First things first:
Why should you choose to be a small business accountant?
Here’s the quick answer:
Small and medium businesses are the backbone of the economy. The Association of Chartered Certified Accountants (ACCA) estimates about two-thirds of jobs worldwide are created by SMEs.
This means helping them succeed translates to helping a huge number of people be and remain employed.
That’s a pretty noble job, isn’t it?
So to be an effective part of building or protecting small business wealth, here are what you need to master according to The Balance Team.
Skills of a Small Business Accountant
For startups
- Financial analysis. What does their business plan say about their finances? Is it feasible? Does it need tweaking? You see you can tell a lot from the business plan itself. For example, you should be able to analyze if a subscription-based service is better for their current financial health than one-time license fees.
- Cash flow management. Plenty of startup entrepreneurs we meet are too focused on increasing profitability and ignoring cash flow altogether. While it’s normal to have a negative cash flow at first, you, as an accountant, should guide them on how to achieve positive cash flow in the shortest possible time. One way to do that is to take advantage of an online accounting system, which provides a real-time view of your finances.
- Understanding of accounting software. A reliable accounting system is a must for every business. The question is which accounting software will fit their requirements and budget? If you have no idea yet, here’s a quick comparison we made to get you started.
- Awareness of government regulations. Complying with government regulations is crucial for any business; otherwise, penalties may be imposed. Hence, you have to make sure, as a small business accountant, that the accounting procedures in the startup you’re helping does not violate any regulation.
- Knowledge of different business structures. This skill is particularly needed by startups. Should they register as one person corporation or a single proprietor? Which will the best business structure for the situation?
For existing businesses
- Employment classification. If you can, review contracts to make sure the independent contractors are not classified as employees. The Department of Labor and Employment has different regulations for these two. This is particularly applicable to 13th-month pays and other benefits an employee may get.
- Financial statements. It’s not unusual for business owners not to understand what their financial statements mean to their business. Some see a positive number, and they think the business is doing OK. This is because “they get mixed up about profits, assets, cash flow, and return on investment,” says Robert Follet.
- Closing out books. We can’t stress the cruciality of accounting in every business. Hence, as the accountant, you should know how to close out books at the end of the year, so your client can file the proper income tax returns. Not knowing how to finalize books can cost your company a lot. If you’re doubtful of your financial reporting skills, getting accounting software is a good place to start. It can automatically close your income and expense accounts then add net profit and loss to the earnings account.
- Compiling and submitting taxes. This is self-explanatory actually, but we’re including this nonetheless. The reason you should master this skill is to help SMEs prevent BIR audits. Or, if it happens, at least you should guide your clients through it.
- Financial forecasting. Your financial prowess does not end at preparing financial reports. You should also master financial forecasting to help your clients make informed decisions in the future. Is the business ready for expansion? Should they let go of some assets? This will all depend on your expertise.
These are not the only skills you should have in your arsenal to succeed in the industry. However, these are what most, if not all, SMEs need from their number crunchers at the least.
Oojeema can help you with preparing financial statements and closing out books with ease to help you win financial forecasting.