At a Glance
Main Takeaway
Your goal as a private business owner is to run a profitable operation. Although sales and revenue are essential for small business growth, behind-the-scenes accounting and bookkeeping can make or break your company’s success.
Next Step
While many company owners perform accounting tasks when starting, they can quickly become overwhelming as you scale your business. Learn why using outsourced accounting and bookkeeping services is an excellent strategy for small business growth and the top five questions you should ask your accountant to scale your company.
1. How Do I Improve My Business’s Cash Flow?
Cash flow can significantly impact a company’s success or failure. The U.S. Small Business Association (SBA) defines cash flow as the money coming in or out of your business ledgers. Tracking incoming and outgoing money on a cash flow statement allows you to monitor your accounts payable and receivable. This method helps you to avoid late or missed payments and lets you know how much cash your company has available.
To scale your company, ask your accountant how to improve your business’s cash flow. If you outsource your bookkeeping, ask the firm to pull your cash flow report and analyze where you can save money or implement more efficient operations. Switching from net 60 to net 30 terms or due on receipt in your accounts receivables may be helpful. You can negotiate longer payment terms if you need more time to pay creditors to free up some cash.
You can also look at amortization and depreciation numbers to better understand how your assets can gain or lose value over time, making it easier to plan where to use your available funds.
2. How Do I Plan for My Yearly Taxes
Tax planning is essential to your company’s success. Smart business owners take charge of their taxes well before filing seasons by understanding their tax liabilities and how these may change based on new IRS regulations or company growth.
When you work with a professional accounting partner like Windes, you gain expert insights on deductions and credits. Besides ordinary expenses like a home office deduction, payroll, and utilities, your accountant may recommend reducing your tax bill by using Section 179, deducting bonus depreciation, contributing to a retirement account, or making a charitable donation.
In addition to keeping accurate records, your accountant can ensure you are paying quarterly taxes if you will owe more than $1,000 at the end of the financial year. Your accountant can help you prepare your quarterly estimates and file them. Paying quarterly estimated taxes helps alleviate the stress of meeting your annual tax obligations.
3. Should I Change My Business Structure?
When starting a business, you must choose an entity type, such as a Limited Liability Corporation (LLC) vs. an S-Corporation. However, as your company grows, you may find that the structure no longer serves your long-term goals. When working with your accountant, it’s essential to ask whether your current entity type is holding you back from expanding and, if so, what options you have for restructuring.
For example, as a sole proprietor, you are responsible for your business’ liabilities and pay personal income tax for your profits. Your accountant may advise moving to an LLC to shield you from personal liability for debts or judgments against your company. Alternatively, if you own an LLC but are looking to expand further, you may need to move to an S-Corp or C-Corp to add partners and enjoy additional tax benefits.
4. What Are Possible Financing Options to Grow My Business?
A fundamental rule of scaling a business is putting your profits back into the company. A 2018 Forbes article states business owners should consider putting 30% to 50% of their earnings back into the business to see growth. However, if your company doesn’t currently bring in enough revenue to allow you to reinvest at such a high rate, you may turn to options like financing.
When discussing small business growth strategies with your accountant, ask about potential financing options that allow you to grow without taking on too much debt. Your accountant may be able to guide you through the benefits and downsides of multiple financing choices, such as:
- Investors
- Loans
- AR financing
- Business credit cards
- Crowdfunding
Each financing option has rules and potential tax liabilities that your accountant can help you understand. For example, crowdfunding may be an excellent option for tax-free financing unless it meets the 2022 IRS threshold of $20,000. Additionally, funding through a loan or credit card for deductible business expenses, such as machinery or equipment, can result in tax benefits in the long run.
5. How Can I Increase Overall Profitability?
While revenue and profitability are closely tied, they do not refer to the same concept. Revenue is the money your business brings in by selling goods or services. Profitability refers to the degree to which your company realizes a financial gain.
When speaking with your accountant, ask them to help you identify strategies to help you increase not just your revenue but the overall profitability of your business.
Generally, boosting profitability requires you to do two things: increase your revenue and cut your expenses. This approach includes raising prices, updating your terms, and negotiating with vendors and suppliers. It can also include expanding into new markets.
Streamlining business accounting operations is another essential element in improving profitability. Hiring an in-house team of bookkeeping and accounting specialists costs time and money. You must find qualified talent, train them on your unique operations, and pay them salary and benefits. For a business owner, these expenses can add up and take away from your ability to scale.
Outsourcing your accounting with a professional firm like Windes can significantly benefit your company’s profitability. Working with a professional outsourced accounting team minimizes costs and improves efficiency. Our experienced accounting team understands all financial rules and regulations for small businesses. We use up-to-date software and bookkeeping methods to ensure maximum profitability and growth for your company.
Outsource Accounting and Bookkeeping for Small Business Growth
Implementing small business growth strategies with the help of your accountant is one of the best ways to scale your business. When you opt for outsourced bookkeeping services with a professional accounting and tax advisory firm like Windes, you ensure streamlined cash flow operations and tax preparation to minimize your yearly liabilities.
If your business needs strategic financial planning or back-end transactional support, Windes has outsourced accounting services that help fill the gaps to fuel the growth of your business.
Contact Windes today to learn more about how we can help you scale to achieve higher profitability.