Most small business owners are not accountants and their time is more often than not
better spent on growing revenue than on functions that feed into financial statements on the expenditure side. Financial statements should be prepared monthly at a minimum so that the business owner can adjust for issues with more current information in the form
of profit and loss, balance sheet and cash flow statements.
Taxes and Payroll Preparation
Many small business owners are scared of handling taxes, so they often have
professionals prepare tax forms such as sales tax forms, payroll tax forms and income
tax forms. They are more likely to handle their own accounting and bookkeeping. Bookkeeping is defined as routine business transactions such as accounts payable (paying
vendors), accounts receivable (invoicing customers, collecting payments and managing not yet collected invoices) and other routine related functions such as operating a point of sale system where sales are recorded and inventory managed. Accounting is defined as non-routine business transactions and financial statement preparation to mention two functions related to small businesses.
However, sales tax form preparation and payroll tax preparation, which most small business owners are hesitant to handle themselves, are typically the easiest accounting functions requiring the least amount of
knowledge and skills. A small business should instead make
sure that professionals are preparing their financial statements. Without timely, accurate and reliable financial statements a business owner is operating blindly. The business owner must get an accurate picture of where they are before she/he can determine where they can go.