Even though the economy has been very difficult to navigate for small business owners in the last several years, it may make sense to actually increase the dollars you spend with your accountant this year. I realize at first glance this statement may appear to be contradictory to surviving a tough business environment, but give me a chance to explain.
Now, more than ever, it is worth your time and money to make sure you have a handle on your small businesses finances. Not only are you monitoring the health of your business closely but you are most likely very conscious of dollars flowing in and out of your business on a daily and weekly basis. You may have had to budget more conservatively, become more efficient, or create new ways to generate revenue to survive this recession. And, not only are you paying close attention to your finances, your banker (and possible investors/buyers) are most likely paying close attention as well. And this is not necessarily a bad thing! Having financials prepared by your accountant could be invaluable to your business for several reasons and could ultimately help you weather the economic downturn.
First, accountant prepared statements can help you stay organized and can leave you more time for running your business. If your accountant is preparing statements, you have peace of mind knowing it is being done by a professional and hopefully you also have less stress in your life because that particular task isn’t your responsibility!
Secondly, at First National Bank of Pandora, and many other community banks, small business lenders and bankers can be one of your best resources. Not only are they looking for ways to help your business succeed, but they are also talking to other small business owners who are most likely experiencing many of the same challenges you experience. Their daily interaction with other entrepreneurs and with other professionals (attorneys, CPA’s, etc) could provide you with valuable feedback on your business practices. In addition to using financial statements as support to borrow money from the bank, having legible and organized financial statements can help your banker recognize what services or resources your business could use to be more successful and efficient.
Another benefit to using your CPA regularly for accountant prepared financials is that it provides another layer of feedback and protection for you and you business. Your accountant will also have ideas and suggestions that could help your business. And knowing you’ve had a professional work on your books goes a long ways towards giving your financial statements credibility—both to your banker and anyone else who might inquire about your business.
Finally, if you are looking to sell your business someday, accountant prepared statements will actually make your business more marketable in most cases because that second set of eyes provides assurance to potential buyers (or investors) that the numbers are reliable. This reliability could actually increase the value of your business because there would be fewer questions about the historical performance of the entity over time. There are several levels of accountant prepared statements (compiled, reviewed, and audited) but even the most basic compilation can be very useful for these purposes.
At the very least, consider discussing your business financials with your banker and your accountant to determine what format will be most helpful for you and your business. Spending a few extra dollars will be more costly in the short run, but those dollars could be some of the most valuable you spend this year.