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Should I Hire An Accountant For My Small Business?

There are several compelling reasons to hire an accountant at various phases of your company’s development. First, an accountant can help you with anything from business strategy to company creation, loan applications, and government audits.

That doesn’t mean you have to hire an accountant full-time or on a retainer basis all of the time. Sometimes only a few hours of their time is plenty.

Like other small company owners wanting to save money, you may believe that you cannot afford an accountant. However, consider how long it would take you to complete some duties (such as taxes) and consider whether this is wise.

Perhaps you’ve just launched your company and are considering hiring an accountant. On the other hand, perhaps you’re still in the planning stages of a new business and are debating whether or not you need someone to handle your accounting separately before going all in.

If you ask an accountant whether you should hire someone to help you with your books professionally, you can be sure that they will say yes.

However, you may rest assured that they are not saying “yes” for personal gain. On the contrary, the majority of successful business owners who work closely with an accountant will tell you that having an accountant is a requirement. According to Intuit, the maker of QuickBooks, TurboTax, and other financial software programs, 89 percent of small companies believe that having an accountant or adviser helps them succeed.

Even yet, it’s realistic to question whether every small firm need an accountant. Isn’t employing an accountant overkill for a small business? Is it possible to “wing it” till you reach a particular amount of revenue?

When you operate a business, dealing with federal paperwork might be intimidating. This is why, when the initial tax file is due, so many small business owners engage an accountant.

They can, however, assist you with more than simply tax returns. They can also assist your organization while dealing with the government in various ways.

A qualified accountant will be able to:

  • Complete and file all of your company’s legal and compliance documentation.
  • Keep up with the newest tax rules for your business.
  • Prepare yearly financial statements
  • Keep the government’s company registry up to date with your firm’s status.
  • Maintain director and other administrative personnel records.
  • When a business is founded, a business partner exits or a new partner enters, organizes and record share/stock allotment.
  • Manage your payroll and make sure that all of your workers’ tax codes and payments are accurate.

Cash Flow

 

Correctly preparing your tax records may save you money – maybe more than your accountant charges you. A qualified accountant will also propose strategies to free up cash flow, save money, and generate capital for development using their understanding of tax regulations and legislation.

It might be difficult to determine what kind of assistance you require for your small business because that assistance will cost you money. Unfortunately, however, your company’s finances are something you can’t retain.

We at Bookkept, Australian bookkeeping and accounting specialists, have done our research on [post title] and are here to share our findings.

Keep in mind, this information about this article is intended to be general in nature and is not personal finance and accounting advice.

Keep in mind that this content is intended to be general in nature, and is not personal financial advice. You should always consult with an accountant, finance or registered tax specialist to ensure that you are getting the right advice.

What Can an Accountant Do for Your Company?

Accountants are more versatile than you would imagine. They can provide strategic advise and suggest innovative methods to save money or increase income. They’ll also eliminate or automate administrative activities that keep you from focusing on your main company. As a result, you’ll be able to operate your business with more clarity and confidence if you hire an accountant.

 Are you aware of the benefits that an accountant may provide? This might assist you in determining if it is worthwhile to hire one.

An accountant may assist you with data management, financial analysis, financial report preparation, and ensuring that your company’s accounting operations are in line with regulatory requirements.

When to Hire an Accountant

The majority of accountants will tell you that they could have saved their small company customers a lot of time, money, and hassles if they had done things differently. That is if those customers had not waited so long to seek assistance. The bottom line is that there are certain critical points in your business’s life cycle when you don’t want to go it alone.

Forming Your Business

One of those critical periods is the creation of your company. An accountant can assist you in developing your company plan. Do you really need a business plan if you’re not looking for funding? Your landlord may demand one if you want to lease office, retail, or manufacturing space. Furthermore, having a business direction and goals is a smart idea rather than winging it.

Provide guidance on the entity structure of your company. Although most businesses begin as sole proprietorships, your business kind or personal financial condition may dictate that a different corporate form is more appropriate. For legal and financial security as a freelancer, you should, at the very least, consider incorporating an LLC. A professional accountant can help you with this!

Assist you in getting the required permits. Oh my, sales tax permits, business licenses, and payroll accounts! Every state, and in certain cases, every city, has its own set of company rules. Likewise, each industry has its own set of standards. An accountant can help you cut through the red tape and start your business off on the right (read: legal) foot.

  • Assist you in setting up your accounting software. I’ll let you in on a little secret at the risk of losing my bookkeeper’s membership card: The majority of small businesses do not require a bookkeeper on a long-term basis straight initially. However, you’ll want to outsource or subcontract your small company bookkeeping at some time. You can probably handle your bookkeeping till then and engage a bookkeeper to undertake frequent inspections of your work.

