You know the thing is, as far as your accounting needs go, the only difference between running a small business and a medium sized business is the number of transactions you have. You still need to know as much about accounting in a small business. You are bound by pretty much the same laws but you can’t afford and don’t really need to employ a full time specialist to look after each area.

No matter what size your business is there are three very important roles that need to be filled. Most small business owners will dabble in at least one of these areas from time to time and sometimes you may have one person who can cover two of the seats for a period of time. All three can be very effectively outsourced to a remote team or professional advisors.

So what are the three seats you need to fill?

Someone to keep track of what you sell and what you spend

To do this you need to

  • Invoice clients for work done or sales made
  • Keep track of everything you spend and how you pay for it
  • Enter all that into an accounting system
  • Reconcile (“technical accounting term warning” here people, I’ll explain all this in another post) your bank accounts and credit cards
  • Prepare at the very least annual accounts but if you’re a smart operator monthly accounts so you can see where your business is up to

Bookkeepers are the people you can easily outsource this work to. You could also try to do parts of it yourself if you choose to.

For instance you could find some online software for client invoices and use something like Shoeboxed to scan your expenses invoices and receipts into. Both of these will help your bookkeeper and so reduce your costs.

If you use a cloud based accounting software like Saasu or Xero then you get your bookkeeper to set up some templates for you to follow.

Someone to make sure you are keeping the tax department happy

(And I know you live to make the tax department happy!)

To do this you need to know

  • What is and is not tax deductible
  • The best way for you to take money out of the business (ie a salary, dividend etc)
  • What is the best legal structure to operate your business from given your particular circumstances
  • That you are complying with all the financial legislation relating to your business
  • How to prepare and lodge your annual business tax return
  • How to keep sweet with the government on your company records by paying the gratuitous annual company payment (Don’t get me started on what a rort that one is!) and doing minutes of meetings with yourself if you are a sole director (I feel the need to find a soap box!!!!)
  • Lodging your quarterly or annual Business Activity Statement
  • Making sure you are paying people correctly and paying all the extras like PAYGW and Super on time.

Generally speaking you will find a tax accountant who can advise you on all of this.

Seeing a tax accountant is like seeing any other professional advisor they are often so comfortable with the terminology of their profession that they forget other mere mortals don’t speak their version of geek speak. The majority are very happy to explain things to you so don’t be afraid to ask. And with those that aren’t obliging don’t be afraid to shop around.

Most bookkeepers are now accredited BAS agents and if yours isn’t then your tax accountant can lodge the BAS for you or you can lodge it yourself.

Someone to help you manage and understand the financial side of your business

This will involve answering questions like

  • I’ve made a profit so how can I have no cash in the bank?
  • What do my financial reports mean?
  • Should I look at more than one financial report?
  • Are my goods or services priced correctly?
  • Are my clients paying my bills?
  • Can I afford to employ someone?
  • How much do I need to sell in order to get the level of income I want from the business?
  • How do I control the cash that is flowing through my business?
  • My business is growing so quickly – how do I manage that?
  • I feel like there is something wrong but what the hell is it?

This is perhaps the hardest role to fill in your accounts team.

Some of these questions you may be able to answer for yourself if you are attuned to the financial side of the business and can read financial reports.

Some of the questions could be answered by your bookkeeper depending on what their focus and abilities are. Some bookkeepers are just keen to push through the data entry and don’t wish to be responsible for interpreting the results. Others are prepared to get involved at a higher level.

Your tax accountant will be able to answer all these questions – although you may not want to pay their bill for doing so. Some of these questions are what I would call one off questions whilst others require ongoing involvement in your business.

There are other people out there who fill this niche in your accounting team. We might call ourselves a CFO On Call (that’s Chief Financial Officer to translate my own piece of geek speak!) or a Business Manager on Call or if you are totally over the top and have tickets on yourself you might choose a more ostentatious name like The Queen of Numbers.

So that’s a very brief overview of the three seats.

However you choose to do it these are the three seats you must fill in your finance team for your business to thrive.

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