Why Working With an Accountant in Your Online Business is a Good Idea
When you own an online business, you might think that financial management to do with your website isn't that important.
You sell a product, money comes in, you pay the hosting, advertising and keep the rest right? Wrong!
Often an online business is more technical financially, than a traditional bricks and mortar business. This is because a lot of accounting services, systems and rules are set up for offline business, so its very important to ensure that you set up your online business in a way that the accounting can be done.
A lot of people don’t like doing their accounts and so this is where I would recommend a small business accountant. They will take on most of the financial elements of the business for you. However — it is always good management to ensure you understand the basics around profitability so you are always monitoring and ensuring that you are making a profit.
Business accountants will work out your tax position, notify you when your tax is due for payment, they will ensure your business is trading legally from a financial point of view. They can reconcile all of your transactions each month and produce your end of year accounts.
Why is this important? Its critical that you stay on the right side of the IRS in terms of your tax liabilities and paperwork. An accountant will ensure that you are only paying the tax you need to be paying. The regular management of your financial position by an accountant will flag any issues around profitability early so you can address them before they get out of hand. Regular inputting and reconciling of your transactions also ensures that you don’t find yourself with a mountain of paperwork to do at the end of the financial year. It also ensures that you can focus on running and growing your business rather than doing financial paperwork that someone else can take on.
Another detail is that if you decide to sell your website, then your accountant will have well prepared financials already completed for you to present to prospective buyers. This is a huge benefit and adds a lot of trust to the sale information.
Accountants also provide additional services like helping you prepare forecasts, cash flow analysis and any other financial questions you need answering.
I recommend using financial accounting software like FreshBooks, QuickBooks or Xero and having this linked to your bank account for automatic transaction reporting and also allowing secure access to this for your accountant so they can get the data and reconcile your transactions.
How do you choose an accountant? I recommend selecting a small business accountant as this will ensure they are focussed on your sized business and you don’t pay large fee’s from a big accounting firm. Another thing to look out for is to try to get an accountant who is familiar with online website businesses and has other clients they work for, who own websites. This way they will be familiar with the intricacies of online businesses and you won’t need to show them so much.
You can also look at online accounting services as these are very experienced with online businesses and can be less expensive than a traditional accountant sitting in an office. One online company I would recommend is www.bench.co as they have a good offering at a great price.
When looking for an accountant, seek to get quotes for their services and get this from 2–3 different firms so you can compare before making a choice who to work with going forward. Ask them to outline a breakdown of the services they offer for the fee. Questions to include:
- Do they include reconciling your transactions?
- What frequency do they report back to you on the performance of your business?
- Does their fee include and forecasting?
- Does their fee include any meeting for you to ask questions?
- Does their fee include IRS tax preparation?
- Have they allowed for end of financial year accounts preparation?
To conclude; having a business accountant is important for the success of your business. They will take on work so you can focus on growing your business rather than getting deep in paperwork. I recommend calling one today.
If you found the above information useful, then visit our free resource website at www.emilyandblair.com (launching April 2021) for a vast library of likeminded guides, checklists and content devoted to online businesses.