Choosing the Right Accountant

 

That stated, no matter how simple your accounting software appears to be, you should not attempt to set it up. An accountant, especially if they’re a QuickBooks ProAdvisor, may help you set up your chart of accounts appropriately and even instruct you on utilising your software. If your accountant does not provide this service, they are likely to know someone who does.

Compliance and Tax Issues

Your tax compliance needs might be as unique as your business itself and your route to growth, whether you’re a small or family-owned firm, a huge Australian brand or an international corporation.

As a business owner or leader, you must understand all areas of your company to ensure that it runs well on a daily basis while also planning for the future. Regardless of whether you, as a leader, are focused on other elements of the organization, compliance and tax requirements must be addressed. Failure to do so, or doing so incorrectly, can result in penalties, back-charges, and even bad press.

Even if you have a documented company plan, all of the necessary permissions and licenses, and brand new, bright, and ready-to-use bookkeeping software… Without an accountant, you’re not yet ready to move forward.

Hundreds of compliance roadblocks remain. For example, if you have the following:

  • There are a lot of concerns with sales taxes. In the United States, sales tax compliance is fast becoming a nightmare. If you’re going to transport your items out of state—or even within the same state in some cases—you’ll need to be sure you follow all applicable tax rules. There are applications that can assist you do this on a regular basis, but you’ll need the assistance of an accountant to get things set up.
  • Payroll complications Wage and labor compliance concerns can sink even the most prosperous companies. Some tools and systems can help you stay compliant on a regular basis, just as there are for sales taxes, but you’ll want an accountant to check in on you at least quarterly.
  • Requirements for additional reporting Creditors or licensing bodies may impose these obligations. Even the above-mentioned complicated tax concerns might result in additional tax responsibilities in different states. You’ll want to keep working with an accountant if you need to report on your financial situation for credit or certification or if you do business in many states.

Should I Hire an Accountant for My Small Business?

Accounting or recordkeeping is often thought of as a “necessary evil,” produced and maintained to meet government reporting requirements, particularly taxes.

Accounting and recordkeeping systems are designed to help you make educated customer, marketing, pricing, and vendor decisions, not only to comply with the law.

The activities involved with a company’s accounting and recordkeeping system, as well as concerns for who should do the job and the distinctions between an accountant and a bookkeeper, are discussed in this piece.

We’ll also assist you in determining whether or not you should engage an accountant.

Accounting Tasks

An accountant is in charge of an organization’s financial information management and reporting. In smaller businesses, an accountant may do all of the activities associated with an accountancy function; but in bigger businesses, various accountants are often responsible for different accounting areas. This might cover both financial and managerial accounting.

Keeping track of your funds is a crucial aspect of running a small business. Your accounting system is crucial for assessing how much money you have in the bank each evening and whether or not you can meet your expected expenses.

Three major tasks are required to set up and maintain an effective accounting and recordkeeping system.

  • Putting the system together: A notepad, spreadsheets, or accounting software can be used to create a procedure for tracking transactions and making forecasts.
  • Making a transaction: Transactions include sales, goods acquired, employee pay and benefits, hours worked, rent, IT, insurance, office supplies, and other expenses paid.
  • The status of potential clients, sales made, sales made where customers have not yet paid, expenditure comparisons with the budget and the same time last year, different tax reports, financial statements, and information needed to fulfill bank loan covenants are all examples of reports.

To Outsource or Not?

One of the first considerations you make when starting a business is who will be in charge of the accounting. You have three options: do it yourself, delegate it to someone on your team, or hire a bookkeeper or accountant. Because you are often the sole employee at a start-up and funds are tight, the founder often conducts all of the bookkeeping at first.

You might consider outsourcing the process after you have adequate discretionary finances. The important thing is to consider whether bookkeeping is the best use of your time.

You began your company because you excel at selling, building software, producing a product, consulting, or any other activity that generates revenue. Is it better to spend your time making sales or performing accounting? Accounting is unlikely to be your strong suit unless you work in the financial services industry.

A certified public accountant (CPA) and a bookkeeper are two sorts of financial specialists to consider if you opt to outsource. But, of course, you’ll want to keep both for distinct tasks because they have radically different talents and rates.

Certified Public Accountant

A state examination board has certified that a CPA has satisfied the state’s legal standards. However, by legislation, these experts are given certain obligations, such as the capacity to certify financial accounts, and they may be held accountable for professional misconduct.

Accountants, like physicians and other professionals, are specialists as well as generalists.

Tax accounting, mergers and acquisitions, and nonprofits are examples of accounting specialty. You must locate the best match for your requirements; initially, this will primarily be general accounting tasks.

Depending on the market and the complexity of the assignment, CPAs might charge anywhere from $100 to $300 per hour. As a result, it’s best to hire an accountant only for the most complex or high-value projects, such as quarterly financial reports (especially if they’re required by a bank or under a government contract), tax filings, ongoing or case-specific advisory services, or the financial section of your business plan. You should outsource these duties until your company’s revenue exceeds several million dollars, rather than hiring a full-time accountant.

