Starting a business comes with a number of challenges. Keeping track of your finances is one of those challenges, and is beyond the expertise of many small business owners. But as a small business, you may not have the resources to bring in a full time CFO or accountant. Knowing when you should hire an accountant and what options are available can save you time, money, and trouble.
What an Accountant Can Do for Your Business
What an accountant does for your business has a lot to do with what stage your business is in. Growing a small business can start out with just one or two founders working from home. Over time you may take on employees, leases, inventory, and assets. As your business grows, your needs will change. So will the amount of resources you have available to dedicate to accounting services.
The important thing to remember is that a good part of an accountant’s job is to save you time and keep you out of trouble. Basic bookkeeping may seem simple enough, but it can also be time consuming. When it comes time to do your taxes you may find that filing corporate taxes is complicated. And making mistakes on your tax returns can land you in hot water.
If your company has employees, inventory, and assets, you probably have a lot of money moving around. Keeping track of it all can become very time consuming. Again, errors at this stage can lead to legal trouble. An accountant knows how to keep track of all that moving cash and what needs to be done to stay legal.
The Founders Stage
Most small businesses start very small. Does that sound familiar? In the beginning your business might be no more than one or two founders working out of your homes. At this point your business is likely a sole proprietorship. All expenses and payments are made in your personal name. You also carry all the liability for the business. If someone sues the company and wins, they could go after your home or other personal assets.
About this time you should start thinking about a business plan, if you haven’t already. This would be a good time to make first contact with an accountant. An accountant can help advise you on your business plan. They can help you to create realistic projections for your business’ financial future and reports that clearly document those projections. They can also help you to consider different options for limiting your liability, from forming a limited liability company to incorporating.
Another reason you might want to bring in a professional early on is to help with bookkeeping. Bookkeeping seems simple enough, and it may be something you could do yourself. But if your time is money, it may make more sense to hire a freelance or part-time bookkeeper to do the books for you. Determine what your time is worth and it will be easy to see if hiring a bookkeeper is cheaper than doing it yourself.
As your business starts to move some money around, you will start collecting receipts, invoices, and financial statements. If you have a bookkeeper you can simply collect those documents and deliver them to the bookkeeper once a month. A trained bookkeeper can enter your information into an accounting application, reconcile your accounts, and help protect you against simple record keeping mistakes.
As your business grows, so will the number and complexity of your financial transactions. At this point you hopefully have more resources, too. You may find it’s worth bringing in a bookkeeper more often.
When It’s Time for Taxes
From the moment you’re paid your first dollar, you need to be thinking about taxes. Consulting with an accountant early on can save you a headache when tax season comes around. An accountant can help you develop a plan for effective record keeping so your taxes are simpler at the end of the year. They can also help you figure out what you should be keeping track of to ensure that you get the most deductions and best tax breaks.
When tax season rolls around, there is almost no excuse not to hire a CPA. Doing corporate taxes can be complicated. Even if you are a sole proprietor, you don’t want to run the risk of making mistake on your tax returns. Hiring an accountant to do your taxes doesn’t have to break the bank and it can save you a lot of trouble. Also, just like with bookkeeping, you need to keep in mind that your time is money. For the dollar value of the time it would take you to do your own taxes, you could probably get a CPA to do it several times over.
Keeping Control of Your Finances
Another good reason to bring in an accountant is to benefit from their expertise in financial management. As your business grows you may be adding employees, leases, and other expenses and assets. If you don’t keep track of all of the money coming in and out, you can quickly lose track of your long-term financial objectives.
An accountant can help you wrangle all those receipts, invoices, pay stubs, and financial statements into a coherent picture of your business’ financial wellbeing. If you are paying salaries, you may want to pull a report on the ratio of salaries to revenue over time. This is important information to guide the growth of your business. But compiling that information on your own can be complicated and time consuming. An accountant is trained to look at all of your financial data and produce valuable reports that will inform your business decisions.
When It’s Time to Delegate
As your business grows, you will inevitably run up against your personal limitations. As a small business owner, the control you have over your business and finances is part of the appeal. You have the power to control your work schedule, set the vision and financial goals of your company, make detailed business decisions, and generally run your business in the way that you want.
But at a certain point, if your company is successful you will find that you don’t have the time or expertise to do everything yourself. Rather than an admission of your shortcomings, this realization should be a sign of your success. No Fortune 500 company is run on the day-to-day decision making of a single employee, executive, or founder. For a business to grow, you MUST delegate. Finding the right people to delegate to will be a major factor in the ongoing success of your business.
One area in which you should consider delegating is financial management. This doesn’t mean giving up control of key financial decisions. But it does mean giving a full or part-time employee the day-to-day responsibilities of bookkeeping, invoicing, bill payment, and asset management. Any financial duties that don’t involve making large decisions can be easily delegated. As an added bonus, a trained accountant can take all of that information and prepare monthly, quarterly, and annual reports that help you track your business’ finances. These reports can be very useful when making important decisions about the future of your business.
Stresser & Associates, P.C.
No matter what kind of financial help you need, Stresser & Associates is there for you. Dale trusts Stresser & Associates so much that when he started TrustDALE he turned to them for his own financial needs. They have been in business since 1990 and carry a combined 80 years of financial services experience. As a full service accounting firm, they are prepared to fill any need your business may encounter. From consulting on business formation to bookkeeping, tax preparation, and even forensic accounting, Stresser & Associates has you covered.