Running a business usually involves making difficult decisions. And those decisions only become harder when they affect your bottom line.
Fortunately, an accountant can help you during these moments. Many people assume that accountants are just limited to bookkeeping and tax returns preparation, but they can help you a great deal.
They can give you advice on the best decisions to make in your business, depending on their extensive knowledge of your finances and expertise. Here are 13 common situations that require the hiring of accountants specialized for small businesses.
You know nothing about accounting
If you’re confused by financial statements, you find it hard to create reports, or you don’t understand accounting terms, you probably need to employ an accounting professional—at least at the beginning—to teach you everything related to finances.
An accountant can speak to you in a simple language, weed through jargon, and show you how to handle your own finances. Apart from that, you wouldn’t want to make mistakes initially or miss vital information that might be costly down the road. With an accountant, you and your business can get started on the right lane.
You know nothing about taxes
The American tax code is complex. Even so, if you don’t pay the relevant taxes for your company, you’ll likely incur fines and penalties. An accountant can give you advice early so you can abide by all tax regulations. Even more important, an accountant can let you know of deductions and tax credits you can take, as well as predict taxes you owe so you can pay them to the government. Lastly, an accountant can file your taxes on your behalf, making the tax season less challenging.
You need advice on creating a business plan
An accountant can provide you with invaluable assistance when you’re preparing your business plan. With accounting software, they can add financial projections as well as other reports to handle the numbers better. This helps you write a more professional and realistic business plan.
When your small business is expanding
As a small business owner, growth is exciting but it isn’t always simple to handle. As your business grows, an accountant can guide you—much like a chief financial officer does in a big company.
Growth usually necessitates making strategic decisions such as taking on additional office space, expanding your product/service offering, or hiring new employees. Your accountant will get to understand your budget better than anybody and can recommend the right moment to implement these decisions.
You need advice regarding your business’ legal structure
Businesses have various kinds of legal structure, including limited company, limited liability partnership, sole proprietorship, etc. An account will teach you about the various legal structures, as well as help you pick the best one.
You want to delegate
One of the pluses of running your own company is the freedom of being in control of every aspect of the business. But as you expand and really focus on moving the company forward, there’ll come a time when you need to delegate financial responsibility a bit more. Having an accountant take care of some financial matters provides you with more time to run your business.
When you’re seeking a loan
Having an accountant in your small business can be a huge benefit when you’re seeking a business loan. Lenders usually deal with businesses they know will pay back and having an accountant shows that you want to succeed.
An accountant may also help you apply for a loan. They may use your financial details to produce expense reports and revenue projections to give to the lender. This shows you know your cash flow and have a strategy to pay off the loan.
When you need to focus on more important tasks
Perhaps you’ve got some practical knowledge of accounting, but bookkeeping isn’t allowing you to accomplish tasks that might directly expand your business (like moving into fresh markets or acquiring new customers) or managing your company effectively (like handling performance problems or fixing service problems). You should employ an accountant in order to focus more on building your team, innovating, winning more business, as well as other development matters.
Your revenue is growing but profit is not
If you have more sales than ever before, but your profit isn’t increasing, an accountant can review your overheads and recommend where you can slash costs or make changes to grow your profit margins.
If you’re buying/selling a business
You don’t need to launch a new business when you can purchase one that’s already operational. But before you buy an existing business, consult an accountant. They’ll review the business’ accounts to ensure everything is fine.
If you’ve been operating your business for many years, it’s highly likely that you’ll have an accountant when time comes to sell the business. However, if you don’t have an accountant maintaining your books, it’s important to hire one to sort out your finances and generate statements to show to potential buyers.
You’re about to be audited
An accountant will provide guidance through this testing process by dealing with the IRS for you or preparing you to handle the audit. An accountant may save you precious money and time, and provide guidance during a very stressful time.
You have to handle the government
As your business grows, you’ll need to fill out plenty of regulatory and tax documents. Dealing with government matters can be very technical aspects of business management that can prove daunting. Accountants may help you with far more than tax returns, however. They can assist you to stay on top of your compliance and regulatory requirements.
You want to venture into another state
If you plan to take your business to a new location, hire workers in other states, or distribute in another state, an accountant may help ensure you comply with regional tax-reporting, income, or sales requirements.
When you’re managing your small business, you’ll end up handling lots of different tasks. Hiring an accountant, however, is one thing that can actually impact your business’ growth. The knowledge and expertise of accountants is very useful, whether you’re having a tax audit, preparing a business plan, or handling tax compliance.