When running a small business, there’s a lot to keep track of, from daily operations to customer service to boost sales. While all of that occupies your time, it is easy to let the financial health of your business go unmonitored.
This is a huge mistake. In order to run and grow your business without letting money matters deteriorate, you’ll need to hire a dedicated accountant at some point. There are 1.4 million accountants in the U.S., according to the Bureau of Labor Statistics — many of whom have the exact training and expertise to help a business maintain good financial standing.
A good accountant will help you manage your venture’s financial statements, keep your books clean, and ensure you have the consistent positive cash flow or are on the road to achieving it.
Before you hire an accountant for your small business, however, make sure you understand why you need one, what to look for, and what one will do for you.
WHAT BUSINESS ACCOUNTANTS DO
An accountant is a professional who oversees the financial health of your business, day in and day out.
This includes keeping tabs on the money your business owes to other parties such as suppliers (accounts payable), and the money owed to your business by customers and clients (accounts receivable).
A good small business accountant will also track cash flow, maintain balance sheets that show snapshots of your business’s assets and liabilities, ensure your financial statements are accurate and detailed, help manage payroll, and make income projections you can depend on.
An accountant is an essential team member who can “diagnose and treat” financial problems from within your company while clarifying the path to business growth and increased profits, so it’s important to hire the right person or retain the right outside accounting services.
THE BENEFITS OF HIRING AN ACCOUNTANT FOR YOUR SMALL BUSINESS
Here are 13 of the most important advantages of hiring an accountant who’s capable, experienced, and attuned to the needs of your business:
1. Save Time
Running your business day-to-day can easily consume all of your productive time as a business owner. It can be overwhelming to maintain complete oversight of your finances, especially if your company is larger than a one-person operation.
Hiring an accountant to manage your finances solves this problem. An accountant can handle money-related tasks faster than you can, especially if you don’t have the same kind of training they do.
2. Save Money
While you’ll have to pay a salary to an in-house accountant (or a fee for outside accounting services), they will end up saving you lots of money in the long run.
A seasoned small business accountant will be able to spot opportunities for savings, point out where money is being wasted or spent inefficiently, and advise you on cost-effective ways of managing inventory, payroll, and more in the long term.
3. Comply With Tax Laws
For smaller businesses, it can be tempting as the owner to try filling out all the tax forms and making payments yourself, without seeking advice. This is very risky, however. A lot can go wrong.
Hiring a Certified Public Accountant (CPA) is the way to go. A CPA is a professional who is especially qualified to ensure your business’s compliance with all tax laws, including obscure ones that business owners can easily miss. This will spare you from audits down the line — and save your business from unexpected penalties and legal trouble.
4. Maximize Tax Benefits
Aside from just heading off problems, a CPA can help you maximize tax benefits and claim all the deductions and credits your business is entitled to. They will also stay on top of the tax laws as they change, enabling them to scout out new opportunities for you to save on your tax bill.
5. More Focus On Running Your Business
One of the biggest benefits of hiring an accountant for a small business? Peace of mind. Having a competent accountant by your side enables you to focus more on ensuring smooth business operations and providing excellent customer service.
A big part of your accountant’s job will be to make sure your business is not hit with woes such as outsized tax liabilities, ballooning debts, and other money problems that will distract you from your daily management responsibilities.
6. Clarify Future Business Directions
A seasoned accountant will understand how to make revenue projections that take industry developments, as well as regional and national economic conditions, into account.
That means you’ll have more clarity on where your business is headed, what might affect your ability to sell and retain customers, and what changes you can make to position your business better in the marketplace.
7. Solidify Your Business Plan
If your business is still in the pre-launch stage, an accountant is one of several professionals who can help you put together a solid business plan. They’ll be able to advise you on what kinds of sales numbers you can achieve, helping you project your revenue over the next few months and years.
Your accountant will also give you a sense of necessary startup costs and investments and can show you how to keep functioning even in periods of reduced or negative cash flow.
8. Minimize the Risks of Business Activities
Every business needs to evolve to stay profitable, eventually. That means taking risky actions that have financial consequences, many of which are unforeseeable.
