The decision on when to hire an accountant is crucial for any small business owner. Whether you’re just starting, experiencing rapid growth, or navigating complex financial situations, the expertise of an accountant can help you achieve your goals.
But how do you know when to hire an accountant or if your small business truly needs one? In this article, we’ll reveal the key signs and benefits that indicate it’s time to bring in a professional.
Let’s get straight to the point
Hiring an accountant can benefit small businesses at various stages, from startup to growth and complex financial scenarios. Key times to consider hiring include when launching a business, creating a business plan, applying for a loan, or preparing for taxes. Accountants offer expertise in tax compliance, financial planning, and saving time on administrative tasks, allowing business owners to focus on growth.
Depending on business needs, accountants can be hired on a part-time or full-time basis, with CPAs offering specialized skills for complex financial strategies and transitions like selling or transferring ownership.
When to Hire an Accountant for a Small Business
1. Starting a New Business
If you’re starting a new business, choosing the right business structure is one of the first decisions you’ll face. This choice will have long-term implications for your taxes, liability, and overall management.
A good accountant can help you create a business plan, decide on the best legal business structures, and even determine whether you need to register for GST. Their guidance in these early stages can save you from costly mistakes and set your business up for success.
2. Creating Your Business Plan
A well-thought-out business plan is essential for any new venture. Accountants can help you create realistic financial projections and ensure your plan aligns with industry standards.
This improves your chances of securing a business loan and gives you a solid foundation to grow your business.
3. Applying for a Business Loan
An accountant’s assistance is invaluable if you plan to apply for a business loan. Accountants can prepare accurate financial statements, cash flow forecasts, and other required documentation to increase your chances of approval.
They can also help you determine the best type of business loan and lender for your needs.
When Should You Hire an Accountant?
1. As Your Business Grows
Many small business owners start by managing their finances, but keeping accurate financial records becomes more complex as the business expands. A small business accountant can help with bookkeeping, tax planning, and cash flow management, freeing up your time to focus on running your business.
If you’ve been running a business for years without employing an accountant, now might be the time to reconsider.
2. Preparing Your Tax Return
For most small businesses, tax season is the time they seriously consider when to hire an accountant. Filing a tax return can be complicated, and the stakes are high if you make a mistake.
A professional accountant ensures that your tax returns are accurate and compliant and can identify potential deductions and credits to lower your tax bill.
3. Handling Complex Financial Situations
As your business grows, so do its financial needs. If you’re considering a major investment, hiring more employees, or expanding into new markets, it might be time to hire a business accountant.
They can provide strategic advice and financial analysis and ensure your business strategy aligns with your goals.
Key Benefits of Hiring an Accountant
1. Better Use of Your Time
As a business owner, your time is valuable. Consider the time it takes to manage your finances—time that could be better spent growing your business.
Hiring an accountant frees you from administrative burdens like payroll, invoicing, and tax filing, allowing you to focus on what you do best.
2. Expertise in Tax Laws
Tax laws are complex and constantly changing. A tax accountant stays updated on these changes and knows how to apply them to your advantage. They ensure that your business remains compliant and avoid costly penalties while maximising your tax savings.
3. Audit Insurance
No one wants to face an audit, but it’s a reality for many businesses. If your company is audited, having a good accountant who offers audit insurance can ease the process. They can represent your business, handle the paperwork, and ensure everything is in order before the audit begins.
When Should You Hire an Accountant Full-Time or Part-Time?
1. Accountant Full-Time vs. Retainer
You don’t always need to hire an accountant full-time. Many small businesses opt to hire one on a retainer or for specific tasks like tax preparation or financial forecasting. You may need a full-time accountant to handle ongoing financial management as your business grows.
2. Consider Hiring a Certified Public Accountant (CPA)
Not all accountants are created equal. Consider hiring a Certified Public Accountant (CPA) for more complex financial needs. CPAs have advanced qualifications, have passed rigorous exams, and bring higher expertise to your business.
A CPA can be particularly useful when structuring your business or navigating complicated tax scenarios.
When to Involve an Accountant in Your Business Strategy
1. Your Business Grows
If you plan to scale your business, it’s time to bring in an accountant who can advise you on managing growth. They can assist with budgeting, forecasting, and planning for additional expansion costs, like hiring more staff or opening new locations.
2. Selling Your Business or Transferring Ownership
Selling a business is a complex process with significant financial implications. An accountant can help you determine the value of your business, prepare financial records, and advise on tax implications.
They’ll ensure the sale goes smoothly and you get the best possible return.
Conclusion
Knowing when to hire an accountant depends on your specific business needs. From starting a business to navigating tax season or planning for growth, the right accountant can make all the difference.
Small business owners often wear many hats, but when it comes to managing finances, a professional accountant is an investment that can save you time, money, and stress. Consider your financial situation, your business’s growth stage, and the complexity of your accounting needs.
If you’re finding it difficult to keep up or simply want to focus more on growing your business, it might be time to hire an accountant. Whether you need to employ an accountant full-time or just need advice on specific aspects of your business, having expert knowledge can give you peace of mind and set your business on the right path to success.
FAQs
What Are The Main Signs I Should Hire An Accountant?
Key signs include struggling with tax compliance, spending excessive time on bookkeeping, managing rapid business growth, or needing detailed financial analysis.
How Can An Accountant Help During Tax Season?
Accountants ensure accurate tax filing, identify deductions, keep your business compliant with tax regulations, and help minimize tax liabilities, reducing stress and errors.
Is Hiring An Accountant Beneficial For Small Businesses?
Yes, an accountant saves time, reduces financial errors, helps with strategic planning, and allows business owners to focus on growth rather than managing finances.
Can An Accountant Help Me Manage Cash Flow Better?
Absolutely. Accountants monitor cash flow, forecast financial needs, and provide insights into revenue and expenses to help you maintain a stable cash position.
What’s The Difference Between An Accountant And A Bookkeeper?
Bookkeepers manage daily financial tasks, while accountants focus on tax planning, financial analysis, and strategy, providing a broader view of your business’s finances.