Now that we are well into the summer season (and warmer weather lasting longer), small business owners may be finding themselves struggling to balance a higher volume of customers with less-than-favorable macroeconomic conditions – all while trying to enjoy their vacation and spend time in the warm weather with family. Entrepreneurs face common stress factors such as financial pressures, uncertain market conditions, time management and work-life balance, to name a few. To help alleviate some of these challenges, they can benefit from taking some responsibility off of their plate by leaning on external partners and technology to manage more mundane tasks, such as data entry, payroll processing and expense management.
The role of an accountant as well as accounting technology are important for small business owners who typically manage various functions: sales, marketing, billing, and beyond. Many entrepreneurs even juggle other jobs while trying to grow their business; in fact, 72% of startup owners launched their small business while still working at their day job. This means that from conception of a small business, owners are often stretched thin and seldom able to enjoy the perks of being their own boss.
This demanding situation is further reflected in a survey from Xero, which found that only 19% of small business owners say they woke up feeling fresh and rested most or all of the time. Without time to disconnect and recharge, business owners are quickly becoming burnt out, which can ultimately lead to negative business impacts. Accountants and accounting software can alleviate this burden and take a huge workload off small business owners’ shoulders when utilized correctly, leaving ample time for business owners to relax, decompress and recharge with friends and family during the summer months.
Read on for three tips entrepreneurs can use to alleviate some to-dos and enjoy more free time in the sun – whether that be with family, on vacation or in creative pursuits.
1. Outsource Bookkeeping and Accounting
Small business owners can save time, reduce stress and even help improve the accuracy of their financial records and tax filings by outsourcing their bookkeeping and accounting to an external expert and technology. When determining which bookkeeping/accounting tasks you want to outsource, consider mundane, time-consuming tasks such as recording transactions, reconciling accounts, managing accounts payable and receivable, payroll processing, financial reporting and tax preparation. By outsourcing these to experts, small business owners not only benefit from the professional’s expertise but also free up valuable time to focus on strategic work to cultivate and grow their business.
Once you have determined which tasks to outsource, it’s time to do research, research and more research. Take the time to identify service providers that specialize in working with small businesses. Look for companies with a good reputation, positive client reviews and experience in your industry. Consider factors like cost, service offerings, technology tools used and the level of customer support provided.
2. Stay Ahead of Tax Season
During summer, an end-of-year tax deadline might be the last thing on your mind – but by working closely with your accountant all year long, you can stay ahead of your tax situation and make filing easier.
It’s vital to stay on top of important tasks like recording every single business transaction while also gathering and organizing expenses and receipts on a continuous basis. Of course, it’s also key to make certain your financial records are constantly reconciled with your bank accounts so that they match perfectly.
Accounting software and the accountants who use it can make these processes more accurate and efficient by making sure your business’s data flows are linked. For example, a small business’s accounting software can be connected to a bank account so that all banking transactions populate the accounting software automatically. The same goes for third-party payment processors such as PayPal and Stripe. This eliminates the need to enter these transactions manually, which often causes errors.
In short, entrepreneurs and their accounting team save time and avoid costly mistakes by prioritizing tax planning throughout the year instead of rushing during the busy season.
3. Financial Analysis
By analyzing financial data, small business owners can make informed decisions and stay ahead of the competition. Accountants play a crucial role in helping entrepreneurs assess cash flow and track other key performance indicators to make these decisions. This helps alleviate extra stress brought on by the current up-and-down economic climate.
In addition, accountants help small business owners understand all the information presented in important documents like income statements and balance sheets to identify trends and assess the financial health of the business.
Accountants can conduct comparative analysis by examining financial data over different periods or against industry benchmarks. This is a tremendous asset to small business owners. It helps them understand how their business is performing relative to previous periods, competitors or industry standards. Accountants can identify areas of improvement, pinpoint strengths and weaknesses and provide recommendations for enhancing financial performance. Ultimately, this helps drive your business forward.
Not only can accountants compare current and previous financial data, but they also can assist by preparing forecasts and projections. Analyzing historical data, market trends and business assumptions creates models that can project future financial performance. These projections help in setting goals, making investment decisions and planning for growth. This gives small business owners a glimpse into the future, enabling them to prepare for what’s to come – ideally saving time and making more money.
Overall, accountants play a critical role in small business owners’ ability to optimize their finances as they work diligently behind the scenes, managing complex tasks and providing crucial insights for strategic decision-making. Remember, effective communication and collaboration with your accountant are essential – clearly articulate your needs and expectations, maintain regular contact and involve them in important financial discussions. By leveraging your accountant’s expertise and delegating financial tasks, you can free up valuable time to focus on growing and managing your small business – and enjoy a well-deserved summer vacation!
Latisha Carter (@latisha_c3) is the Head of Partner at Xero. Latisha helps lead all partner growth channels across Xero’s US sales organization. Her teams are focused on regional and enterprise partner consulting, reinforcing Xero’s commitment to accounting and bookkeeping partners and the key roles they play in helping small businesses succeed. Latisha previously served as Head of Partner Services at Xero and brings over 20 years of experience in the accounting software industry where she held different positions across marketing, sales and professional services throughout her career at Sage. She is based in Atlanta.