You own a business that’s very, very small and are wondering whether monthly accounting is the right option for you.
The answer is probably not. Monthly accounting is rarely the right solution for micro businesses. Let’s talk about why that is.
At CSI Accounting & Payroll, we’ve provided monthly accounting services to small businesses for 60 years. That means we’ve talked to thousands of micro business owners who wanted to know:
- What is a micro business? How is it different than a small business or a hobby?
- Why isn’t monthly accounting good for micro businesses?
- Are there any exceptions or alternatives for micro businesses?
Micro Business vs. Small Business vs. Hobby
So, what is a micro business? There’s no formal definition, but Google will tell you that a micro business typically has revenue under $250k or has startup capital under $50k.
I think these numbers seem a little high. By this definition, roughly 75 percent of private employers in the United States are micro businesses! To me, micro businesses are often Sole Proprietors or Independent Contractors and have their business and personal taxes combined.
Here are some examples:
- Owning a small rental property or “mom and pop” shop.
- Freelance writers, consultants, or artists.
- A college student who paints houses or mows lawns for 15-20 neighbors.
- An employed mechanic who fixes up and resells lawnmowers on the side for $100 each.
Need more information? It helps to compare micro businesses to small businesses (which also have no formal definition) and hobbies (which are too small to be considered businesses).
Why Monthly Accounting Isn’t Good for Micro Businesses
Why isn’t monthly accounting a good option for micro businesses? There are two main reasons: Micro businesses tend to have very little financial activity and may not be making a profit yet.
This severely limits the advice that your accountant can provide, especially in tax planning. We wouldn’t be able to provide enough value for you to justify the investment before you grow a bit more.
Monthly Accounting Alternatives & Exceptions
If you’re seeking advice on how to get on your feet and start growing, the SBA has tons of free guides on its website that might be a better fit for you right now.
As for exceptions to micro businesses that may be a good fit for monthly accounting, we sometimes work with startups that have advisory potential, are generating cash flow in the first few months, and have ample capital and investors. If you’re ramping up quickly, you should call a monthly accounting service like CSI today.
Find Out if Monthly Accounting Works for You!
Now that you know the informal definition of a micro business, why monthly accounting isn’t ideal for micro businesses, and exceptions or alternatives, are you ready to check out monthly accounting services?
If so, please consider CSI Accounting & Payroll! To see if we can be a good fit for your business, click the button below for a free consultation:
Not ready to talk? That’s okay! First, learn what your monthly investment might look like by clicking the image below:
