Do I Need an Accountant? Understanding Your Small Business Accounting Needs

With a never-ending list of operational ‘to-dos’, managing business finances effectively can often seem like the cherry on top of an endless pile of work.

No matter how frustrating it can be, however, sound financial management remains cornerstone of any successful business.

The question for many small business owners is simple…”Do I need an accountant?”

For many running their own small businesses, this question can come down to time versus money. Do I have the time to properly manage by business and personal finances? Do I have the money to outsource this function?

The reality is that there are much larger and much more important considerations at play, though.

With ever-changing business and tax legislation, the questions small business owners ought to be thinking about when they consider the need for an accountant should be more centred around their understanding of these regulations, their ability to understand how they can best meet their tax obligations and their ability to ensure prepper financial recordkeeping.

Understanding the Essentials of Bookkeeping

Sound financial management of any business comes down to effective bookkeeping.

This is the systematic recording of every financial transaction, whether that is money in or money out, of your business. Every dollar must be accounted for and in doing so, this will set the foundation of your financial management moving forward.

The good news that is bookkeeping and accounting technology has come a long way in this space.

Software packages such as Xero and MYOB now link directly with your bank account and make the once painstaking process of account reconciliation a breeze.

Still, for small business owners, mastering the basics of bookkeeping is fundamental. It includes tracking sales and expenses, managing invoices, and preparing financial statements. However, the complexity increases with the business’s growth, prompting a need for professional help.

Businesses like RDV Business Solutions have been pivotal in transitioning companies to more robust bookkeeping systems, ensuring accuracy and compliance.

The decision to hire a professional bookkeeper hinges on several factors: the complexity of your transactions, the volume of sales and expenses, and the time you can dedicate to managing your books.

As Rick De Filippis, a Director who benefited from RDV’s expertise, points out, professional bookkeeping can reveal gaps in your business that you might not have noticed.

“RDV have been our accountants and financial advisers for five years now. We thought we had been receiving the right advice but soon realized there were gaps in our business that needed to be sorted. RDV set up a buy sell agreement for us and ensured that if anything happened to the business owners that our family was secure and looked after.:

• –Rick De Filippis

Bookkeeping is an essential aspect of sound financial management, but it’s not the be-all and end-all.

If bookkeeping for small businesses is the act of maintaining meticulous records, then accounting is the art of understanding and interpreting financial data to make strategic business decisions.

This can include budgeting, financial forecasting, and managing cash flow.

Even the best laid plans and budgets can change quickly once a business goes from a concept to a reality. A professional accountant can help you get your initial budgets, or help you to make sense of the actuals once your business is up and running.

A common trigger for considering whether or not your business needs a small business accountant is to ask yourself when was the last time you sat down and looked at your budget.

Do you have a budget for the current financial year?

If you do, have you sat down in the last three months and considered how your business is performing against that budget?

If the answer to either of those questions was no, then you may very well need to consider the services of a business accountant.

The expertise of a professional accountant becomes invaluable when financial management starts to hinder your ability to focus on core business activities. For instance, Daniel Warfe, a Director who engaged RDV Business Solutions for his IT consulting business, found that professional guidance was crucial in setting up and streamlining the day-to-day operations of his company.

“We engaged RDV Business Solutions to work with us to set up our new IT consulting business. RDV set up our company and trust and provided us with advice on what would be the most streamlined approach for our day to day operation of our business.”

• –Daniel Warfe

In scenarios where businesses face complex financial challenges, like managing cash flow during rapid expansion or navigating financial downturns, professional accounting advice can be a game-changer. It’s not just about recording numbers but making sense of them to drive business growth.

The Importance of Strategic Tax Planning

Tax – or rather, tax planning – is another juncture a business reaches where an owner or director might consider the need for an experienced accountant in Melbourne.

This aspect of financial management is a crucial part of ensuring a profitable business that is prepared and ready to meet its financial obligations and not caught unaware by a big bill from the Australian Taxation Office.

A business tax accountant can help analyse your businesses performance over the 6-12 months and help you understand how to best minimise your tax bill, forecast future performance and provide a clear picture of what your tax obligations will look like at the end of the financial year.

This is particularly important for businesses who are registered for GST and are required to lodge quarterly Business Activity Statements.

It’s also important to remember that tax laws are often complex and ever-changing, making it challenging for small business owners to keep up.

