In Pursuit of Profit
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QuickBooks is an excellent bookkeeping platform for small businesses. However, it is just that – a tool to keep track of finances. The benefit that a business derives from QuickBooks is contingent upon what is put in and how much expertise is available to use the tool correctly. QuickBooks will not manage a business’s finances any more than a hammer will build a house without a carpenter there to swinging it.
A disorganized structure, poor inputs, unreconciled accounts, or incorrect data visualizations can not only leave profit on the table, but also negatively affect long-term business growth.
The benefits of using a bookkeeper or an accountant in conjunction with QuickBooks include improved accuracy, reporting, and decision-making as well as reduced risk of fraudulent activity and tax errors. The cumulative effect of these differences more than justifies the added expense of retaining a financial professional in conjunction with using QuickBooks.
When compared to a typical business owner, a bookkeeper is more likely to enter and categorize business expenses and income correctly to reduce mistakes. This establishes a firm financial foundation while creating better peace of mind. Leadership can rest assured that finances are being handled correctly and reported accurately, reducing anxiety around overall business management.
For businesses with outside financing, accurate financial reporting is typically required to communicate value with investors and shareholders, making this even more important reason to utilize the services of a bookkeeper or accountant.
QuickBooks is capable of robust reporting, but it requires an understanding of how data should be organized and presented. Business owners running reports themselves may lack the acumen needed to create sophisticated reports, limiting the available reporting capabilities included in QuickBooks. However, the kind of understanding that a bookkeeper or accountant brings to a business’s finances enables them to know which reports to use to display data in a way that will be most meaningful for leadership and investors.
A financial professional is going to know how to best use the data that results to make sound business decisions and recommendations. For that reason, it is still advised to lean on a bookkeeper or accountant to interpret and apply the data.
Financial data is the basis for cash flow management, hiring decisions, tax planning, and strategic investing. However, much like a race car’s potential cannot be fully utilized without a professional driver, data cannot be used to the fullest without a financial professional to analyze it.
People who use QuickBooks at a high level every day can recommend integrations to get even more out of the software. In fact, they may even be able to suggest other compatible business apps to use in conjunction with QuickBooks to streamline other business operations. These add-ins and add-ons provide value in the form of greater efficiency, more accurate record-keeping, and reduced paper waste.
Unfortunately, utilizing only in-house employees to manage the books increases the likelihood of fraudulent activity. An accounting firm has the policies and practices in place to screen employees so that business owners can be assured that they are working with a reputable professional. Furthermore, a credible accounting company will also have legal considerations in place to recoup losses if fraud does occur on their end. Without leaning on a third-party in this capacity, businesses must manage these risks on their end, which is a daunting task for time-constrained owners.
QuickBooks integrates with TurboTax to make filing taxes easier for business owners, especially those with uncomplicated tax considerations. However, some businesses may still want the reassurance from a financial professional that their taxes are being filed correctly.
For example, new owners tend to want some support and reassurance when filing business taxes for the first time. But green business owners are certainly not the only ones looking for tax help.
Businesses that have had past tax issues like needing to file amendments or file for extensions or those that have undergone an IRS audit, will likely want an accountant to take ownership of the process so that they can avoid the hassle year after year.
For businesses with more complex tax considerations utilizing the services of a professional ensures that all tax regulations are being met while working to reduce their tax burden where possible. Tax complications can arise due to a change in ownership or business entity type, merging with or acquiring another business, expanding into new markets, divesting a portion of the business, or downsizing operations. Any of these major shifts to the structure or daily operations of the business usually necessitates a financial professional to assist with tax filings.
QuickBooks and TurboTax may work well together to import the financial data needed to get taxes filed on time, but an automated software program will never do as thorough of a job as an experienced tax professional.
Giving a tax preparer access to the company QuickBooks account when it is time to file taxes ensures that the business will minimize its tax burden for that year. This is especially important for businesses that have not been working with a financial professional throughout the year to integrate tax planning strategies into ongoing operations.
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