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Buying Guide for Accounting and Bookkeeping Services
Accounting is the method by which a business tracks its expenses and income and uses this information for business planning. Accounting includes tracking all monetary transactions and creating the appropriate financial documents that are necessary to run a business.
Bookkeeping is one of the most basic aspects of accounting services. This entails recording all income and payouts by a business and creating the appropriate spread sheets for financial and business planning. This service also is necessary for tax preparation and planning. In many cases, the accountant also handles tax preparation.
In addition to these basic services, an accountant offers businesses many additional services. Accountants can prepare business valuation statements, financial planning services, and auditing services. These valuable services are crucial to the financial success of any business.
Accountants And Tax Services
One of the most dreaded words that a business owner can hear from the Internal Revenue Service (IRS) is "audit." An audit can cost a business thousands of dollars in penalties and even more if they fight the findings of the audit.
A business that uses the tax services of a quality accountant can minimize the risk of undergoing an audit. An accountant knows how to document all financial transactions in a manner that is recognized by the IRS as correct. They can also make sure that all back up documentation is available so that any questions about a return can be proven.
In addition to this service, an accountant can help business owners decrease their tax burdens with careful planning and tax strategies. An experienced accountant can even use these strategies to help the business owner increase the value of their company because their tax burden is so low. Business owners will always benefit from accounting services when it comes to tax planning and preparation.
Additional Accounting Services
Many business owners do not realize all of the services that an accountant can provide above basic bookkeeping and tax planning services. These beneficial services include:
- Compilations or Overviews. Your accountant can take all of your financial information and provide you with detailed reports of how the business stands financially. These reports are crucial to business planning efforts.
- Reviews. A review is very similar to an audit. The accountant will review all of the financial statements of the business and provide that business with an outlook to their financial standing. In most cases, this is performed quarterly. Part of the review process will include an opinion by the accountant of the financial standings and outlook for the business.
- Consulting Services. If a business desires to find ways to cut costs improve profits or lessen the tax burden of the company, an accountant can provide valuable services. Businesses in need of these types of services should look for an accountant that is familiar with their area and industry to receive the most beneficial advice.
- Valuations. There are several reasons that a business may need a value placed on their business. Loan applications require a value of the business as part of the application process. Business owners that wish to sell their companies will also need this information to place a sale price on the company and to show potential buyers. Estate planning may also require a business valuation.
- Financial Planning For Business Owners. Business owners face many different types of financial situations when they are preparing for their personal futures. An accountant can help make sure that the owner of the business is preparing financially for their own future as well as that of the business. This may include personal expenses, insurance requirements, and estate planning.
Pricing for Accounting Services
There are many different ways that a business can be charged for accounting services. Some accountants charge an hourly rate while others offer a flat fee. In most cases, basic accounting services for bookkeeping and tax preparation are charged at a flat monthly rate.
Different factors must be considered when calculating accounting costs. These factors include:
- Size of the Business. A larger business will require more work than a smaller one resulting in higher fees.
- Complexity of Service. Basic accounting services will be less than more complex services such as auditing or valuations.
- Amount of Services Required. Businesses may decide on full accounting services or just basic services.
Accountants may also change how they bill a company once a relationship has been established. Many accountants will bill by the hour until they understand the depth of the services they will need to regularly provide the company. Once a working relationship has been established, most accountants switch to a flat fee for services.
Tips to Keep Costs Down
Businesses may find that there are several little things that they can do that will greatly reduce the expenses associated with an accounting service. These simple tricks can also help reduce costs and stress in other areas of the business as well.
- Keep Paperwork Automated. Having digital files of business sales, debts, payouts, and inventory levels will be beneficial to your accounting costs.
- Keep Ledgers Legible. If the business handwrites all information, make sure that it is easy to read.
- Do Basic Bookkeeping. Businesses that keep their bookkeeping records updated have very low accounting costs. The accountant can use these files as a way to generate the correct tax information and financial reports.
- Use A Temp. If the business wants to reduce costs but does not have time for bookkeeping, hire a temp to do the data entry.
You can also speak to your accountant about ways to cut costs from their point of view.