The most basic query a lot of small business owners have when faced with the idea of hiring a small business accountant is why you need accurate accounting service in the first place? You will see along the course of this article as to why that is the case. Without accurate and up to date financials, your small business is as good as doomed. Let’s explore why.
Attracting Prospective Investors:
Any small business owner will tell you that there comes a time when you need to scale your business. When you need to diversify and explore unchartered territories. What he will also tell you is that for doing all this, you need capital. So when you approach banks or prospective lenders, you will need financials and here’s why. The prospective lender doesn’t know you or your business. So how does he know if your business is worth investing in? Here’s where the role of the small business accountant comes into the picture.
A Reflection of your Company’s Financial Health:
The financials certified by a small business accountant is his window into your business. The financials will tell him all about the health of your company and how good it is doing. He can measure the success of your business by taking a look at the financial reports of your company. You will find numerous reports that say that the cost of capital reduces a great deal if you possess accurate financial reports. Most lenders will not even entertain you if you are not in possession of your reports.
To a lender, your business will always appear more dangerous than it actually might be. So, to compensate for the risk, he will charge you greater rates for the use of his capital. It is not all that difficult to figure out then, that the accurate financials will most likely quell his apprehensions and thus reduce the cost of capital for you.
Filing Tax Returns and Other Annual Reports:
In most of the financial systems, it is imperative to make public the financial reports of the company. Also, these documents are required while filing tax returns. A badly presented financial report can hugely damage the reputation of the company and can make it almost impossible to attract investors and lenders. So your accountant can virtually be your man Friday when you’re dealing with bankers. And if your loan application goes through, you have your accountant to thank for.
So those were the main reasons for the need for accurate accounting service.