Accounting for your retail business is not the same as accounting for other small businesses. There are many accounting challenges that are unique to this sector like improper inventory management, misplaced paper bills, and day-to-day transactional errors. They only increase if you do not have a dedicated accountant or an accounting firm that can take care of your accounting and bookkeeping processes.
Reason #1: You can avoid Small Business legal mistakes
Around 72% of small businesses have one resource that takes care of both accounting and HR. It will seem like for a small business setup, this might work but it’s not so. Accounting and HR are fields that have frequent updates in law and regulations. These are also professions where one small mistake can cost you legal penalties. It is always better to have dedicated resources for these roles. If you do not have enough cash to hire these resources you can look for small business funding options or outsource the work.
Reason #2: They can help with your business plan
An accountant can help with your business plan and initial set-up such as,
- Analyzing the finances required as per the business plan and your current financial situation.
- Advising on the best business structure in terms of ownership (partnering, incorporation or sole proprietorship).
- Making sure that your accounting procedures are compliant with government rules and regulations.
- Managing personal and business expenses and emphasizing the importance of keeping them separate.
Reason #3: It is a big job
You might hire the best accountant for your retail business, but the amount of work to do might be overwhelming for just one person. Instead of burning out your accountant, make his/her job easier by using retail-specific accounting software. The purpose of this software is mainly to increase accuracy and to easily maintain a large amount of data.
You can also opt for a POS (Point of Sales) software with an accounting feature to help you with the overall operation of your business. While choosing your software make sure that your accountant finds it easy as they will be operating in it day-in and day-out.
How an Accountant can help your Retail Business
Small businesses usually incur losses due to inefficient or incorrect tax filing. Depreciation, out-of-office expenses, and home-office rent are usually not tracked and filed for a tax deduction. Accountants can easily identify the possible deductions for the year and advise you in advance. Most states in the US also levy off sales tax. The accountant can guide you through the process of getting back the tax amount.
As a retail business owner, you must be aware of how difficult inventory management is. Accounting for your inventory gets complicated, especially when you have different prices for each unit of goods. An accountant not only maintains the cost of the inventory but also checks the value of remaining units periodically. This will help you analyze the loss that your business has incurred from excess inventory.
Paying your employees correctly and maintaining an accurate record of it is complicated. You will benefit from an accountant taking care of the payroll process to avoid confusion and delays. There are many factors in the payroll process, like; the payroll cycle, salary updates, and reimbursements. You shouldn’t leave this important part of your business to someone who is unqualified.
There must be a massive amount of data that your retail business produces every month. Maintaining this data and creating relevant reports that will benefit your business is what accountants do best. These reports give you an overview of your company’s performance and the targets that you have hit or missed.
Business Growth Strategy
Aiming to expand your retail business? When opening multiple locations or expanding your business online, you can use an accountant to help you guide your financial decisions.
- Loans and other alternate funding options are the first things you will shop for once your expansion plan is ready. It is best to have an accountant help you decide which option is right for your company. They will have a good idea of your financial requirements.
- If you are looking at business growth in the form of franchising; accountants can help you with F.T.C rules, audits, tax and consulting services.
- If you are trying to buy or sell a retail business, consult an accountant. They can provide insights on market trends, the value of the company that you are buying, their annual profits, tax reports, etc.