Don’t be Fooled into Thinking that Accounting is an Administrative FunctionBy: Dan Bender | NEWS | December 17, 2020
Many small businesses think hiring an accountant is an exercise in outsourcing an administrative burden. They want a low-cost solution to a petty problem that usually involves getting the numbers “put together” for taxes while avoiding audit risk. They send over a bunch of files to the local CPA who often hands the file off to a junior employee.
Because 80% of a local CPA firm’s work is condensed into a 3-month tax season, inevitably shortcuts get taken and imperfect data gets ported into tax software to crunch the tax implications. Because the CPA is almost always hard pressed for time, they scan for surface level issues and make a couple of minor fixes before marking it complete and waiting for the cycle to repeat itself next year. Even worse, some of these small businesses take a pass on hiring a professional and choose to tag in a family member or friend to handle the bookkeeping, then use TurboTax to handle the filings themselves.
Spoiler alert – I don’t work with these sorts of clients/companies/entrepreneurs.
If you are one of these folks, you should decision now: do I keep reading to learn why this is totally the wrong way to handle my accounting, or do I stop here and bury my head back in the sand.
For the folks that appreciate the candor – here’s the first important message – your business health is entirely visible through your financial management.
The client I do work with are a fewer, but far more savvy group of small business owners. They want to understand how their decisions are impacting their business now, in the next 3-6 months, and want careful accounting to help them keep score at how well they are performing.
Because at its essence, accounting is all about keeping score. Just like in any competitive exercise, keeping score and analyzing the results makes you better at what you do, faster at acting strategically, generate more profitability, find more efficiencies, which most importantly, leads to generational wealth.