When you start a business, you do not necessarily consider the need to grow your company’s accounting functions. Accounting is a vital task that companies perform to record, gather, and analyze financial data. This information helps perform daily business operations effectively. Historical financial information can also be used to develop new ways to expand your business operations. A growth strategy based on available financial information helps business managers make important decisions in their current and future business scenarios.
Based on experience, the accounting functions for a business tend to progress step by step. You will likely not need a Chief Financial Officer on the first business day. However, there is always a need to grow your company’s accounting functions as the scale of your business widens. Some of the guidelines mentioned below will assist you in deciding when it is time to put your foot on the gas.
Part-Time Services or Outsourcing
You probably need help from a full-time finance professional when your business starts operating. However, it is indispensable to keep accurate financial records from day one. If you do not have the expertise to perform this task independently, a part-time professional or an external service provider can do the job for you. Below are some of the tasks that need to be done.
Setting Up an Accounting System – Grow Your Company’s Accounting
QuickBooks is an accounting tool many new businesses prefer as it’s easy to operate. Your company needs to set up the format of your financial reports and decide on SOPs to be followed by accounting practices. During your initial phase, you will encounter many issues regarding handling accounts. However, the situation can be avoided through better organization of the work.
Bookkeeping
The day-to-day accounting functions need to be recorded in your books as soon as they occur. It does not require much expertise, and anyone with basic financial knowledge can do this. You can even handle it or hire someone to prepare checks, invoices, or related issues. However, as your business operations grow, you will need to grow your company’s accounting management, which is best handled by a professional, and you should consider outsourcing the bookkeeping.
Another valuable way to manage your books is by avoiding cash and running all your transactions through a bank account. This way, you can get a record of every transaction you make, which will help you cross-check your entries.
Protection Against Fraud
The earlier stages of any business are more susceptible to fraud and theft because there are no defined standard operating procedures, and you are also getting familiar with how to manage your accounting efficiently. When you decide to grow your company’s accounting functions, it helps you against these frauds and thefts because you will be better equipped to manage your money. Research has proven that almost half of small businesses are affected by such fraudulent activities, either by employees or external factors.
Tax Preparation
As your business grows, you must prepare yourself to pay all taxes. Depending on your business type, you may need to pay sales tax, property tax, payroll, etc. It is best to consult an expert to file taxes, as many complications require a deep understanding of the taxation system. The outsourcing agency handling your books may also provide tax services, so consulting them before moving on is better.
Grow Your Company’s Accounting with Full-Time Professionals
With time, your company will grow, and you will realize that your accounting tasks are far more complicated now. This is an ideal time to convert your part-time employee to full-time or hire permanent employees. You may require not only a bookkeeper but also a CFO or a professional who can oversee the completed work. A CFO must be capable enough to handle all questions and must be able to work with you to construe the financial statements, deal with banks and investors, confront taxation issues, forecast future budgets, and protect your company’s assets.
Once your business is at a scale that outsourcing professional services and hiring an internal CFO would cost you the same, it’s better to do the job internally. A CFO is an employee of the company and will sincerely make an effort for its success as your interests are aligned. This is the right time to hire a full-time CFO to grow your company’s accounting functions.
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