Starting a small business is stress-inducing. Business owners have many challenges in the first few months, so getting accounting services is not a priority. Because of limited resources, they would much rather maintain the books themselves.
Although small businesses employ 10.3 million people in Canada as of 2021, one of the top reasons some of them fail is financial mismanagement. They run out of money and have no idea why. Professional accountants from companies could tell you. However, it may be too late by then. So it is best to cover all your bases at the get-go.
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Accounting Services Are Necessary
Proper financial management is critical for sustaining and growing a business. Contrary to what most people believe, accounting services should come at the company’s start, not at the end.
Accounting is not as simple as you might think. You want to save money by doing accounting tasks yourself, but you might be doing the opposite. Unless you have a good grasp of generally accepted accounting principles (GAAP), you are probably making costly mistakes.
The Benefits of Hiring Accountants
Hiring an accounting professional in Canada such as the Faris CPA firm in Toronto is not cheap, but they are worth it. Accountants typically study for four years to get their designation. Certified public accountants or CPAs take even longer, typically six or more years. The knowledge and skills they acquire can benefit your business in many ways.
Keep you compliant
By law, small businesses in Canada must keep accurate financial records to support income and expense claims. Aside from tax authorities, shareholders and other regulatory bodies must have access to these records at any time. Failing to keep your books in order can land you in a world of hurt. Your accountant can ensure you comply with all business record requirements.
Keep you in control
Most owners of small businesses have only a vague idea of their actual financial situation. An accountant can keep you updated on everything that goes on with your finances and allow you to take control. You will be able to avoid losses due to fraud, theft, poor cash flow or business asset management, and human error.
Your accountant can also increase transparency and accountability in your business transactions by adhering to GAAP. In other words, you know what’s going on with your money and who is responsible.
Keep you informed
One of the best things about proper accounting is you can quickly see how well your business is doing. Financial statements and reports provide you with key performance metrics to help you gain insights into your company’s financial condition and performance.
With the help of your accountant, you will find out if you are losing money, making a profit, or only breaking even. Knowing these things can help you decide the next steps for your business.
Keep you liquid
Cash flow is critical for keeping operations going because it indicates liquidity. When making decisions on purchases, you need to know how much you afford before spending it. Otherwise, you might find yourself with shiny new equipment but no money to pay overhead expenses. Your accountant can provide you with the information to make those decisions.
Keep you viable
Most small businesses require a fresh infusion of capital to grow. However, to get a bank loan or investor funds, you need to show a good grasp of your finances. Your accountant can provide the financial information a potential lender or investor will use to decide if your business is a reasonable risk.
Invest in a Reputable CPA Firm in Toronto
Hiring a qualified accountant is crucial for small business success. Consider their fees as an investment in the sound financial health of your company. Without proper financial management, you might as well close up shop.