A professional accountant or tax advisor can provide invaluable assistance in this area. They can help you understand various tax obligations, identify tax-saving opportunities, and ensure compliance with tax laws.

This expertise is particularly beneficial during significant business events like acquisitions, expansions, or shifts in business structure.

Clients of RDV Business Solutions, like Jim Ilievski, the CEO who has relied on their services for over 15 years, testify to the importance of having knowledgeable professionals handle complex tax matters.

“Having used RDV for over 15 years for both business and personal tax needs, I can highly recommend their services. The knowledge on all matters small or extremely complex is something that sets them apart. A great team with a genuine desire to please us as clients, has provided my business with the support we need and the piece of mind that our tax and finances are in great hands.”

• –Jim Ilevski

This not only ensures compliance but also optimises tax efficiency, allowing businesses to reinvest savings into growth and expansion.

Accounting Best Practices for Small Businesses

RDV Business Solutions assists our clients in understanding and implementing best practices for the financial management of their business.

We believe that accounting is the backbone of any successful business, as it allows our clients to make decisions based on the financial realities and opportunities of their business and therefore assists with the long-term viability of the business and it’s potential sale value.

For those reading, here are some simple best practices you can implement in your business:

• Choose the right accounting software package for yoru business: Managing finances is an essential aspect of any business, but it can be time-consuming and prone to errors if done manually. By using accounting software, you can streamline your financial management processes and avoid these issues. With modern accounting tools, tasks such as invoicing and payments are automated, freeing up your time and reducing the risk of errors. This not only saves you time and increases efficiency but also ensures that your financial records are accurate and up-to-date.
• Keep Accurate Records: Accurate financial record keeping requires careful transaction recording. This procedure may be made simpler with accounting software such as QuickBooks and Kashoo, which will also help you learn financial reports and tracking expenses—two great practices. To guarantee an accurate portrayal of your organisation’s financial success, don’t forget to maintain your personal and business costs distinct.
• Implement Financial Control:Internal controls are essential for guarding against fraud and mistakes in your company. Create a system of checks and balances by dividing up the work involved in the accounting procedure. Having a minimum of two observers for every transaction lowers the possibility of errors and guarantees efficient internal control.

For more Accounting Best Practices, check out our article HERE.

Keeping Up with Business Accounting Trends

For small businesses, it’s important to keep up with the latest accounting trends.

Consider this: back In 2021, the Australian government announced over 40 different tax measures. Of these measures, 28 were introduced into parliament under Bills amending tax legislation. In the last 12 months, we’ve heard about ‘stage-three tax cuts’, changes to the national minimum rage, the removal of the low and middle-income tax offset (LMITO) and more.

Keeping up to date with all of these can feel like another big ‘to-do’ for small business owners who choose not to appoint a business accountant.

Accountants are very important for businesses because they keep them up to date on these changes. They can help the business decide whether to use new tools or accounting methods that will be good for it.

In today’s quickly changing financial world, a business can gain a big advantage by hiring an accountant who knows and can use the newest trends and methods.

Making the Decision – Do You Need an Accountant?

A big step for any small business owner is deciding whether to hire an accountant. This choice usually depends on a number of things, such as how complicated your finances are, how much you know about accounting, and how much time you have to handle financial chores.

Take a look at the advantages of hiring a professional accountant:

• Help from an Expert: Accountants do more than just keep books. They give strategic tips on how to grow a business, plan for taxes, and handle money.
• Saving time: Hiring a professional to do your accounting frees up your time so you can focus on running your business.
• Compliance and Accuracy: Accountants make sure that your financial records are correct and follow all current rules and laws.
• Strategic Tax Planning: Accountants are trained to find ways to save money on taxes and help people plan their taxes efficiently.
• Support for Business Growth: Accountants can play a key role in big business events like mergers, acquisitions, or changes.

As you think about these things, keep your business’s wants and goals for the future in mind. If your business is growing quickly, if it’s hard for you to keep track of your finances, or if you need help making complicated financial decisions, you might benefit from hiring an accountant.

In the end, hiring an accountant should be based on your business goals and the amount of financial knowledge you need to reach those goals. Should you find that handling your money is getting harder and taking more time, it may be time to get help from a professional.

Have you been asking yourself, “Do I Need an Accountant?” more and more often? It’s time to chat to RDV Business Solutions.

Our comprehensive business accounting services are designed to take the stress of sound financial management off our clients’ shoulders as much as possible, whilst providing them the tools and advice they need to better understand how their business finances work.