Regardless of what your small business is selling, whether it is goods or services, business accounting is an essential element that helps to keep your business running efficiently.
For many small businesses trying to run a lean operation, keeping overheads down as much as possible is the main goal of their day to day operations. However, while a small business may be able to track their income and expenses by themselves using modern accounting software instead of hiring an accountant to do this job for them, there are limits to what accounting software packages can do for your company.
Digital accounting solutions are great for helping you to balance your books and for keeping an eye on your cash flow. They can even help to automatically calculate your tax, which can be a major headache for small business owners that are not trained in accounting and have so many other important tasks to perform.
For a small business owner that is bootstrapping their company on a limited budget, using modern digital accounting software can be a godsend, but they do have their limitations.
Most small business owners don’t have an accounting background or a solid understanding of business finance. They are driven by their passion to succeed and their desire to see their idea come to life, and while small business owners need to be creative visionaries, unless they have the right team backing them up, their dreams are at risk of failing.
The difference between business accounting and cost accounting
While hiring a good accountant or using the latest cutting-edge digital accounting software package will help you to understand your profit and loss, failing to take a deeper look at the details of your business costs could hurt your business not only now but also in the future.
Regular business accounting will take all of your financial figures and work out your business expenses, profit and loss so you can see how your business is performing. But cost accounting is different because it breaks down the individual costs for all of your raw materials in your production process or the individual costs for your service delivery.
Having individual cost breakdowns for your consumables, materials, direct and indirect costs can help you compare prices at their source to see where savings can be made. This could be through sourcing raw materials in bulk at a better price than you are currently paying, or streamlining your service delivery to make savings.
So you could say that regular accounting will give you results based on your current financial figures on the materials, consumables and expenses that you have already used, but cost accounting analyses your core costs to see where savings can be made right now and going forward into the future.
How MW Technical Operations can help
If you run a small business in or around the Bristol area, MW Technical Operations are here to help you will our cost accounting services. If you have ever wondered about making cost savings in your small business but don’t know where to start, we can deliver all aspects of cost evidence to give you the true picture of where your business spends its money and if there are wiser choices you can make.
From our Budget Master Tracker services for individual projects to accurate budget forecasting and cost accounting, we can offer you an in-depth analysis of your business processes to help cut costs and improve your business productivity and efficiency levels.
Do not hesitate to get in touch to see how we can help boost your small business profitability.