Owning and operating a small business is time-consuming. And for most small business owners, just getting a day off is a blessing. The reality is: most small business owners love what they do, but there is never enough time for all of the things they want to do, let alone need to do.
According to Salesforce, two-thirds of SMB owners and leaders (66%) are typically responsible for at least three of the following areas:
- Customer service
- Product development
There aren’t enough hours in the day for a small business owner to take on all these roles, especially when you consider the workload and expertise required to do them. Take taxes, for example. Taxes are just a fragment of the finance role, yet more than one-fourth of small business owners will spend over 100 hours doing their federal taxes.
100 hours. Let that number sink in.
That’s over two weeks of digging through boxes of receipts looking for those expensive power lunches while trying to find the name and number of every contractor or temporary employee you hired. And, don’t even get us started on nexus.
According to Score.org and the National Small Business Association, the number one thing small business owners unanimously dislike is doing taxes. There’s compliance issues, tax codes, financial costs, it never ends.
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So, what should a small business do?
If spending an afternoon shuffling through receipts sounds like a good time, then by all means!
Otherwise, the average small business owner has two choices:
- Hire an accountant or tax preparer
- Get an accounting software
The great thing about these solutions is that they can help you with more than just your federal taxes.
There’s a lot more to your business financials than just taxes. There’s crafting a business plan, entity types, loan applications–the list goes on. All of those items impact how your business files in January, and all of those items can be better managed using an accountant or accounting software.
Other items accounting experts and software can help with include:
- Filing required compliance documents
- Keeping company up to date with the latest tax laws
- Preparing annual statements of accounts
- Keeping company’s governmental status
- Maintaining records
- Handling payroll
- Ensuring employee tax codes, and payments are correct
Depending on your business, you won’t always need a full-time accountant. Sometimes just a few hours a week is enough. But, having someone make sure the books look tidy and trim is a game-changer.
Pro tip: Don’t think you can’t afford accounting help? You can. There’s a variety of packages for SMBs and software designed to help even the smallest of small businesses.
Forming a business plan with the guidance of an accountant or accounting software is a game-changer because they can find ways to boost your cash flow and save money. How do they do it? They spend a lot of time looking at your financial records and filing your taxes to ensure you get the best returns and the most out of your profit.
Another reason to work with someone who knows taxes in and out? Some folks just aren’t good at math.
Small business accounting, let alone taxes, can become tricky almost immediately. When it comes to measuring business metrics, sales, salary ratios, and total revenue, accounting experts (like ScaleFactor) can break down managing payroll or produce graphs to show ratio changes.
There’s a black hole no small business owner wants to go down, and that’s getting audited. Why? Audits are expensive and will take a long time (a really, really long time). The smart move is to turn to an accountant or accounting software that can help you navigate the rough seas of tax filing and auditing.
The grand takeaway here? It’s probably a good idea to work with an accountant and tax preparer if you’re a small business owner. The relationship could be one that’s an everyday check-in, or it could be as passive as making sure the books look clean. But, at the end of the day, finding that someone or software is critical unless spending those 100+ hours seems like a good use of your time. Probably not, though.
What solutions do you use to save time and money on taxes? We’d love to know what you found works for you, or what you found didn’t work. Hit us up on Twitter or LinkedIn. As always, for everything else, there’s the ScaleFactor blog.