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So, you run a small business. You’ve been keeping up with the bank account and invoices so far, but now you’re expanding—sales are picking up, and you’re spending more and more time on the not-so-fun side of your business.
Or are you already knee-deep in receipts and accounts receivable—drowning in bills, pay stubs and tax worries?
Or even better, are you just starting your small business and want to get your books right from the start?
In all of these scenarios, there’s no better time than right now to hire an accountant.
What Is an Accountant?
Before you get started, you probably have some questions about what an accountant is and what they can offer.
An accountant is a professional who handles the bookkeeping and prepares financial documents like profit-and-loss statements, balance sheets and more. They perform audits of your books, prepare reports for tax purposes, and handle all the financial information that’s part of running your business. In other words, they are the finance nerd you need!
What Does An Accountant Do?
So what does that mean for you and your business? How can an accountant’s way with numbers and super-human calculating skills make your life easier? Here are just a few examples of how using an accountant can help your business grow:
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An accountant can advise on business structure. Is your small business set up as a sole proprietorship or an LLC? What’s the difference and what are the benefits of one over the other? An accountant can point your ship in the right direction and even handle the paperwork to get you there.
An accountant can issue invoices. Your business has to make money somehow, so you need to be sure you’re charging—and collecting from—your customers in a timely and professional way. An accountant can create and send bills to your customers so you can get paid.
An accountant can record sales. For your business to succeed, you need to know what you’re actually selling, how much you’re selling and at what profit. An accountant can keep track of your small business’s sales and run reports. That way you know what your biggest sellers are, which products to phase out, and how much inventory you need for next month. An accountant also answers a tons of other questions that will help your business grow.
An accountant can manage and pay invoices from suppliers. The bigger your business becomes, the more stuff you’ll need to make it run. Your accountant will pay your suppliers (and keep track of those expenses) so you know how profitable your business really is.
An accountant can manage payroll. How many hours did your assistant work in June and how much was she paid? Your accountant can track and calculate her pay, plus tell you how much you need to withhold for quarterly payroll taxes. An accountant can track accounts receivable. You know invoices have been sent to all of your clients, but have any of them been paid? Your accountant can track who has paid (and who hasn’t) so you know how much cash you have on hand—and if you need to send out late notices.
An accountant can keep you up to date with tax laws and changes. Taxes are tricky and with the 2018 Tax Bill, they may get even trickier for small businesses. An accountant can help keep you in compliance with tax laws by calculating payroll taxes for your employees or keeping up with sales tax changes for each of your products.
Create weekly, monthly and/or annual reports on the financial well-being of your business. How healthy is your business? How much cash should you keep on hand? An accountant will create all the reports you need to make the right financial decisions for your business.
When Should You Hire an Accountant?
It’s smart to have expert advice from an accountant throughout the life of your small business, whether you’re just in the planning stages, or you’re so far in you already have employees. But advice from a professional can only be helpful if you’re willing to take it.
Small-business owners wear lots of hats and can struggle with delegating some of their control to others. We understand that this business is your baby! You made it from scratch. Or maybe you’ve had a bad experience with someone keeping your books in the past and don’t want to go through that again. These are all reasons you need a trusted, experienced, qualified professional.
What Are the Types of Accountants?
Accountant responsibilities come in all shapes and sizes, but there are three distinctions you should keep in mind:
Bookkeeper. Bookkeepers are not all accountants, but accountants can be bookkeepers. Bookkeepers handle a range of activities for your business, from bill payments to weekly reports. While bookkeepers are skilled at handling plenty of financial responsibilities, they’re not required to hold licenses that allow them to represent you to the IRS or prepare your taxes.
Certified Public Accountant (CPA). CPAs are certified through the state through specific examinations and licensing requirements. They’re allowed to prepare and sign tax returns for individuals and businesses and can represent taxpayers before the IRS for audits.
Enrolled Agent. Enrolled agents must pass a comprehensive examination that covers individual and business tax laws. They’re allowed to prepare your tax returns, but not sign them. They must also meet continuing education requirements to maintain their licenses, and they can represent you before the IRS if you’re audited.
Small Business Accountant Versus Accounting Software
You can find anything on the internet. In fact, that’s probably a big part of your own business. So, of course, you can find plenty of online or software solutions for your accounting and bookkeeping challenges. But if you use software on your own to manage your books, you don’t have an experienced set of eyes reviewing your work. This leaves a lot of room for user error and increases your risk of making costly mistakes. What if you input an invoice wrong? What if you didn’t know a tax law changed?
Without a trusted pro taking a look at your work, there’s a big chance your mistake will go unnoticed—and you’ll end up paying the price.
You don’t even have to hire a full-time bookkeeper or accountant to keep your finances organized and accurate. Outsource specific financial tasks to a professional who is experienced in handling business accounts.
Get the Accounting Help You Need
All this seems like a lot of work . . . and it is! Small-business owners can spend more than 120 hours a year keeping up their books and taxes.(1) That’s a lot of time that could be better spent on your business, developing new ideas and doing what you love.
The step to bring on an accountant isn’t just about the value of your time. It’s also about whether or not you can handle your business finances as well as a professional would.
Let us put you in touch with one of our trusted Endorsed Local Providers (ELPs). Find a top-notch accounting pro near you today!