself

When first starting out with limited resources, many business owners choose to do their own bookkeeping using a software package, such as QuickBooks. Determining whether the do-it-yourself approach is right for you depends on a number of factors. Ask yourself the following questions:

1. Do you have a business background or basic understanding of accounting?

2. Do you have the time to do the bookkeeping yourself?

3. Could your time spent doing bookkeeping be better spent on business development activities?

Hire an Accountant/Bookkeeper

Bookkeeping is one of the least popular administrative tasks for small business owners. Many would rather go to the dentist for a root canal rather than make journal entries. So, one option is to hire a bookkeeper.

Many responsibilities come with hiring employees and it is an important decision that shouldn’t be taken lightly. If your business is complex and revenue is sufficient to justify hiring an employee to handle your bookkeeping, then consider starting off with a part-time employee until revenue and complexity justify the need for a full-time bookkeeper.

Advertising job openings with your local workforce commission or free internet sites is one way to quickly find potential candidates. Likewise, most accounting software providers have communities of certified consultants, accountants, and bookkeepers that may be looking for part time work.

Outsourcing

If you’re focused on growing your business and don’t have the time or expertise to handle the bookkeeping duties, or don’t want the liabilities that come with hiring employees, then outsource the number crunching and pay someone else to do it so you can focus on what’s really important for your business.

Outsourcing involves hiring a professional services firm to handle the bookkeeping and accounting for you. Typically, the bookkeeper will come into your office once a week to handle data entry, accounts payable, and accounts receivables.

Nowadays, because of improved technology and Internet connections, some businesses use bookkeepers in other cities, states, or even countries to handle their bookkeeping and accounting.

Outsourcing is a viable option that allows you to pay for only the level of support that you need and could suffice until you grow large enough to justify a full-time employee to handle the bookkeeping and accounting tasks.

Regardless which option you choose, always remember that it’s your business and staying intimately familiar with your finances is critical to your long-term success.

Accounting Software 

Another reason to hire a professional is to help you with finding the right accounting system for your business.

Accounting software is available in many forms and across a broad spectrum of pricing. Given that there are many inexpensive accounting software options available for a start-up, there isn’t any reason to use a manual bookkeeping system. Using accounting software is the most efficient choice for your business. Accounting software is available as a desktop or cloud-based option and can be purchased from a third party.

Some of the most common accounting software products for start-ups are QuickBooks, Sage 50, Zero.com, and FreshBooks; There are many others and you should conduct research to find the software that best fits your business requirements.

Course Summary

You've reached the end of Moja Academy’s Introduction to Accounting training course.

The important thing to remember in accounting is to not let the terms and formatting of the financial information scare you.

All you need to remember is that you have three basic financial statements for keeping track of your money.

The balance sheet shows your business at a particular point in time. It gets its cash and earnings balances from the other two statements. The income statement shows your net earnings over a period of time. And the cash flow statement shows cash coming in and going out and what the net result is over a period of time.

You can now describe basic accounting concepts, identify the important bookkeeping principles, differentiate between the three main types of financial statements, and explain the importance for finding the right accounting resources for your business.