Properly managing your finances is essential to building a successful business. However, tracking expenses, configuring payroll, and determining your tax liabilities can be complicated. On top of every other responsibility you have as a small business owner, math is probably the last thing you want to deal with – especially if doing that math incorrectly may result in penalties for your business or extra attention from the IRS. 

This article will outline common accounting tasks for small self-care businesses, plus determining whether or not you need an accountant for a small business, the pros and cons of hiring one, and what to do if you choose to handle your finances yourself. 

What Are the Key Accounting Tasks for Small Businesses?

As a small business owner, you have plenty of responsibilities that require your continual attention. Without a dedicated tax professional at your side, some of those duties may involve some heavy accounting, receipt-saving, and financial analysis on your end. 

Accounts Receivable (AR)

Tracking the money clients owe your business for services rendered is crucial for maintaining accurate financial records. Without this record, you won’t know the full scope of your budget or true profits, which can lead to potential cash flow problems and unpaid bills. 

Bookkeeping

Bookkeeping involves categorizing your business income and expenses, reconciling bank statements, and keeping an accurate record of all financial activities. It’s incredibly important to have these transactions correctly sorted and accounted for by the time tax season rolls around, as it can be a huge time investment. Early bookkeeping may also allow you to identify errors in any of the accounting with enough time to reconcile before you need to file. 

GlossGenius’ Finances can manage your expenses and reporting from one easy-to-use interface.

Payroll

Payroll involves calculating wages, withholding taxes and other deductions, and distributing payments to employees. Even if you’re the only employee of your business, you’re still responsible for calculating your payroll taxes and determining your tax liabilities. 

Preparing and filing the business's federal and state tax returns

One of the most important elements of business accounting is ensuring compliance with state and federal tax laws, while also minimizing your tax liability. (And your business is required to file taxes even if it doesn’t make any money.) If you’re in charge of your returns, you’ll not only need to precisely calculate the gross and net pay for your business, you’re also responsible for staying updated on the most recent tax law changes. 

GlossGenius’ Payroll features can simplify tax time so you can focus on delivering quality service to your clients.

4 Pros and Cons of Hiring an Accountant

Finding an accountant for a small business can be a necessary step to getting your finances in order, but there are some disadvantages to hiring one as well. Here, we outline some of the pros and cons of bringing on an accountant to manage your money.

Pros of hiring an accountant

1. They know what they’re doing

Accountants are highly trained and experienced in their field, which means they carry in-depth knowledge of accounting principles, tax laws, and financial regulations that can save you time and ensure you’re in full compliance. They can also help you categorize your deductions and manage your expenses to save you hundreds to thousands of dollars in taxes every year. 

2. They can help you plan

If your accountant is well-versed in the self-care industry – that is, if the majority of their clients work in that field – they may be able to provide valuable business consulting services and advice tailored to your specialty. Much like an entertainment-focused accountant can provide specific guidance to actors, writers, or musicians, a wellness-focused accountant can offer planning strategies and other financial advice to those working in the beauty and wellness industry. 

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Cons of hiring an accountant

3. It can cost a pretty penny

Hiring an accountant, whether full-time, part-time, or even just one time, represents a significant expense for a small business. For example, in California, some accountants charge over $2,000 just to file taxes for a single-member LLC – and that’s not even counting the payroll taxes, which can cost thousands of dollars depending on your business income and deductions. (And that’s also not counting the cost to file your personal taxes, which can cost between $300 and $800 on top of that.) 

While these amounts may vary between states, it is generally never cheap to take on professional help. Plus, if business doesn’t go well that year, it can be especially painful. 

4. Loss of control

Entrusting your business’s financial information to an external party isn’t an easy choice to make, and outsourcing that decision means giving up a certain amount of control over your own monetary obligations. While an accountant will do much of the financial dirty work on your behalf, you’re still responsible for giving them the most accurate information regarding your income and expenses so they can make the right decisions for you. 

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What Can You Do if You Donʼt Want or Canʼt Afford an Accountant?

Finding an accountant for a small business in the self-care industry isn’t completely necessary – and sometimes, it’s just not possible given the time you have or budgetary constraints. Luckily, there are a few steps you can take to manage your own financial obligations. 

Use accounting software 

Find the right software or app that specializes in financial management for small beauty and wellness businesses. These programs may not be as accurate or savvy as a real professional accountant, but they can certainly help you get the job done much more affordably. 

GlossGenius is the ultimate booking and accounting software for beauty and wellness business owners. With tools like Finances and Payroll, you can stay on top of your spending by automatically tracking expenses and employee payments, which will hopefully make tax time less taxing. 

Separate business and personal finances

Combining business and personal expenses together can make it difficult to track your self-care business's true financial performance. By categorizing your deductions and keeping your professional expenditures separate from your personal spending, you can make it easier to handle your tax filings, and less likely you’ll make a reporting mistake.

Stay organized 

Developing a system for storing receipts, invoices, and bank statements can be a lifesaver for your business. By keeping all your documents and papers organized, you always know where everything is and can provide literal receipts if necessary. 

Manage Your Finances Like a Pro with GlossGenius

It’s up to you if you really need an accountant for your small business, but it’s a decision you should thoroughly consider. Managing small business finances on your own isn’t as easy as all the step-by-step guides you find online would have you believe. It takes a lot of time, effort, math skills, and knowledge of tax laws to do correctly, and even then, without the right training, you may not even realize you’ve made an error. And it’s the errors that are costly – whether you’ve underestimated your tax liability or unwittingly overpaid. 

Fortunately, GlossGenius can help take much of the guesswork and confusion out of doing your business taxes. With features like Goal Setting, you can track your progress against your goals and measure the efficiency of your business model, while also getting personalized insights to refine and conquer your benchmarks. Reports & Analytics can also make it easier to view your end of day reports, plus live snapshots of key metrics such as client retention and staff performance. GlossGenius also provides integrated Inventory Management with their Point of Sale system, so you never have to manually update product quantities or waste money on items you already have. 

Try GlossGenius today and get a 14-day free trial!