What to expect from your future accountant
Introduction: Why is accounting important for small businesses?
Accounting is important for small businesses as it can help owners and other parties evaluate the performance of the business. Accounting is able to display all the relevant information about various aspects such as profit and loss, assets and liabilities, and
other factors that influence decision-making.
The main reason to have a solid accounting system is to ensure that you have a record of all financial transactions and to be able to monitor the health of your business. Small business failure is often due to poor financial management when resources are limited.
For all small business owners, accounting is crucial to keep track of cash flow, understand the costs of the business, keep track of how it’s performing and its profitability, and to enable good business decisions.
What are the benefits of having an accountant?
As you focus on growing your business, the financial ins and outs are not always top of mind.
We’ve put together the top benefits of having an accountant for your small business:
1. Saves you time: By having an accountant as a part of your business, you won’t have to perform all the tasks on your own. Having an accountant means that they need to deal with obligations such as taxes and following the relevant rules and regulations. All of this will allow you to free up your time and focus on business development.
2. Prevent tax penalties: The Tax Law in South Africa can be complicated, and it is your accountant’s duty to know what needs to be submitted to the South African Revenue Services (SARS). Having an accountant will reduce your chances of receiving any penalties for late tax returns and missing tax payments.
3. Keeps your business organised: When your business has various departments and a number of employees, your accountant can help you set up your payroll system, assist with budgets, and organise other necessary payments.
4. Assists in business planning: If you’re looking to expand your business or make big financial decisions, your accountant is in the best position to give advice on whether these decisions will positively or negatively impact your finances.
5. Helps with bookkeeping: Bookkeeping is especially important for small businesses. Your accountant will help record sales and purchases, monitor expenses, bank balances, and other financial aspects. Without an accurate bookkeeping system, you may not be able to anticipate future financial instances.
Questions your accountant may ask you
When hiring an accountant for your small business team, they will need to ask a number of questions in order to get an overall idea of your business, its financials, and any other aspects that are relevant to the accounting system.
The Cloudworx team has put together a list of questions that you’ll need to answer to onboard your new accountant.
What is the nature of your business?
● Your accountant will need to know: What is the purpose of your business, how you run your business, who are your biggest clients, and who are your suppliers. This will provide your accountant with a good understanding of what processes need to be put in place in order to give your business what it needs.
What are your business issues?
● What are your main concerns within your business and what aspects of your business are currently not working? Knowing this information will allow your accountant to bring solutions to the table and think ahead on how they can solve your problems.
What are the circumstances with your staff?
● Your accountant will need to know more information about the members of your staff, such as:
○ What type of staff do you have? I.e. full-time, part-time, or freelance staff members.
○ How many staff members do you currently have?
○ How does your staff fit into the accounting process?
○ Who do you need to work with in order to make the accounting process function correctly?
How do your business processes work?
The business process is an important aspect as it will help streamline business activities and ensure that all resources are put to optimal use. When looking into your business processes, your accountant will tend to do the following:
● Dig deeper into how your business sends invoices, how you purchase or receive stock, and how you perform your payroll.
When looking into your invoicing process, your accountant may ask the following:
● How do you decide how much to invoice a client?
● How does an invoice get sent out?
● How do you acknowledge that you have received money from the client?
Purchasing and receiving stock is an important part of your financial expenditure. Your accountant will need the answers to the following questions:
● How does the business decide to purchase stock from a supplier, and how does the order get placed?
● How are received services and/or stock acknowledged by the business?
● How do stock invoices get processed?
● How does the business pay the supplier, and what processes need to be followed when the supplier is paid?
Payroll is another crucial part of the business that your accountant needs to be informed about. They will look into things such as:
● Who decides how much staff members are being paid, and how is this decided?
● Where is all the payroll information saved?
● Who handles the payroll information?
● How do we account for all payroll?
The ultimate goal for your business is to have a built-in accounting system to make your financial processes easier. For your accountant to fully set up an accounting system, add value to your accounting processes, and prepare management accounts, they’ll need to understand all of the above questions.
We hope that you will think about these questions, find the answers to them and eventually get to a point where your business has an efficient accounting system that works.
To get your small business’s accounting in order, contact Cloudworx and chat with an experienced team member.