When to hire an accountant?

The majority of people who enquire about our services are owners of small businesses who are grappling with various challenges. In most cases, there will be a modest nuisance that needs some work after they have been there. (And in some instances, they have a major problem that has been piled for years, including years of tax returns which they have ignored until an ATO attorney rang.)

Do Small Businesses Need an Accountant?

When tax season rolls around, you’ll frequently hear owners of small businesses discussing the necessity of hiring an accountant.

On the other hand, the professional skills of an accountant can be beneficial to owners of businesses in a number of different ways.

The training of an accountant includes not just the ability to “crunch the numbers,” but also the ability to analyse financial data, report on that data, and make recommendations that can lead to an increase in the profitability of a corporation.

Challenges for growing small businesses

At each successive phase in the development of your firm, there are important times when it would benefit you to bring on an accountant.

An accountant can make your life easier at every stage of the business process, from writing a business plan to forming a company, from applying for a loan to undergoing an audit by the government.

That doesn’t necessarily mean that you need to hire an accountant full-time or keep them on retainer at all times, though. There are occasions when only a few of hours’ worth of their time will be sufficient.

You may believe that you cannot afford an accountant, just like the other owners of small businesses who are always seeking ways to save money.

But you should consider how long it would take you to complete certain things (like your taxes), and then you should ask yourself if doing so would be a productive use of your time.

Consider the following scenario: it takes you ten hours to complete your taxes, and you charge $100 an hour for your services.

The expense of doing your own taxes comes to a total of one thousand dollars. And there is always the possibility that you have made mistakes, which is especially true if, like the majority of business owners, you are juggling multiple responsibilities at once.

On the other hand, if you hire an accountant to handle time-consuming chores like filing your taxes, it is quite likely that the accountant will charge you less per hour than you would if you did it yourself.

You won’t just have more time on your hands, which will free you up to focus on generating revenue; you’ll also have the peace of mind that comes with knowing an experienced professional is handling the particulars of the situation.

At what other points in the life of a normal small business may it be beneficial for you to enlist the assistance of a certified public accountant?

What Are an Accountant’s Responsibilities?

It is possible for the responsibilities of an accountant to change from one company to the next; but, in general, an accountant is accountable for the following tasks:

Management of data

Your accountant is the person who would be in charge of ensuring that your financial data is maintained, updated, and stored in the suitable manner for the organisation that it is in.

This is done so that an accurate report on the information can be presented to the government, as well as to the owners of the firm, as well as to any investors that you may have. Moreover, this is done so that you can comply with the requirements of the investors.

In addition to this, the accountant is responsible for ensuring that appropriate protocols have been established for data entry and that the accounting software system being utilised is up to date, secure, and frequently backed up. In addition, the accountant is responsible for ensuring that appropriate protocols have been established for the entry of data.

Analysis and consultation of finances

Have you ever been in a meeting when someone proposed that you bring in the bean counters to get their views before making a decision? If so, how did you feel about it?

There is a logical justification for that action or remark.

When it comes to making choices that will impact the future of your small business, your accountant is often times the best resource you have available to you.

It’s possible that you need some basic guidance on how to manage your spending over the next three months, that you need to discuss your possibilities for tax or credit deductions because of a large purchase, or that you simply need help understanding some financial lingo in a document.

A financial advisor can help you in any of these circumstances.

All of the aforementioned issues can be resolved with the help of an accountant, who can also troubleshoot the processes involved in the regular management of your company’s finances.

Financial Reports

Have you ever heard of something that was referred to as a “Cash Flow Statement” or something that was referred to as a “Profit and Loss Report”?

These are the forms of reports that provide you the opportunity to remain up to speed regarding the monetary state of the organisation at all times.

It is vital that your accountant ensures that these reports are accurate and up to date because decisions, whether they be yours or those of your investors, are going to be relied on the reports that he or she gives.

Regulatory Compliance

Are there a significant number of laws that, individually or collectively, have an effect on the way in which your firm conducts its day-to-day business? It’s possible that your organisation is now being subjected to an audit right now. Or should we be preparing our tax returns? Hiring an accountant, who can also assure that your reporting of income and expenses follows to all applicable state and federal regulations, is one way to reduce the problems associated with keeping accurate financial records.

