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What are The Different Types of Accounting a Small Business Owner Should Know?

Accounting is one of the most critical aspects of any business. It involves not just keeping track of business spending but also monthly bifurcation of those spendings to track the cash flow, incoming and outgoing cash, gross profit and net profit and so on. Keeping up with your finances is a very crucial factor in the success of any business. Therefore, you must know the different types of accounting, and which of these types apply to your business.

Hiring an accountant does not automatically mean that he or she will take care of all types of accounting services. Nowadays, there are different specialisations in accounting, so you must know what you are looking for, for your small business accounting needs.

Following are the different types of accounting that you should know if you are a small business owner

Public Accounting

This is one of the primary accounting types that small businesses must know. In this accounting, the person responsible for the finances, preferably an accountant, takes charge of regular bookkeeping, financial aspects of the business, and the tax filing process of the company. In public accounting, the accountant also oversees the growth prospects, offers financial suggestions to improve revenue, and offers support in other areas, such as employee payroll. Another important task that the accountant does here is auditing all financial statements. Auditing is very critical from a tax filing point of view. Moreover, it helps identify discrepancies in the balance sheet and rectify errors.

Management Accounting

Another important accounting type is management accounting. This is a much more analytical kind of accounting than public accounting. In management accounting, the accountant gets a hold of financial data and understands company performance, patterns etc. Using this historical and present data, the accountant assists in asset management, budgeting, and cost handling. For each new or ongoing project your firm takes on, it is this accounting that dictates the amount of capital to be invested. Management accounting is very relevant in predicting the risks and opportunities in any future endeavours.

Internal Auditing

The accountant who looks over internal auditing has a lot of responsibilities. They have to ensure that the financial statements are appropriately audited whilst also paying attention to internal practices. There are various specialisations in auditing, such as payroll auditing, operational auditing, compliance auditing etc. Internal auditing helps the company improve its financial practices and makes you well-equipped with the tools you need to handle your income.

There are a few other types of accounting, such as governmental accounting, but those do not apply to small business financial management.

Consider M.A.S. for your small business accounting needs

M.A.S. Partners provides one of the finest accounting services for small business requirements. To get a good grip on your finances, taxation, growth planning and small business accounting in Sydney, contact us by clicking here now.