Operating a small business is exciting, although at times overwhelming too. From customers and advertising to bills and taxes, you wear many hats. A huge question a lot of small businesses ask themselves at some point is "Does my small business need an accountant?"
And if this question has crossed your mind lately, you are not alone. This article offers 7 signs it's time to hire a professional accountant to keep your business in good health, compliant and growing.
7 Signs it's Time to Hire an Accountant For Your Small Business
Below are the 7 signs that tell you it’s time to hire an accountant for your small business:
Sign 1: You Are Spending Too Much Time on Financial Tasks
Time is money, especially for a small business owner. When you are wasting many hours balancing your books, understanding tax rules or tracking invoices, you are wasting time you could be spending growing your business.
These are tasks which accountants can handle so you can do what you do best, work on your business. The more time you free up, the more you can invest in customers, profits and products.
If you are starting to Google things such as "how to do payroll" or "how to reconcile accounts" each week, you may want an accountant.
Sign 2 : Not Sure What You Can Deduct On Your Taxes
Tax deductions could help you save money when you understand the way to utilize them right. Many small business people leave money on the table simply because they do not know tax rules or maybe they are scared of making an error.
A professional accountant knows which expenses are usually deducted and the way to organize them. They will additionally help you stay away from red flags which may prompt an audit.
So in case you are thinking "do I need to have an accountant just for taxes?". You do, particularly in case your tax situation is a lot more than an easy return.
Sign 3: You Are Growing or Hiring Employees
Growth is great, but it also brings more financial responsibilities. You should:
- Find your first employee.
- Open a 2nd location.
- Get a business loan.
- Extend your products and services.
If the above conditions are there then you need an accountant on your team. They can help you anticipate future expenditures, handle payroll, comprehend new tax responsibilities and create a long-term budget.
Sign 4: You Fear Making a Mistake
Managing your own business finances with no adequate training can be costly. A simple mistake in your bookkeeping or misclassified expense could result in IRS penalties, missed deductions or legal trouble.
Accountants learn to detect blunders before they cause damage. They can review your present system, detect errors and make suggestions to save you money and stress.
In case you are sleeping through money matters, you may need help.
Sign 5: You Have Been Audited or Got a Notice From the IRS
A letter from the IRS Audits is frightening, especially in case you've absolutely no clue what it is and how you can react. Whether it is a complete audit or a simple correction notice, you cannot do it by yourself.
An accountant can represent you during audits and also explain issues and solve them quicker. They know the IRS and what paperwork to prepare. In case you got an IRS notice already, you might wish to stop asking "Does my small business need an accountant?" The answer would be yes, immediately.
Sign 6: Your Books Are Always Behind or Disorganized
If your receipts are stuffed inside a drawer, your spreadsheets don't match your bank account, or maybe your bookkeeping service is weeks behind, you are in risky territory.
A healthy business relies upon clean and current financial records. They help you understand:
- How much money you actually make.
- Where you are spending too much.
- Whether your business is growing or not.
A good accountant (or bookkeeper) can put in place correct systems, automate reports, and keep everything current. No more last minute scrambling during tax season or pondering whether your business is on track.
Sign 7: You Don't Understand Your Financial Reports
Do you know how to read a profit and loss statement? Can you explain what your balance sheet says? And if not, you are not alone. Some small businesses point out they lack confidence with financial reports.
You can not make sensible business decisions without understanding your numbers.
An accountant can not only generate reports but explains them in simple language. They will help you understand things like:
- Gross vs net income.
- Cost of goods sold.
- Projections of cash flow.
- Estimated tax liability.
If you ever looked at a financial report and became confused, it's a sign that you should stop asking "Does my small business need an accountant?" and begin searching for one.
How to Find the Right Accountant
Now you understand the signs, how do you find the right accountant for your business? A few quick tips:
Look for Small Business Experience
Not all accountants are the same. You need somebody who knows small business challenges and can provide effective solutions.
Choose Someone Who Communicates Clearly
You should be able to ask questions and obtain responses in simple English, not accounting jargons.
Ask What Their Tools And Services Are
Some accountants do only tax returns. Others provide complete bookkeeping, payroll and advisory services. Be sure their services meet your needs.
Read Reviews & Ask for Referrals
Word of mouth matters. Ask other business owners or even check reviews on Google, Yelp or LinkedIn.
Related Resource
- Unlock Growth: Major Benefits of Hiring an Accountant Explained
- Finding the Right Accountant: Key Steps to Choose a Financial Expert You Can Trust
- Best QuickBooks Accounting Services in New York
If you have ever thought about "Does my small business need an accountant?" and you answered "probably yes" to all of these seven signs, then you definitely need an accountant.
Employing an accountant does not mean you lose control over your finances. That means you're investing in your business's economic well being and future. By having the right accountant with you, you save time, stay away from errors and feel much more sure about making better choices. Connect with our experts at The Fino Partners to learn more.
