As a small business owner, you don’t have a lot of time to research all of your options for accounting services. Plus, there’s not a lot of information out there about monthly accounting. How are you supposed to find your right fit if you can’t compare all of your options?
CSI Accounting & Payroll has worked with small business accounting for over 50 years. We know a thing or two about our specialty - as well as different accounting options that may be a better fit for some businesses.
While each of our articles and videos briefly touch on differences between monthly accounting and annual accounting, no pieces explicitly outline the differences and how they might meet your needs - until now. Here, we discuss:
When you think of monthly accounting, you might think of bookkeeping. However, it’s a much more extensive service.
It also involves tracking your financial activities and reconciling your accounts every month. Receive monthly financial statements, have monthly discussions for advice from your accountant, and even call them as much as you want with one-off questions.
This approach allows you to have a clear understanding of your cash flow and helps you to catch and correct errors more quickly. The other focus is on your taxes. Monthly accounting also removes the need to work with an annual tax accountant - and the cost to file your taxes is included in your monthly fee.
With regular touch-ins from your monthly accountant, you can ensure your tax liability is minimized through tax planning. With the help of tax projections, you’ll also know what your tax season will look like.
Monthly accounting is much different from annual accounting. Annual accounting is mostly just the process of preparing and filing taxes each tax season.
If you’re lucky, you may receive attempts at advice or projections based only on your current situation and the prior year. Annual accounting is often used alongside an outsourced bookkeeping service - or just one of your employees who performs some bookkeeping tasks on the side.
In general, annual accounting by itself is often a cheaper, limited service - but how do you know if this option is good enough for your business?
Annual accounting (paired with bookkeeping) is a good option for small business owners who are just starting out. This time span can vary a bit depending on your industry. If you’re just starting out, either you need to grow more before you can afford a larger accounting investment, or you need to increase your financial activity before you truly get value out of a more insightful service.
Monthly accounting is an ideal solution for small or medium businesses that are able to invest in their accounting - and see the value in doing so. This option might cost more than annual accounting in some instances, but it’s a complete service with value to match or exceed the price.
If your business is ready for monthly accounting but you still choose to only use annual accounting, you can put your business at risk. If you’re having any issues, you won’t notice them as quickly - and they can snowball. Many business owners find monthly accounting to be worth it to stay on top of their finances and make better-informed decisions for their businesses.
Is monthly accounting up your alley? Find out if you’re a good fit to work with CSI here!
It can be difficult to find your ideal accounting service! Now that you know about your options, ultimately, the decision comes down to your specific business needs.
If you have a high volume of financial transactions and want a more complete service, monthly accounting may be a better option. If you have a smaller business with fewer transactions and don’t want to invest in a full service yet, annual accounting may work just fine.
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Not ready to talk? That’s okay! First, you can learn more about the different types of advice a monthly accountant can provide.