10 Essential Accounting Services Every Business Needs

Using accounting services allows entrepreneurs to streamline bookkeeping tasks and gain real-time insight into their company’s financial health. They can also improve their decision-making by analyzing data.

Choose an accounting software with a seamless interface, a short learning curve, and convenient features like automated invoice reminders to boost collections. Some programs even let you track and record receipts digitally, eliminating stacks of paper.

1. Bookkeeping

Bookkeeping services help businesses keep their financial records organized and up to date. These services include everything from tracking daily sales to reconciling bank statements. They also track how much a business owes, which can indicate problems with cash flow or inventory management.

Bookkeepers record all of these transactions into general ledgers and other accounting records. They can also handle more advanced accounting tasks, such as analyzing data and preparing yearly statements for tax filings.

The process of preparing these reports involves consolidating and reviewing the information gathered through bookkeeping. It’s critical to the success of your business, and it requires a high level of accuracy to ensure your company’s financial health. Investing in a good bookkeeping service helps to streamline the process and save time and resources.

2. Payroll

Payroll is the compensation a company pays its employees for their work. This includes not only the employee’s base salary, but also their allowances and benefits. It also involves withholding federal, state and local taxes from each paycheck and submitting them to the appropriate tax agencies.

Small businesses may manage payroll internally, or they may outsource this function to a third-party provider. A specialized payroll service can help you calculate your employees’ paychecks and ensure that the proper taxes are withheld.

Choosing the right payroll service will depend on your specific needs and budget. Consider the cost, the number of employees you have and how often you run payroll. Some services are available on a month-to-month basis while others require yearly contracts. It’s also important to understand the tax schedule and whether you want to file a single quarterly or annual return.

3. Accounts Receivable

Accounts receivable are amounts owed to a company by its customers for goods or services provided on credit. Companies typically record accounts receivable on the balance sheet as current assets and expect to convert them into cash within a year. Depending on the size of a firm, the AR department might include a team that handles invoices, tracks payments, explains payment terms and discounts to customers, calls late payers to speed up payments, and maintains accurate records.

The best accounting software tools offer robust and streamlined accounts receivable processes. For instance, AI-based invoicing tools connect to sales channels and payments systems to automate the process of importing all transactions – sales, fees, and discounts – into accounting software for analysis and reporting. This also helps with reducing data entry errors and improves tracking of customer payments.

4. Accounts Payable

Accounts payable is an accounting sub-category that addresses the short-term debts owed by a company to vendors, suppliers and service providers. In most cases, a robust accounts payable process helps improve cash flow and builds credit, allowing businesses to negotiate better payment terms with suppliers and vendors.

A good accounts payable service enables companies to keep track of vendor invoices and payments while collecting crucial data for financial reporting. It also helps a business maintain a strong relationship with vendors and identify opportunities for cost savings.

Accounts payable departments must follow strict internal controls to prevent fraud and ensure the integrity of the financial statements. Fortunately, there are a number of automated tools that help businesses streamline the accounts payable process.

5. Taxes

Tax accounting involves ensuring compliance with local, state and federal regulations as well as leveraging tax breaks and laws to maximize financial benefits. This service may also include making tax payments and preparing year-end returns.

The right accounting and bookkeeping software can simplify your tax filings. It usually combines accounting, invoicing and project management into a single platform so you can track time spent on each client, automate overdue payment reminders, and send invoices via email or SMS.

6. Financial Reporting

Financial reporting is the documentation that reveals key accounting data to stakeholders like shareholders, regulators and creditors. These reports adhere to specific regulatory requirements, so they have to be accurate and consistent.

The information in a financial report outlines how much a business is making after expenses and how many assets it has versus its liabilities. This is a vital piece of information for making long-term decisions about the future direction of your business.

Choosing an accounting service that offers comprehensive financial reporting services can save your business time and money.

7. Budgeting

Accounting services include bookkeeping and financial accounting. Bookkeeping involves recording transactions and reporting them to help you understand your company’s current state, while financial accounting focuses on strategic finance and forecasting future growth.

A well-defined budget sets the goals and expectations for company expenses and revenues for a given period. It also helps management assess whether a company is on track to meet those objectives.

Documented budgetary information is valuable for companies seeking investment or loans. Investors value detailed information about a company’s past, current and predicted financial performance. Budgeting also enables better resource allocation. For example, it can help a company prioritize spending by focusing on line items that directly contribute to revenue or profit. This can make it easier to pivot when circumstances change. This flexibility translates to greater success. It also demonstrates responsible financial management to investors.

8. Cash Flow Management

Cash flow management involves tracking and optimizing how much money comes in and goes out of your business. The goal is to have positive cash flow where more money is coming in than is going out, which can then be used for new projects like hiring or geographic expansion.

A good accounting service will help you set cash flow goals and monitor them on a regular basis. They’ll also help you come up with strategies to improve your cash flow, like negotiating better payment terms with suppliers or offering early payment discounts to customers.

There are many online services that provide a variety of tools for managing your cash flow, including budgeting. Google Sheets is a free tool that provides basic spreadsheet functionality, and is a more sophisticated solution with features for accounting, invoicing, reconciliation and more.

9. Financial Analysis

Financial analysis involves examining historical financial data to assess performance and make predictions. It enables organizations to evaluate investment opportunities, manage risks, and enhance budgeting and decision-making processes.

Financial statements such as the income statement, balance sheet, and cash flow statement provide key insight into a company’s profitability, liquidity, solvency, and efficiency. Analyzing these documents with the help of professional financial KPI tools allows businesses to examine trends, conduct benchmarking, and identify areas for improvement and growth.

Having an efficient system for gathering and organizing data helps to maintain the accuracy and consistency of financial analysis. This is crucial to providing stakeholders with an accurate, cohesive picture of a company’s financial health and stability. This includes investors, shareholders, and lenders who use this information to determine if an investment is a good fit for their portfolio.

10. Financial Planning

Financial planning services help a business plan for future growth. It encompasses many different functions and may include budgeting, forecasts, and financial reporting.

A FP&A team’s financial planning reports should show revenue projections (sales minus expenses and overhead) and cash flow forecasts. The latter is a crucial service, as it helps businesses understand their overall financial picture and whether they’re able to pay all of their invoices, expenses, and debts.

Savvy entrepreneurs seek strategic accounting services as well, including financial model builds, pro forma cap tables, and financial review meetings. All of these services are geared towards giving a business improved long-term visibility into fund allocation and empowers better decision making. For instance, an accounting software simplifies the process for businesses putting together their own financial plans. Its visual map lets you see the full data in a single dashboard.