When should you make use of an accountant?

For people as well as proprietors of businesses functioning in any industry, accountants provide a service that is of tremendously high value.

An accountant may do a great deal more than just crunch numbers for a business, regardless of whether it is a one-person art studio run out of their house or a bustling restaurant with a number of employees.

You are passing up opportunities if you are unaware of the benefits that can result from hiring a competent accountant.

You want to start a new business

It is exhilarating to launch a brand-new company, but doing so involves taking on a significant amount of financial risk. Before you begin, you will need to have an understanding of whether or not your huge concept will actually be profitable.

An accountant will not only be able to guide you through some of the administrative aspects that are associated with starting a business, such as deciding on a business structure or determining whether or not you should register for GST, but they will also be able to walk you through start-up and operating costs as well as create accurate revenue forecasts for your company.

They are also able to explore the many financing choices available to you and offer advice regarding the best lenders.

To set up a corporate structure

Before you begin trading, you should talk to an accountant to outline the legal framework of your firm. This is something you should do regardless of how complicated your company is or what your goals are for it.

If you run your business as a limited liability company, you may have more flexibility when it comes to paying yourself and dealing with potential tax ramifications.

In addition, this will ensure that the company is acknowledged as a separate legal entity from yourself, protecting your personal assets in the event that the business encounters challenging financial conditions.

For statutory accounts and tax returns

A limited company’s annual set of accounts as well as the corresponding tax return is a difficult process that requires the assistance of professionals in order to complete it successfully. It is essential to ensure that compliance rules are not violated, as doing so could result in monetary penalties in addition to increased administrative work.

Hiring an accountant to do these filings for you can save you money in several ways, including helping you correctly categorise expenses that are tax-deductible.

For cash flow forecasting

The inability of a company to maintain a positive cash flow is frequently listed as one of the primary factors contributing to the failure of a company.

You will be able to better plan for potential gaps if you compile a forward-looking forecast for the next 12 months. This will also help you determine whether you will need to take out a loan or raise equity financing for your business.

Setting financial goals and targets for where you want your business to be in the future can also be a useful exercise to complete as part of this process.

You’re losing control of your finances

Do you have no idea why your costs are so high, but they are through the roof? Perhaps there has been an increase in sales, but there has been no change in profitability.

Is the debt that your company carries becoming unmanageable?

An accountant can analyse your financial reports, determine the most important KPIs, and point out areas in which you can improve operational efficiency or reduce expenses.

They are also able to examine the structure of your debt and provide recommendations regarding when it is best to repay what is owed and when it is best to reinvest the money.

To get access to finance

There is currently a multitude of different financing alternatives available for start-ups. These possibilities include traditional loans, equity finance, and a range of other services that are more specialised, and they vary based on the type of business or industry in which you operate.

An accountant will be able to assist you in determining the various forms of financing that will work best for your company.

They are also able to assist you in the preparation of an application and any additional paperwork that may be required in order to improve your chances of obtaining expansion funding.

While accountants are able to provide assistance to you throughout the entirety of the lifecycle of your company, you can decide to handle the more fundamental aspects of bookkeeping on your own if you have the time.

It is usually a good idea, and recommended as a general rule of thumb, to spend a couple of hours with an accountant every so often in order to ensure that your financial matters are being handled responsibly.

Make sure that your accountant is able to offer growth services such as access to financing and support around business planning. Cloud software is helping to redefine the responsibilities of accountants so that they become more advisory.

Your company is making progress

Almost every proprietor has the goal of expanding their company, but the question is: is now the ideal time? The possibility of expansion is quite appealing, but it’s important not to rush into anything. It would be smart to hire an accountant to help manage the shift while scaling up.

Not only will they be able to offer sound financial advice on the best growth strategy for your company, but they will also take care of the new financial and administrative pressures that come with opening more stores, hiring more staff, and serving a greater number of customers.

This is because they have experience in these areas.

You are going to require legal counsel regarding the organisational form of your company.

