If you have an accountant, chances are good that they’re making life a lot easier – but chances are also good that you’re not making the most out of your relationship.
For instance, you know to go to your accountant to, say, file your taxes or get help with things such as making financial statements. Those are the bread ‘n’ butter of any business-account relationship, and that shouldn’t stop.
But there are several conversations you should have with your accountant that perhaps you haven’t yet – either because this is a new relationship, you haven’t thought to ask about a specific topic, or perhaps because your accountant is too busy to give you the level of service you deserve.
If you own a company, here are five important topics that you should be tackling with your small business accountant.
1. Cash Flow: Many small business owners think of their finances in terms of revenues and profits. They’re the building blocks of an income statement, so that’s completely natural. But cash flow – the actual cash moving in and out of your money every month – is just as important, if not more. Cash flow is what you use to pay employees, pay taxes and tackle other everyday expenses. It’s actually possible to report a profit but still have negative cash flow – and that’s a problem. This concern is especially prevalent in nonprofit organizations, which experience very seasonal influxes in donations.
Every small business should talk to their account to not only understand cash flow, but figure out how to improve it. For instance, finding small areas in the budget where you can cut back might seem pointless because it’s a few dollars here and a few dollars there. But ultimately those can still have a very positive effect on your cash flow over time. So talk to your accountant about understanding cash flow, learning how to monitor it and determining ways to improve it.
2. Inventory: Inventory – essentially, goods that you own, whether they’re used to produce something or are finished products not yet shipped out – isn’t the first thing that comes to mind when you think about accounting. But inventory is very tightly tethered to your finances, and some fuller-service business firmscan help you with this aspect of your company’s operations. How you actually order items and fulfill orders affects things such as federal and state tax liabilities, profits and cash flows. Thus, some accounting firms can be quite familiar with inventory processes and how to tweak yours to benefit you financially.
3. Insurance: Again, insurance isn’t necessarily a first-of-mind topic when it comes to your finances. But considering that insurance literally protects your profits, it’s a necessity for every small business – and something that many accountants and business-services firms will be equipped to help you understand better. Businesses naturally will need all sorts of types of insurance, from property to product liability to workers’ compensation. There’s even business interruption insurance. In the event of a disaster like a fire, property insurance might cover the costs of what was destroyed in the building, but business interruption insurance will actually cover you for profits you likely lost as a result of your company’s operations pausing.
4. Fraud: Accountants can help you with fraud of all types. Naturally, they’re always on the lookout for things such as tax scams, and in fact simply having a reliable accountant can keep you from running into several types of tax fraud. But there are other types of issues to look out for – and again, depending on the breadth of service provided, your accountant may be able to help. For instance, every company should be increasingly aware of cyber threats and prioritize protection of their corporate and customers’ data. There’s also the risk of internal fraud – employees either siphoning away money or sharing corporate secrets for their own gains, among other problems. You want a firm who can help you identify these risks in advance … and help you investigate them should they happen regardless.
5. How to Expand: Accountants aren’t just there to help the financial trains running on time – they should be helping to put your company on a better foundation from which you can grow. How you grow, of course, can vary. There are organic methods – adding new products to your lineup, spreading out into new territories. But then there are inorganic methods, such as buying up other businesses. You might think it’s crazy to think of your small business jumping into mergers and acquisitions, but companies of varying sizes use buyouts to do things they can’t accomplish (or can’t accomplish as easily) the old-fashioned way.