If you're a brand new small business owner, you've probably wondered about the value of bringing on professional accounting or bookkeeping services. Here are some thoughts from the team at Madan Chartered Accountants:
One of the main jobs of a financial professional is creating a budget for your company. A budget is a forecast of a company’s expenditures and revenues over a time period in the future (e.g., 3 months, 6 months, 1 year, etc.)
It’s important for business owners to prepare budgets periodically in order to:
1) Better manage cash-flow
2) Plan for any short-falls in cash (e.g. through bank financing)
3) Help allocate company resources
4) Set goals for revenue and profit
In addition to preparing a budget, you as a business owner, should review your company’s actual results against the budget to see if financial goals have been achieved and if there is room for improvement.
2. Review company financial statements
It’s important to review the financial performance (i.e. profitability) of your business at least quarterly with your bookkeeper so that you can:
1) Quantify the business’ profits or losses.
2) Identify areas for improvement in sales.
3) Proactively look for cost savings opportunities.
4) Measure your financial results against your competitors.
5) Track your company’s financial performance against your goals.
This sounds great, but why should you care about accounting if your business has a healthy cash balance? Well, you should care because accounting will help you know if you’re profits are declining, whether there are signs of a sales slump in the future, and whether your cash will run out shortly.
Allan Madan is a Chartered Accountant, and cross border tax expert who enjoys working with business owners, individuals and entrepreneurs. He has over 14 years of experience in public accounting. Prior to founding Madan Chartered Accountant in Mississauga, Canada, he was International Tax Manager at Deloitte for six years. .
For free online videos on how to use Wave to complete your company’s books, see Madan CA's bookkeeping tutorials.