There isn’t just one form of legal structure that every company uses; rather, the numerous kinds are determined by a variety of circumstances.

Others might be referred to as solo traders or proprietors, while still others might be referred to as limited firms, limited liability partnerships, or corporations.

These aspects differ from one nation to the next.

Before determining which one is best for you, you need to give careful consideration to all of the different types.

For instance, you may run your company as a sole trader or sole proprietor, which would mean that you would be self-employed and would issue invoices under your own name.

If this is the case, you may be eligible to deduct some of the costs associated with your living expenses from your taxable income.

On the other hand, this implies that you could be held personally accountable for any liabilities that are tied to the firm. In the event that your company does not pay a supplier, is unable to make payments on a debt, or loses a case, the creditor may have the right to go for your home and other possessions.

Things are handled differently when the company is structured as a limited liability company. It should come as no surprise that the liability of the company is restricted to the assets actually owned by the company, and not to you personally (though there may be exceptions in some circumstances).

Your accountant can walk you through the many legal business structures that are open to you and assist you in selecting the one that is going to work in your favour.

Which Small Business Accountant Should I Hire?

You need to go from this point forwards with the utmost prudence, and you should advance at a speed that is not too quick.

You do not want to speed through the process of choosing an accountant for your company because that individual will have access to all of the company’s financial information once they are hired.

You are looking for someone who can do the job, can be trusted, and is worth the money you are going to invest. The following items should be checked off on your list while looking for an accountant for your small business:

JOB DESCRIPTION FOR A SMALL BUSINESS ACCOUNTANT

Before you even begin your search, it is of the utmost importance that you first devise a comprehensive strategy outlining the specific tasks that you need this individual to carry out.

Depending on the size of your firm, you may just need assistance filing your taxes, or you may simply need occasional assistance classifying and processing the expenditures of your business. Both of these scenarios are possible.

Or perhaps it is a duty that is more substantial: you need someone to recommend, set up, and supervise an acceptable online accounting system in your office.

Have a discussion with your team, find out what their needs are, and then make a list of the activities that need to be completed.

If you aren’t sure how to get started or where to start, you might want to consider consulting with a temporary accountant who can come to your location, evaluate your needs, and provide suggestions. If you aren’t sure how to get started or where to start, you might want to consider consulting with a temporary accountant (some might do this for free just to get the business).

CHECK WITH COWORKERS ABOUT THEIR ACCOUNTANT

There is a strong chance that you are acquainted with a few people who own their own small businesses and who occasionally discuss their accountant. If this is the case, you may have heard them talking about their accountant.

Establish communication with them. Find out who they collaborate with and enquire about the level of satisfaction they have with the services that are supplied.

Have you been able to go through all of the duties on time? Were there sufficient specifics and information that could be relied upon in the reports? Have there been any problems that have come up?

A CERTIFIED PUBLIC ACCOUNTANT SHOULD BE USED

Not everyone is a Certified Public Accountant (CPA), but if you hire one, you can be confident that they have passed the difficult CPA exam, have the required amount of work experience, and will continue to take classes to keep this title. If you hire a CPA, you can also rest assured that they will continue to take classes to keep this title. Employing a Certified Public Accountant (CPA) is, without a shadow of a doubt, a crucial issue that should be taken into consideration.

CHECK THE REFERENCES OF THE ACCOUNTANT

Have you or one of your coworkers ever been recommended to an individual who demonstrates promise? If it turns out to be required, enquire for further references. You will have a better idea of how a reference is feeling if you hear their voice, therefore it is important that you put aside some time in your schedule to give them a call rather than sending them an email in order to get a better sense of how they are feeling.

By compiling a list of questions in advance, you may ensure that you won’t allow yourself to become distracted throughout the conversation.

MEET INFORMALLY

Are you feeling confident that you’ve hired the best individual for the position? We should get together a few more times, the first of which should be in a casual environment, such as over lunch or coffee.

You want to choose someone who is not just capable but also compatible with the culture of your company and will work well with you.

Describe the methods in which you stay on top of things, and ask the others whether they find that helpful. Discuss what a typical day may be like for this new employee at the organisation and what their responsibilities might be.

