Small business accounting is a complex yet essential undertaking. Recent small business accounting statistics show that there are 33.2 million small businesses in the United States, and 64% of those small business owners take on their own bookkeeping duties.
Knowing the small business accounting basics is the key to making sure each small business is running as productively and profitably as possible. Unless your small business is working with a professional accountant to handle all of your finances, keeping up with small business accounting can be daunting for even the most well-prepared entrepreneurs.
Analyzing small business accounting statistics helps them understand where they stand among their peers and provides crucial information for successful decision-making.
Small Business Accounting Statistics
- 64% of business owners do their own bookkeeping.
- 29% of the companies have already implemented the automated accounts payable process to eradicate human labor and increase accuracy.
- 1.3 million accountants and auditors are employed in the US.3
- 21% of SMBs owners admit to not knowing enough about bookkeeping.
- 72% of self-employed contractors do their bookkeeping and accounting errands without professional help.
- The accounting services global market value was $544.06 billion in 2020.
- Around 70% of small businesses don’t have an accountant.
- 60% of small business owners feel they aren’t knowledgeable when it comes to accounting.
- 64.4% of small business owners make use of accounting software.
- 70% of small businesses outsource tax preparation.
How many small businesses have an accountant?
According to Onpay, only 30% of small businesses have an accountant. This means that for the majority of small businesses, managing their books and preparing financial documents can be a major burden.
Without an accountant, it’s especially difficult to stay organized and ensure one’s taxes are current and compliant with applicable laws and regulations.
Additionally, small business owners may find they lack the necessary financial knowledge to properly file their taxes on their own, making it even more important to seek support from a certified accountant.
Do 64% of business owners do their own bookkeeping?
Twine reported that approximately 64% of business owners are doing their own bookkeeping. With high-end accounting software becoming more available and user friendly, many small business owners find it easy to manage their own finances rather than paying for an accountant.
By taking on the task themselves, entrepreneurs can save money and make sure they can keep track of every penny going in and out of their accounts.
While outsourcing bookkeeping remains an option for those who don’t have the time or ability to complete the process on their own, an increasing number of business owners are opting for self-service.
Is an accountant worth it for a small business?
Xero says accounting can be one of the biggest hurdles small businesses face when they’re in a period of growth. Often business owners are so wrapped up in managing their day-to-day operations, that they don’t have the same kind of time to manage the associated accounting activities.
Hiring an accountant can make sure all the detail is handled; from payroll and employee tax management, to property taxes and utility payments.
This way, small business owners can stay focused on what they do best – growing their business. So yes, an accountant can be worth it for any small business going through a period of growth.
What type of accounting is best for small business?
According to Tworoadsco, cash accounting is the preferred method for small business because it’s much easier to maintain and understand.
This system focuses on income and expenses when they are actually paid for, with the understanding that items purchased or sold don’t necessarily take place at the same time.
Businesses that require a more accurate view of their financial position should look into accrual accounting; this method takes into account all transactions even if exchange of money hasn’t taken place yet.
Accrual accounting gives a better idea of long-term profits and losses, making it ideal for budgeting and forecasting future cash flow.