All businesses and business owners have to file tax returns, so it’s natural that they would have an outside CPA, accountant or tax service to handle this for them. So they do have “an accountant”. But what about other accounting needs? A business might use a clerical person in house for some accounting activities, such as billing/accounts receivable and accounts payable. It might use an outside bookkeeping firm to do write up work and provide a monthly or quarterly financial statement. There could be any combination of these. When an owner is asked if they would like to talk about their accounting and tax needs, the first words out of their mouth is almost always “we already have an accountant”. That is not an unexpected response. But what does it really mean? And is it a sufficient answer?
But is this sufficient for a business owner? Certainly in some cases it could be, but I believe that in most cases it is not. Why not? When a business owner thinks that all he needs to do is file his tax return, all he gets is the tax return months after the end of his fiscal year of operations. That satisfies the IRS, but it offers virtually nothing of value to the business owner. It tells very little about the performance of the business.
Using basic bookkeeping or write up services offers much better information. But how complete is it and what does it tell the owner? Does the owner really look at it? Does he understand it? In many cases, probably not.
These are generally outside-looking-in services. Most CPA’s and outside bookkeepers, while academically proficient in accounting, generally do not have the expertise and experience to help the business owner analyze the numbers and assess the business operation. This is not a criticism. They have their role and they serve it well. Businesses require many different resources to be successful. I have shared many clients with outside CPA firms.
So what does a business owner need? I believe that an owner/manager needs to really understand what is occurring inside the business from both a financial and operational perspective. The objective is to help improve profits and cash flow. You can’t do that by using a tax return. You need timely and accurate financial information that can be analyzed and explained to the business owner.
A small business needs to have an internal accounting function to complement the outside accounting function of tax preparation. All mid- and large-sized businesses have an accounting department as well as an outside CPA/accountant. Of course, a small company does not require, nor is it able to afford, a full-time accounting department. But the owner can access resources that can provide the same general service on a part-time, affordable basis.
MEC Professional Services (www.mecprofessional.com) offers such services – everything from basic accounting/bookkeeping services to CFO/Controller services — at affordable prices. However, rather than just turning over a financial statement, our service is designed to assist the business owner in assessing the operation with the objective of improving profits and cash flow. If you would like more information about our services, please visit our website and fill out the contact information or give us a call at (904) 900 4360.