f you are a small business owner or entrepreneur, you probably are already familiar with certain details of handling the financial aspect of your trade. You may be serving as an accountant yourself, and you may utilize certain apps to help you organize your cash flow, business bank account, financial reporting, and tax filings like Quickbooks or Xero

Hiring an accountant for your small business may help you manage your business finances and  financial information more effectively – especially as your business grows. 

When are You Ready to Hire a Small Business Accountant? 

Before choosing the right accountant for your small business, you must know when the time is right, especially if you’re a new business. Here are some key indicators:

You face challenges in your business’s growth 

There are many reasons why you should hire an accountant for your business. It may be for creating business goals or crafting your business operation design. You may also need one when applying for loans, auditing, and accounting itself. Remember that you do not always need to hire a full-time accountant for your business. Sometimes, you will only need their service for a few hours or days in a given business period.

You need assistance creating a business plan

It is also time to hire a CPA or accounting firm when making your business plan. An accountant offers advice in financial conceptualization that applies to real-life and professional standards.

You need assistance in your business’s legal structure 

Not every business has a legal design or structure. Be careful in considering the legal structure that suits you best. For instance, if you operate your business as a sole proprietorship, different rules and regulations will apply than if you run your business as an LLC.

Your business finances need better accounting and analysis

Accounting may become too complicated if you do it on your own. You may need to consider business metrics that are familiar to accountants. Accountants also have skills in using various types of accounting software. This skill set will significantly aid you in your finance routines.

These are all valid reasons to seek an accountant for your small business or startup. Once you’ve made the decision, entrepreneurs like yourself will need to follow these four steps to ensure you’re making the proper selection.

Define the Skillset You’re Looking For

Accounting isn’t all about numbers. It also has to do with more profound concepts.

CPAs possess a broad understanding of financial statements, ideas, and taxation codes. It can be difficult, or at the very least time-consuming, to transfer that ability to layman’s terms. Because of this, an accountant can be more valuable than their resume suggests. You should have particular standards and qualifications that fit your business objectives.

Your accountant is also highly likely to work with your other employees, mainly when they extract data relating to your business’s financial records. So, the accountant you hire must have the ability to communicate well. Success in this field requires not only competence but character. You must be able to trust your accountant with your business information. For this to happen, there is a need for a careful selection process. An accountant will have internal scrutiny of your cash flow and financial cycles. You must be ready to trust an accounting professional with these tasks.

Your accountant must also be able to do the following:

  • Track accounts receivable and accounts payable
  • Manage payroll, including employer/employee tax records and payment records
  • Clarify and streamline business records and transactions
  • Keep business status and government registries up to date
  • Ensure your company is up to date with any changes in business tax laws and regulations

You may also need bookkeeping and financial planning services in addition to general accounting help. Learn more about the difference between accounting and bookkeeping

Hire a Small Business Accountant Who Meets Your Needs

Communicating your specific needs to an accountant will ensure you both have a clear understanding of your business and the financial management required. For example, if you rely on the profit first method of accounting, you must be able to ensure that your accountant is open to allocating your business finances in such a way. 

Take Measures to Ensure a Thorough Financial Analysis

You must find an accountant or accounting firm to analyze and review your business finances. They need to be able to inform you of indicators of profit or loss on a day-to-day basis or with regular frequency. This allows you to make the best decisions for your business.

The following task breakdown will help you and your accountant come up with an orderly business flow and accounting system:

  • Separate business from personal expenses. Having different personal and business accounts will help you understand your industry.
  • Track expenses. Expenses are inevitable, so knowing where and how your money moves will save you from unnecessary expenditures.
  • Record income accurately. An accurate income generation record gives you an idea of the business's profit or losses.
  • Consider hiring a professional, even temporarily. Expert help is a great advantage for your business, even if it is only temporary.
  • Automate accounting techniques and software. Applications and software will make you and your job manageable and your goals more attainable.
  • Dedicate time for bookkeeping updates. Bookkeeping updates save the business from unforeseen discrepancies.
  • Monitor labor costs. This will guide you on your human and financial resources.
  • Expect major expenses. This will give you time to save for costs such as repairs, adjustments, and human resource benefits.
  • Maintain inventory records. This will give you an accurate overview of your product and service availability.
  • Follow up on invoices and receipts. These are evidence of your business transactions.
  • Create financial projections for the near future. This will upgrade your business and aid development and growth.

Refrain from Doing Accounting Tasks on Your Own

There is a reason many businesses hire accountants—they went to college to acquire specific skills and specializations to serve big and small business owners alike.

As your business grows and your accounting needs become more complex, it is generally better to outsource your accounting to a professional. For instance, there are business requirements that only CPAs can process. CPAs are knowledgeable about tax laws and tax returns, and you can expect that they will give you tax advice, including information on tax filing, tax planning, and tax deductions. Delegating tax season prep and tax filing to your accountant will help save you time and money.

Whether you pay your accountant a salary or an hourly rate, it’s essential to let them do their job so that you can do yours. 

The Takeaway

At first, it may be beneficial to hire someone part-time, but keep the door open as your business grows and you need a more permanent accounting position on your team. Outsourcing your accounting needs can lead to more accurate financial plans and peace of mind for you as you run your business.

The bottom line: asking for help from professional accountants is not a weakness, but rather, it is a means of leveling up your venture!

July 25, 2022
Company Culture & Management