 Word of mouth is the greatest way to discover a CPA. Alternatively, you can go to CPAdirectory.com or the National Society of Accountants.

Bookkeeper

Bookkeepers are in charge of an organization’s ledgers, which are the most important accounting documents. Transactions such as revenue and outgoings are recorded and posted to various accounts on a daily basis. With exposure to various elements of the accounting function, a Bookkeeper job description should emphasize the requirement for a good sense of time management and organizational abilities. It can also be a stepping stone to a more senior or specialized accounting career.

Basic day-to-day activities should be delegated to a bookkeeper. Gathering employee timesheets, submitting purchase-order invoices for payment, collecting client payments, creating bank deposit statements, and entering all transaction information into your accounting and recordkeeping system are all part of these responsibilities.

Depending on the market and the services accomplished, a bookkeeper might charge anywhere from $25 to $35 per hour. Many small businesses employ a part-time bookkeeper to help them set up their accounting system and enter all of their transactions until their company becomes large enough to afford hiring a full-time bookkeeper. Even if you decide to do your own bookkeeping, you may want the help of a bookkeeper to set up your accounting system.

Bookkeepers with similar expertise will know which income and expenditure categories are popular in your industry to track and report, saving you time and ensuring your system is correctly set up.

Don’t Outsource It and Forget It.

Consider hiring an accountant or bookkeeper if you don’t have the time, expertise, or willingness to accomplish this task. Keep in mind, though, that this isn’t a circumstance where you recruit these people and then forget about them. It’s your business, and you’re in charge of the financial statements. You will be the one signing the document whether you provide financial statements to a bank, file your tax return, submit invoices to a government procurement officer, or any other usage.

As a result, you’ll require some knowledge of what’s contained. Examine relevant information and seek clarification if anything is unclear.

How Accountants Can Help Every Small Business

If your company is expanding—and we hope it is!—meeting with an accountant on a quarterly basis can benefit in a variety of ways. Meetings with an accountant every quarter may ensure that you’re developing wisely. Believe it or not, growth may sometimes be detrimental to your company. Meetings with an accountant on a regular basis might assist you avoid developing too quickly or in the wrong direction.

  • Your tax payments are sufficient on a quarterly basis. However, your tax burden rises in tandem with your income. If your firm grows significantly, the predicted tax payments you started with may not be enough. Meetings with an accountant on a regular basis will help you prevent a bad tax underpayment surprise.
  • You have the ability to look through your own blind spots. Although small business owners are experts in their fields, it can be difficult to see the forest for the trees at times. An accountant can assist you in taking a broad view of your company, which is critical for continuous growth.

When You Can Go at Things Alone

Isn’t it now possible to do your own accounting?

Sure, why not? But are you sure you want to? Remember how 89 percent of small company owners attribute their success to working with an accountant? 89 percent is a significant figure. So, while you may manage your small business without an accountant, you should seriously consider the additional advantages of joining the large majority of business owners who collaborate with a financial expert and get the benefits.

Maybe I Hire an Accountant Part-Time?

Consider if you need an accountant full-time or part-time, perhaps a couple of days a week. You may plan out this person’s schedule ahead of time. Perhaps half of the accountant’s time is spent on the ‘paperwork’ that the firm generates on a regular basis regarding its income and spending, while the other half is spent consulting with you on accounting strategy. This will contain his recommendations for how to best spend your company’s money on resources essential to maintain the firm profitable, depending on the financials.

Hiring a part-time accountant can save you money, and it could be all you need.

When Your Company Is Growing, Hire An Accountant

Companies do not usually expand at the same rate. However, a new customer or a large project may need you to expand your firm faster than anticipated.

An accountant can assist you with growth transitions like recruiting more personnel or expanding your office space. They’ll handle the details (payroll, employee tax management, property tax, utility payments, and so on), allowing you to focus on the larger picture of your company’s growth.

An accountant may also use accounting software to analyze your cash flow, inventory management, and pricing. They may also provide you advice on how to analyze financial data in order to build your firm correctly. They might also assist you in determining the optimal timing to launch a new product or service to your portfolio.

Do you need help with your bookkeeping? Bookkept is a trusted accounting and bookkeeping company in Australia. We perform cheap and quick tax returns for individuals. You can give us a call on (03) 8568 3606 or email us on [email protected].

Now, Go Find a Small Business Accountant

Working with an accountant is beneficial to every small business, but it is not always essential. Even if you decide to go it alone without an accountant, getting guidance from time to time is a smart idea. It may cost a few hundred dollars, but considering an accountant’s influence on your small business, it’s a minor investment.

Start looking for an accountant immediately if you want to be one of the 89 percent of business owners that notice a boost from working with a financial consultant.

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