The short answer is yes. Every company needs some form of financial accounting.
The longer, more complex answer is still yes, but let’s expand on it.
Whether big or small, regardless of the industry, every company benefits from financial accounting, and every company should have some form of financial accounting.
The better question to ask is, “What is the best fit for my company in regards to financial accounting?”
Let’s take a look at DIY accounting, Out sourced accounting, and in-house accounting.
DIY Financial Accounting
In the early stages of starting a business, accounting comes with the territory. Chances are you are not an accountant and are relying on accounting software like QuickBooks. Wearing many hats, including the accountant’s hat, is the way most small businesses owners start out.
DIY accounting is standard and is very effective during specific periods in your business life span. Just be sure you are asking lots of questions, using accounting software of some kind, and staying on top of and understanding the numbers.
Out Sourced Accounting
Good news! Your company has grown out of your original small startup office! You have hired a few more people, so now it’s more than you and your startup partner.
Now maybe the time to think about taking off that accountant hat and handing it to someone with more experience. Your time is too valuable in other places at this point for you to be crunching the numbers.
Here are a few milestones that may indicate it’s time to outsource your accounting;
- Reaching $1 million in revenues
- Employing eight to ten people
- Accepting outside investor capital
There are several firms that can help you with out-sourced accountant. As a matter of fact Reach Reporting has great clients that can help you with your books. If you are interested we can sure provide you with a list of great resources.
In-House Full or Part-Time
As your company grows exponentially (yeah!), things tend to become a little more complicated. Company structure gets more complex, with different departments, managers, and projects. Gone are the days of seeing each of your employees every day.
Along with growth comes decision-making. Two critical factors in deciding if your company needs its accounting department are;
- Your outsourcing bill is HIGH. Are you paying your Outsourced accountant more than what a salaried employee would be?
- You’re making a lot of money. The term “a lot” means something different to different companies. Sorry, there are no magical percentages to share here.
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Final Thoughts on Financial Accounting
Every company needs financial accounting at some level. Beyond what we have mentioned in this article, many factors come into play when deciding who will be responsible. How long have you been in business? Have you increased your employee count recently? How is your cash flow going?
No one can answer these questions but you. Take your time, do your research, and don’t be afraid to change your accounting if necessary.
Which ever way you go make sure you never take your finger off the pulse of your finances.