If you’re planning to make big moves, such as introducing a new product line, expanding into a new market, or investing in or acquiring another business, hiring an accountant makes sense. They can give you clarity on how that will affect your profit margins and scalability long term. They’ll also be able to warn you of any potential risks to your company’s value.
9. Correctly Value Your Commercial Property
Your commercial real estate is an important asset. You’ll want to factor your property into the overall value of your business and keep track of your property’s value as it fluctuates.
Hiring a Certified Public Accountant who understands fixed asset accounting can properly value your real estate while staying on top of factors that affect the numbers as time goes on. This way, you’ll always remain in the best position to negotiate with potential investors, and know how much commercial equity you can borrow against as needed.
10. Solidify Sales and Marketing Strategies
Your sales and marketing process will require you to spend money, whether it’s on tactics or hiring the right kind of help. It’s crucial to ensure these activities are producing a sustained ROI for your business and leading to higher profits overall.
Your accountant can play a huge role in making those assessments. Specifically, they can help you hone in on which sales and marketing strategies are contributing the most to your bottom line.
11. Get Personalized Business Advice, Recommendations, and Referrals
It can be hard to follow developments in your industry at all times.
An accountant with deep experience in your industry, however, can do just that. They’ll also likely come with a valuable professional network, as well as wisdom from the successes and failures of businesses like yours.
As a result, your accountant might be able to give you up-to-date advice that fits the unique needs of your business. On the other hand, when they can’t advise you directly on something, they can tap into their network and refer you to the right person.
12. Have an In-House Expert in Your Business
As your accountant gets familiar with your books, they’ll develop one-of-a-kind expertise on your venture. They’ll see the overall trends, opportunities, and threats. Their projections will gradually become more accurate.
This is one of the major advantages of keeping a great accountant on staff. They will grow right alongside your company and personnel, making their expertise as one of your team members increasingly valuable over time.
13. Ensure the Security of Financial and Other Sensitive Records
An experienced accountant will stay up to date with data protection standards, especially as the internet becomes increasingly essential to business and risks of exposure skyrocket.
That means they’ll be equipped to implement the right kind of cybersecurity systems and software, as well as ensure your company’s financial records, customer data, legal records, and other proprietary or sensitive business information stays safe.
This is especially true if you hire an accountant who has completed the Cybersecurity Maturity Model Certification (CMMC) or work with an accounting firm that specializes in making those kinds of assessments.
OTHER CONSIDERATIONS WHEN HIRING AN ACCOUNTANT FOR SMALL BUSINESS
Whether you own a small retail store or a professional cleaning firm, hiring the right accountant for your small business means taking a critical look at qualifications and areas of expertise. You’ll also want to look for signs of professionalism and fitness for your unique business type.
A few things to think about are:
Look for a small business accountant who knows your industry inside and out. They will be best equipped to understand how money flows through your type of business. They can also follow industry trends more closely, and advise you on the smartest financial moves to make.
In-House vs. Accounting Firm
By employing a full-time accountant to work within your business, you’re recruiting an ally whose expertise on what your business needs to stay in financial good standing will only grow over time.
However, depending on your situation, an external firm might be easier for you to retain for specific accounting needs as they arise, such as taxes or specific investments. This is especially the case if your business has a low transaction volume, or if your business is small and simple enough that bookkeeping is very easy.
At the very least, you’ll want to work with a professional who is a Certified Public Accountant or CPA. They are qualified to do the bookkeeping for entire businesses. They’re also expected to understand the nuances of tax law, and can help you navigate key compliance tasks.
From there, you might choose a CPA with additional experience or special expertise in a certain area. A Certified Management Accountant (CMA), for example, has the extra skill and training to play a management role within a growing company.
Other accountants may have deep knowledge of business valuation, investments, and other key areas.
Whichever accountant you choose, make sure they can give you a sense of what their background and capabilities are, and ask them how they envision building a healthy financial future for your business.
HIRING A SMALL BUSINESS ACCOUNTANT? TALK TO RAINCATCHER
The benefits of hiring an accountant for your small business are many. That said, it’s crucial to hire the right professional.
If you’re looking to hire an accountant, we’re here to support you. Our professional business brokers can help you narrow down the type of accountant that’s right for you, and can help with referrals.
To get all your accounting questions answered and to find out what your small business is worth.