Business accounting

Understanding business accounting in the time it takes to make a toasted sandwich.

In the time that it takes to cut up a tomato and figure out how to re-wrap the deli ham, we’ll dish up the benefits of business accounting, summarise what accountants do and tell you when you should hire one.

We’ll also give you an idea about how to grill a potential accountant when it comes to hiring one.

All that in about four minutes of total reading time.

Business accounting is all about keeping track of all the economic activity that happens in your business. These can be split up into three main tasks: identifying, recording and communicating the financial information of a business.


Benefits of accounting


Unless you come from a financial background, one of the first people you should hire for your business is an accountant.

Accountants won’t just find ways to save your business money, they’ll set up systems to streamline tax and administrative obligations to save you time in the long run.

You’ll also be grateful that you invested in an accountant early in case you’re ever audited.


When should I hire an accountant?


While their role in your business will become more involved once you start generating revenue and growing, it’s a good idea to get an accountant on board as soon as possible .

When you start your business, your accountant can advise which business structure will work best for your business and will help set up day-to-day accounting procedures.

While you should consider getting an accountant on board as early as possible, by no means does this have to be on a full-time basis. Many accountants will charge per hour, so you might only need to do few consultations with them to establish your business.

Once your business grows, you should consider getting someone on board on a more permanent basis.


What do accountants do?


Accountants can provide many services that could be beneficial for your business. They include:

  • Assisting with establishing your business
  • Tax advice and planning
  • Auditing
  • Financial reporting
  • Business management and analysis
  • Superannuation advice

Accountants not only help you find ways to save money, but they can also help you generate more revenue. You can find out more about how they do that here.

We’ve also put together a list of questions that all business owners should ask their accountants, which you can read about here.


What to look for in an accountant


What you need in an account will depend on what the needs of your business are, as well as how well you can work together.

Here are four things to think about when looking for an accountant:

1. Area of expertise

Most accountants will specialise in one or two areas of finance, such as financial analysis or investment management, so many may not be able to perform all the tasks your business needs.

Think about what accounting tasks you need to get done and if your accountant has the skills to do them.

2. Fees

Many accountants and accounting firms charge by the hour, so the more experienced the accountant or the more complex the job, the higher the price. For example, auditing is a more complex task than bookkeeping, so it’ll cost more.

Consider how much you can afford to pay your accountant and whether the task justifies the cost.

3. Personality

It’s much easier to work with someone if you get along with them.
Your accountant is no exception – you might be spending a lot of time with them, so it’s important that you get on and work well as a team.

4. References

It’s worthwhile speaking to your potential accountant’s clients to find out what their work is like, as well as what they’re like to work with.

Ask them about how satisfied they are with the accountant’s services, fees and availability.

Top 3 takeaways

  1. Accounting is all about recording, analysing and communicating the financial information about your business.
  2. Having good accounting systems can help save you time, money and grief (when dealing with the government and auditors).
  3. Consider hiring an accountant as soon as you start a business.

 

READ NEXT: A beginner’s guide to BAS