January 21

What Are The 10 Top Accounting Pain Points For Small Businesses?

If you face ongoing challenges with your small business accounting, whether it’s because your team lacks the skills to manage your accounting efficiently, you feel you can’t afford accounting services, or you are trying to manage the bookkeeping yourself, you’re not alone. These are common accounting pain points for small businesses.

However, it is possible to optimize the financial health of your business. Here we look at the top accounting pain points small businesses face, with solutions to help get your finances back on track. 

10 Top Accounting Pain Points For Small Businesses

1. Not Grasping The Importance Of Cash Flow

A businessman holding a tablet displaying cash flow information, addressing accounting pain points for small businesses.

Poor cash flow management is the cause of 82% of small business failures. Understanding cash flow, tracking recurring costs, and managing funds is crucial to business success. You need someone such as a bookkeeper with CPA oversight to analyze your accounts payable, collect invoice payments efficiently, and study your expenses to ace cash flow management and improve profitability. 

2. Not Being Prepared For Unexpected Costs

A little girl is sitting at a desk with a pile of papers, struggling to manage the accounting tasks for small businesses - top accounting pain points facing small businesses - not being prepared for unexpected costs.

Small businesses need help understanding the concept of contingency funds. A perfect example of unexpected costs is taxes, which by the way, is also a common accounting pain point. If you aren’t managing your taxes, you could face a one-time large sum owed to the CRA.

You need to ensure you can cover unexpected costs on top of your financial obligations, such as payroll, GST/HST, supplier costs, rent, etc., so you don’t find emergencies impacting your short-term cash flow. You need to consult with someone who understands common threats, the importance of liquidity, and ways to optimize credit and profits to create a viable contingency plan – someone such as a fractional CFO. 

3. Not Analyzing Financial Reports

Two businessmen analyzing accounting graphs on paper, addressing pain points commonly faced by small businesses.

Just getting by on day-to-day bookkeeping is not enough to remain profitable. You need ongoing insights gained from financial reporting. Reporting lets you understand your financial health and look for red flags and opportunities. At the least, you need a bookkeeper to keep track of your finances and, in the best-case scenario, gain insights with the help of a fractional CFO or accountant oversight. 

4. Poor Tax Planning

A small businessman is climbing up an arrow with the word tax - poor tax planning is a top accounting pain point for small businesses.

Whether it’s your GST/HST, payroll, or your own income tax, tax planning is the key to reducing your taxes. Do you understand all your available deductions? Do you know what penalties you face for not filing on time? What about not following proper withholding for payroll? What income are you failing to claim?

Tax laws are brutal and complicated, not to mention they change each year with new rules and new write-offs you should be leveraging. You can also find yourself in a pickle if the CRA decides to audit you or your business. Whether you hire a tax accountant to assist with tax planning, work with a bookkeeper to ensure taxes are paid promptly or consult a fractional CFO to offer tax planning advice, you want to be compliant and understand ways to reduce your taxes. 

5. Payroll Woes

A person typing the word payroll on a laptop, addressing the accounting pain points of small businesses.

As your business and team expand, payroll woes are likely to follow. There are laws you must adhere to when you hire new employees and submit your payroll contributions to things like CPP and EI. Are you doing it right? You won’t know until you’re hit with penalties. A bookkeeper with payroll experience can manage your payroll, and with accountant oversight, you can also make intelligent decisions to plan team expansion based on your profitability.

You’ll also remain compliant to avoid fines. Payroll software can help you prevent payroll woes. A consultation with a CPA or fractional CFO can help you find effective payroll software solutions to simplify life with automated payments, employee deposits, etc. 

6. Not Tracking Expenses

A small business owner holding a sticky note that says track your spending, addressing their accounting pain points.

Saving receipts is essential, but it sometimes gets out of hand if you aren’t managing your expenses effectively. First, you need to know what expenses you should be claiming on your taxes and what ones can get you into trouble. Second, you should review your monthly expenses as part of your cash flow management. A tax accountant helps with the first issue, and a bookkeeper can help with the second. 

7. Not Reconciling The Books 

A woman in glasses sitting at a desk, managing the accounting for small businesses - not reconciling the books when paying bills is a top accounting pain point for small businesses

Paying bills unthinkingly is a big issue for small businesses. Nothing should be paid without reconciling your books to track mistakes. This time-consuming task calls for careful review each month or even weekly to ensure everything is correct and you aren’t losing money. A bookkeeper can help balance your books and ensure invoices are paid correctly.

They can also ensure incoming payments are accurate and that things such as late fees are charged, interest is applied, etc. You can’t make smart financial decisions if you don’t have someone to analyze your books and interpret them to find opportunities to improve your financial health. A fractional CFO can fulfill this function.  

8. The Fear Of Audits

A woman holding a tablet with the word audit on it, addressing small businesses' accounting pain points.

This is a huge pain point for small businesses. In fact, we’d say you should fear audits and take every possible step to first avoid them and then be prepared to ace them with exceptional bookkeeping and record management. You should also worry about audits regarding properly managing the personal financial information you store and manage for your customers. For example, Payment Card Industry Data Security Standard (DSS) compliance is required if you store and process credit card data. 

9. The Risks Of DIY Accounting

A woman holding up a sign that says help, conveying the pain points of small businesses in need of accounting assistance.

All the above issues are usually a result of DIY accounting. Whether you are the one trying to manage your finances or one of your inexperienced and unqualified employees is responsible for the books, the risk of errors increases when you don’t have an experienced professional overseeing your accounting, including:

  • Not collecting outstanding invoices 
  • Overpaying taxes
  • Underpaying taxes
  • Poor tax compliance
  • Double-paying invoices
  • Not paying with credit cards for suppliers
  • Payroll errors

These issues can lead to poor credit scores, cash flow issues, penalties, unhappy employees, and lost opportunities to take advantage of supplier discounts available for early payment.  A skilled bookkeeper can ensure everything is managed properly and accurately to maintain financial health, improve financial sustainability, and allow you to grow your business successfully. 

10. Not Leveraging Technology 

not leveraging technology to automate accounting processes is a top accounting pain point for small businesses

Trying to manage your finances using outdated Excel spreadsheets and manual payroll calculations are classic small business pain points. With all the accounting software available today, many manual accounting processes can be automated to help you have better control over your finances, including:

  • Cash flow
  • Taxes
  • Sales tracking
  • Accounts payable and receivable reconciliation
  • Budgeting
  • Financial reporting
  • Inventory management
  • Payroll

It’s important to know what software is right for your needs and how to take advantage of the features to make the most of the technology.

The recurring theme for common pain points in the accounting of small businesses tends to be a lack of expertise. By engaging a bookkeeping service with CPA oversight, you can resolve all your accounting pain points with an affordable solution customized to your needs.

Call Intrepidium today at 778-800-7976 or click here to schedule a consultation.

Ryan Roch, CEO Intrepidium Consulting Inc.

About the author

Ryan Roch is the CEO of Intrepidium Consulting, offering customized Bookkeeping, Accounting, Fractional CFO, and Tax Preparation Services to small and medium-sized businesses. With extensive experience in financial reporting, strategic planning, budgeting, compliance, and cash management, Ryan helps clients overcome financial challenges, gain clarity, and achieve their growth objectives.


Tags

accounting pain points, accounting problems small business, small business accounting


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