Do not jump into it too quickly. When you have discovered the person you’ve been looking for, it will be obvious.

Do I Really Need an Accountant?

Before you can provide a response to this question, you must first take stock of your circumstances, including the kind of business you run, its size, and the point it has reached in its evolution. Consider your own answers to the following queries:

DO I HAVE A LOT OF EXPENSES AND INCOME TO MANAGE?

If this is the case, and the number of receipts and invoices you have is growing, you might want to consider hiring a bookkeeper for the time being. If you want to save money, you might want to consider this alternative to employing an accountant. A book-keeper is able to recommend and set up an accounting software system for you, in addition to the following services:

• Develop categories for expenses, make suggestions for policies regarding expenses, and manage approvals.
• Transactions involving expenses and income should be entered into the system.
• Take care of banking responsibilities, such as making trips to the bank to deposit checks.
• Keep records in good order and create backups as necessary.
• Help out with the audits.
• Troubleshooting.

DO I NEED A SINGLE OR DOUBLE ENTRY SYSTEM OF ACCOUNTING?

Single Entry System

Every transaction is represented by a single line in a single entry in a single entry system, whether the ledger is physical or digital. It is not expensive and does not require any kind of formal training to do. Because it is so easy to do, it could even be done on the Excel programme if that were necessary. For each transaction, you are only required to record the following information:

• Date
• Description
• Whether the activity is an expense or is income (and Amount)
• Tax
• Payment Method
• Balance (this balance would be updated with every transaction)

If your company does not have a large number of transactions in a single day, then a system with a single entry point may be suitable, and you will be able to make changes to it on your own.

The benefits of employing a single entry system of accounting include the ability to rapidly access information on your cash balance, as well as the ability to know how much money you have coming in and going out of the business.

Double Entry System

If your business is significant enough to require financial statements, then this is a clear indication that you need to implement a double-entry accounting system. Because a double-entry method is both complicated and time-consuming, you should look into hiring an accountant for this purpose.

In order for the method to be successfully applied, accounting software is also required.

Every entry that is made into the system must also have an additional entry that corresponds to it in a different account for there to be a double entry. Consider that in the phrase “double entry,” the term “double” stands for both “debit” and “credit.” The two sums for each component need to agree with one another in order to rule out the possibility of an error in the recording of the transaction.

There are certain benefits to using a system with a duplicate entry. It is significantly more accurate than a single input, and it enables the generation of the necessary financial statements for your business.

Can I Do My Own Accounting?

You can absolutely handle the books for your own small firm; in fact, a lot of business owners do exactly that. However, if your company expands and there is a greater demand placed on your time over the course of your working day, you may discover that you require the assistance of an accountant.

After all, an accountant will have a solid foundation in both mathematics and economics, in addition to years of expertise working with the most effective accounting techniques, procedures, and tools that are available to employ. Additionally, a certified public accountant is able to resolve legal concerns, evaluate appropriate financial plans, and produce the reports that are required.

One of the aspects of running a small business that you probably enjoy the most is having control over its operations. You have complete control over your working hours, the formulation of your business plan, the management of your workload (at least to some degree), and your financial situation. And the feeling of having complete control over all of these aspects is one that is both delightful and empowering.

However, it may prevent you from delegating some tasks at times. The unwillingness of business owners to accept assistance from their employees is one factor that contributes to the feeling of being overworked. It’s possible that you believe no one else can understand your company as well as you do. Because of this, nobody can handle any aspect of your organisation as effectively as you can.

If you are unable to delegate, you may end up feeling overworked and stressed out as a result. You will need to learn to let go at some time and learn to trust other people to handle some aspects of your business so that you can focus on the aspects that are most important to you.

A smart first step would be to delegate responsibility for managing the financial aspects of your firm. You need to make sure that the accountant you hire is qualified and that you can put your faith in them to handle the financial details of your business. You will be able to devote more of your attention to other parts of your firm once you have delegated the responsibility of managing the company’s financial affairs to someone with more experience in accounting than you do.

You should make an effort to learn from the owners of some of the most successful businesses in the world because they are specialists at delegating work to the appropriate people.