Small Businesses make up 50% of businesses and employ more than 98% of the workforce in America. Being that small businesses play such an important role in the American economy, typically what affects the economy will affect the small business owner. In the wake of large businesses financial scandals that are changing the way the government and regulatory agencies mandate new regulations, one would think what are the consequences if small businesses fall prey to similar scandals. The small business owner must take these issues into consideration for accurate financial reporting is not only a “Big Business” problem.
When a small business owner tries to tackle the financial problem alone, they are usually too caught up in the activities of bringing in new business to take any time out to “look over the books” or balance the checkbook. It is also difficult for the small business owner to stay current on all the new changes in the tax law that may affect their business. Despite all the government talks of tax simplification Congress has made more than 5000 changes in the federal tax law since 1986. Many of these changes resulted in new tax forms and instructions. The simple 1040 form with instructions is 107 pages. Small business owner must take into account these issues to ensure a solid future.
Typically a small business owner may attempt to alleviate the problem by purchasing an easy-to use software program to in a sense “do the work for them”. This attempt usually only puts the small business owner back into the same loop of trying to bring in new business at the same time managing day-to-day activities. The time training on the software and entering the data alone could be spent on revenue producing activities which is why often time a small business needs the assistance of a financial consultant to understand the in’s and out’s of financial record keeping.
Partnering with a Financial Consultant
When a small business brings aboard a financial consultant in conjunction with an accounting software package, all financial issues can be addressed. This will ensure that the smartest course of action is taken when making business decisions. At the same time the small business owner can focus their efforts on the revenue producing activities that will help the company grow. In particular entrusting financial activities to a consultant a small business can:
· Have more efficient tax planning- By preparing year round
· Improve cash flow- By knowing where the business stands at all times
· Have better insight as to where it is going- By utilizing accurate reports for decision-making.
By partnering with a financial consultant, a small business will be able to uncover potential tax saving they can apply throughout the year instead of only at tax time. A financial consultant will have the time and access to various tax information sources that will provide the business owner with relevant information and concepts to apply to virtually any small business tax situation.
Cash is the life-blood of any business especially a small business. Without cash the business will suffer and will possibly be forced to cease operations. By partnering with a financial consultant a small business’ cash flow position can be improved. The consultant can provide the small business owner with the numbers beyond just the bank balances so cash and/or financing needs can be addressed efficiently and effectively.
Many small businesses operate under a blindfold when it comes to planning for the future. By allowing a financial consultant to handle the tasks the small business owner will have a better grasp on where they are and where they plan to go. By focusing on journal entries, and various other financial reports the financial consultant can “forecast” potential business scenarios before they occur. This will empower the business owner will the necessary information they need to stay in line with their strategic vision.
The Financial Consultant- Your Business Partner
By investing in a financial consultant a small business can improve its tax planning, effectively manage their cash flow, and improve their management controls. It will also allow the small business owner to spend more time on revenue producing activities. Small business is a contact sport, it is important for the small business owner to make new contacts, maintain their present contacts, and keep in contact with their bottom line. By partnering with a financial consultant, small businesses can continue to be the backbone of the economy.
Brian N. Stovall
Consultant- Accounting and Business Advisory
The Brico Group, Inc.