5 Accounting Challenges that Small Businesses Face and How to Stay on Top of Them

By Analytix Editorial Team

September 19, 2018 1 Comments
Small Businesses Accounting Challenges

Small business owners routinely face certain challenges within accounting and financial operations that could derail the business if left unattended. Some of these challenges have the power to influence business operations, profitability, efficiency, and sustainability. Identifying and understanding how to overcome them is vital to a business looking to grow.

  1. Cash Flow Management

For a small business that is looking at rapid growth, ensuring liquidity while simultaneously investing in the business can prove to be a significant accounting challenge.  Cash flow is the element that signifies the amount of liquid cash available to a business. Effective cash flow management entails staying on top of accounts receivables while balancing payments due.

  1. Creating an Effective Budget

Not all startups and small businesses have funding. Even if they do, it is exceedingly important to create a business budget and adhere to it. Unexpected expenses could lead to financial instability, causing the business to fail. One of the ways in which this challenge can be countered is to create a budget that is developed keeping in mind business goals, availability of money, cost of resources, infrastructure needs, and operations. Incorporating scenario planning into the business can help optimize available resources without resulting in overspending.

A budget also aids in the streamlining of operations through enforcement of vital investments in the business; for example in core security areas, regulatory compliance needs, and insurance coverage payments.

  1. Creating Efficient Accounting Systems

Ensuring that accounting tasks happen on time or keeping a diligent record of expenses and dues may not be enough as a startup continues to grow. To keep pace with growth, businesses need systems that can keep up with the changing numbers, as well. As a result, simply installing an accounting software, or linking business accounting with the software may not be enough. A growing business needs systems that can provide it with timely accounting figures, data that reflects the health and status of finances at any given point in time, and analyses of accounting to help with critical business decision-making.

Efficient and self-sustaining accounting systems are vital to business sustainability.

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  1. Ensuring Effective Tax Returns

It is no secret that tax obligations must be met in full. However, it is equally important for a fledgling startup or a fast-growing small business to understand tax deductions and tax credits they can take advantage of. This helps save financial resources while ensuring the business stays on top of its tax obligations, as well.

It can get difficult for a small business, even one run by an accounting professional, to stay on top of tax time details. For this reason, it is best for a business to hire professionals.

  1. Hiring the Right Resources

Accounting is a specialized area. If a business leverages the expertise of a trained accounting professional, it may have solid accounts and financial health. However, as it grows, it can prove to be extremely difficult for the owner or founder to keep up with managing the business operations and ensuring diligent accounting at the same time.

Hiring the right resources can provide an answer to almost all small business accounting challenges.

Analytix Solutions offers customized solutions for startup companies ranging from reliable accounting, to business budgeting and forecasting, to tax time support and business insights. For more information on how we can assist your business, call us at 781-503-9002 or email us at sales@analytix.com.


    I’ve run (and still do) several small to midsize businesses mainly in the F&B industry, and here I’ll share my experience of accounting issues:

    1. Time vs budget: to hire or not to hire

    Especially during the startup stage, there are many things on our plate as a small business owner. On the other hand, we are often faced with a limited budget. Accounting, let’s face it, is a boring and time-consuming job, yet it is also very important on the early stage of our business.

    How to tackle this issue depends on the complexity of your business from accounting perspective. If it’s quite complex, you might want to sacrifice some of your limited budget to hire an accountant. If it’s quite simple, hey, stop procrastinating and do it yourself.

    2. Limited skill

    Related to the first problem above, many business owners tried to do the accounting themselves but simply don’t have the required skills and knowledge. As a result, they failed to understand the financial health of their business, among other things.

    To tackle this issue, you might want to take a quick course on accounting. Many online platforms (like Udemy) now offer these courses at an affordable price and flexible schedule.

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