URL: http://www.entrepreneur.com/money/moneymanagement/bookkeeping/article51810.html

Introduction
If you think you only need an accountant during tax time, you may want to think again. Good business accounting is not just about balance sheets and tax returns. With the help of a competent accountant, you can track your business's finances and make sure it's running at the optimum level.

And to take it even one step further, your accountant is a great resource to tap into for business valuation and business consulting purposes. Whether you need to get your financial statements in order or an audit to present to potential investors, exploring the spectrum of services your accountant offers could help you turn that once-a-year, tax-time meeting into an invaluable year-round resource.

Luckily, there are quite a few effective options available that won't take a nasty toll on your budget.

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What is accounting?
Accounting refers to the practice of tracking a business's income and expenses and using those figures to evaluate its financial status.

One of the most basic accounting services is bookkeeping, which involves keeping a record of all financial transactions and then preparing financial statements such as balance sheets and income statements. Accountants can then take this information and roll it into tax services, another basic accounting service.

But the business of accountants goes beyond just basic number-crunching. Accountants include a number of other services in their repertoire: auditing services, tax planning, business consulting, business valuation, and financial planning, just to name a few.

Bookkeeping
In bookkeeping, an accountant keeps a comprehensive record of how much your business owes creditors and how much is owed to you. The records of these transactions also indicate how much you have invested in equipment and inventory.

Typically, accountants handling the books take care of accounts receivable and accounts payable, put together financial statements (such as balance sheets, income statements, and cash flow statements) and take care of bank reconciliation.

The cost climbs as the volume of work expands. The more transactions and the more statements you expect your accountant to prepare, not to mention how often you want these financial statements whether they be monthly or yearly, the more you'll pay.

Tax services
Taxes are one of those areas that can easily be underestimated. When tax time rolls around, a good accountant, in preparing your return, can help ensure that the necessary steps have been taken to minimize filing errors that can trigger an audit.

But if you're just in and out of your accountant's office when it comes time to do your taxes, you could be missing out on a major money-saver.

A knowledgeable tax accountant can suggest ways your business can save thousands of dollars through tax planning and tax-saving strategies. In tackling these issues, you and your accountant can also look for ways to add value to your business.

Of course, the more complex the tax planning and the more ongoing the tax services are, the higher your bill. But in the long term, the tax dollars saved makes this extra expense worth every penny.

Audits
Audits are mandatory for public companies; private companies don't have to conduct audits unless a bank or an outside investor requests one.

Accountants might handle an audit for a private company, for example, that is looking for funding from investors who want to have an independent opinion on the fairness of the company's books, financial statements, and financial position.

Most audits can be divided into two phases: the accounting work done to prepare for the audit, and the audit itself.

Make sure it's clear in the beginning what you're paying for. While some accountants will give you cost estimates for these two aspects of the audit, others will simply give you one estimate for the audit and add-on costs at the end for the preparation.

Here are a few things to consider when trying to hold down the cost of an audit, one of accountants' more expensive services because of the detail and time that is usually involved:

• Do some of it yourself. Have your in-house staff prepare the necessary documents for the audit. This cuts down the preparation time that your accountant would have otherwise spent just getting things in order for the audit - time that you would have been billed for.
• Hand over clean books. The cleaner and clearer the books, the less time it takes for your accountant to get through all the paperwork.

Other services
There are also a few other more specialized services accountants can provide.

Reviews
Reviews are less detailed than audits. For a review, your accountant will determine whether the financial statements fairly represent the company's financial status.

Reviews, which are smaller in scope than an audit and therefore less expensive, are usually done on a quarterly basis for public companies since it is not required that public companies have quarterly figures audited.

Unlike the more critical evaluation of an audit, however, that actually tests the details documented, reviews simply touch upon the reasonability of the statements and offer a limited opinion.

Compilations
Compilations are even less detailed than reviews, and they don't involve any opinion on the part of the accountant. For a compilation, your accountant will simply take the financial general ledger and create financial statements from it.

Business consulting
Business consulting is one of the more specialized services, so the rate or fee may reflect that.

If you're exploring a specific aspect of your business, for example looking to cut costs and improve your profit and loss statement, it's a good idea to look for an accountant who not only has experience in business consulting but one who is also familiar with your industry and market.

Business valuation
Business valuation is also a specialized kind of service, so as with consulting, you can expect the costs to go up.

Business owners might want a business valuation if they are looking to sell the company or if they want to do some estate planning. Business valuations are also useful when applying for a loan.

In any case, you'll want to find an accountant who has experience dealing with companies in your industry and market. An accountant with this kind of background will have more insight into your particular situation than one who is just stepping in with no frame of reference to draw from.

Financial planning
Financial planning has really taken off in the past five to 10 years for accountants. This service turns the focus from the business to the business owner. The need for financial planning becomes more pressing when a business owner starts to look at long-term care insurance, wills and trusts, and estate planning.

For instance, if one wants to pass the business on to his or her family, an accountant could suggest ways of doing so without having the family hit by a huge tax burden.

Pricing
While the costs can run the gamut depending on your company's specific needs, accountants usually charge a flat rate per month for basic bookkeeping services.

Rates can vary depending on your geographic area, the size of the firm, and the experience and seniority of your accountant. But even for the most basic of bookkeeping services, you can expect to pay $1,400 to $1,500 per month.

Sometimes in the beginning, accountants will charge an hourly rate until they get a feel for your business and how much time is involved in the work you want done. A few months into it, you can usually negotiate a flat fee for your long-term needs.

For more in-depth and complex services, such as financial planning, accountants typically charge an hourly rate.

Focus groups are helpful because the participants can be probed for the reasoning behind their opinions, and conversations can be generated around a particular topic - giving you what's known as "rich data" as opposed to, for example, the finite answers you get from survey questions.

Cutting costs
While costs will vary depending on your individual business and the accountant you've hired, here are a few tips that can help you keep your costs down.

• Keep records as automated as possible. This makes it easier for the accountant to access the information.
• Keep records as clean and clear as possible. If it is difficult for the accountant to decipher ledgers, it just means more time for them and more money out of your pocket.
• Do your homework. Do what you can as you can to get all of the simple paperwork out of the way on your own, especially in the case of an audit, which can be costly.
• Hire temps. If you need someone to only take care of running the books, you may want to consider hiring temporary help. This is cheaper than going to a CPA for basic bookkeeping.