The majority of successful firms begin with their finances. You’ll need to figure out if you have adequate start-up funds to start and manage your firm, as well as a price point for your products or services. Most small enterprises will fail if they do not consider financing. In fact, according to a recent poll, 89 per cent of small firms think that an accountant or business counsellor was essential to their success.
As a result, it’s only natural that its finances be kept in order. If your business’s purpose is to make a profit, you should keep an eye on your profit margins. Setting up systems early and keeping things updated and monitored regularly is the simplest method to do this.
Because managing money becomes too much for one person, larger organizations will either outsource their accounting or hire an in-house accounting team. Spending time sorting through financial records and books might also distract you from focusing on your organization’s core.
When it comes to small enterprises, it is possible to manage your accounts, and there is no legal requirement that you hire a certified or registered accountant. Still, the benefits of engaging an accountant or financial counsellor tend to exceed the disadvantages.
Most small firms do not hire an accountant because they do not understand the accountant’s position or how advantageous it may be. Your accountant can help you with more than just getting your books in order and preparing your tax filings.
You should be aware that an accountant is not required for every small business. For example, freelancers or hobbyists can usually get by without hiring an accountant because their revenue and costs are straightforward, and they rarely hire additional staff. However, you are the expert on your company and should consider how critical an accountant is to the health and success of your company.
Reasons you might need an accountant
1. Bookkeeping Consumes an Exorbitant Amount of Your Time:
As a business owner, you only have so much time. You can’t afford to be pushed in a million different directions forever. It becomes prohibitively expensive to spend your time and energy on projects that aren’t suitable for your skill set. In addition, transactions become more sophisticated as the company’s revenue grows.
Consider all of the things an accountant could do that would likely take up much time each week, such as:
– Accounts ledger/chart of accounts upkeep
– Oversight of daily transactions – Preparation and analysis of financial statements
– Variance analysis and cost accounting
– Cash management and treasury, including bank reconciliations
– Accounting for payroll and fixed assets
Suppose you don’t have the time or expertise to handle these many accounting tasks. In that case, it might be time to employ a specialist because economies of scale and specialization are essential for corporate growth.
You’ll need the freedom to focus on the business’s growth at some point. If you don’t have it, you risk pigeonholing your company’s growth cycle.
2. Tax Season Is Excessive:
If you’ve ever received a huge refund or owing a significant amount in back taxes, these are red flags indicating you’re not properly addressing your business taxes.
As a result, even for experts familiar with the complexities and nuances of tax rules, requirements, and regulations, tax season may be one of the most stressful periods of the year. However, if you’re in charge of making sure your finances are in order, you can feel entirely out of your element.
It only takes one blunder to get yourself into trouble with the IRS. Even minor indiscretions and oversights can result in a penalty from the IRS.
Simply not comprehending the regulations could result in you missing out on deductions or business credits that could decrease your tax liability.
Hiring an accountant could provide you with someone capable of:
- Tax preparation
- Individual tax preparation
- Preparing and submitting tax returns
- Filing financial records and documentation with the IRS
- Make sure you’re getting the most out of your tax credits and deductions.
3. You intend to expand outside of the state:
As soon as your company leaves its existing state, new rules and regulations concerning the company and its taxes will apply. During this expansion, you’ll most likely encounter the following:
- Hire additional staff
- Hire additional staff
- Open a new location
- Cross-state lines with your business
If that’s the case, an accountant can make sure you’re following all of the state’s income, sales, and payroll tax reporting regulations. They can also go over your papers and look for any incentives you may have overlooked.
4. For unique situations:
As your business grows, you may require the services of an accountant. There are three distinct situations in which hiring an accountant is required:
During an audit – You’ll need an accountant if you’re being audited. Even if the IRS sends you a simple request for more information about your tax returns, you should engage a professional. Accountants are familiar with dealing with the IRS and can guarantee that you reply appropriately to address the problem. If you manage it yourself and make a mistake, you may find yourself in hot water.
Unexpected circumstances – Personal matters can sometimes impact the destiny of your company. For example, if a business partner leaves or if the company is declared a marital asset during a divorce, both of these occurrences could change the company’s direction. An accountant may assist with tax planning, business structures, estimating the value of a firm, and preparing financial documents for sale.
Borrowing money for a business – An accountant can assist you in determining whether or not taking out a loan is in line with your business goals. If this is the case, they can advise on the best loan structure, size, and payment structure while preparing the required financial statements.
5. You require assistance with financial reporting:
If your firm is at the point when additional investment is required, your financial records will be critical in the investor pitch and decision-making process. Therefore, you need reliable reports for your P&L, balance sheet, and cash flow statements.
An accountant can quickly prepare the documents, ensuring that they are accurate and include all pertinent information. As a result, you position your company for success and raise the possibility that outside investors will be eager to put their money into it.
Additionally, once you have enlisted investment, you will need to create financial records and reports regularly to present to your stakeholders.
You can check out more reasons why you should consider hiring an accountant.
Ask yourself these questions before getting an accountant’s help:
- Can I perform my accounting?
- Do I have enough time to do my bookkeeping?
- What can an accountant do for me?
- Do I have the financial means to hire an accountant?
- Is it the right time to hire an accountant?
Working with an accountant is beneficial to every small business, but it is not always necessary. Even if you decide to go it alone without an accountant, it’s still a good idea to seek assistance from time to time. It may cost a few hundred dollars, but considering the influence an accountant can have on your small business, it’s a minor investment.