Hire Accountant | By John Miller | 2025-03-25 10:31:36

Do Small Businesses Require an Accountant?

Not many people know that after operating for 10 years in the US market, the failure rate of small businesses reaches about 65%. That is a heavy number if you think about how a lot of these failures might have been avoided with proper financial oversight. If you also operate a small business and handle all of your advertising, operations, customer support and more duties, you know how essential it is to manage your finances correctly. When it comes to finances, even small mistakes can set you back big. Therefore, we face the question: Do small businesses need an accountant?

Many business owners think they can do everything on their own, particularly in the beginning phases of the process. But as your business expands, your small business accounting requirements get bigger - tax filings, payroll, expenses and compliance all require attention. That is where an accountant for a small business becomes invaluable. Let us understand why employing an accountant could be the smartest financial move for your business.

Should Small Businesses Employ an Accountant?

Let us answer some very simple questions to determine if small businesses should actually employ an accountant:

1. The True Cost of Managing Finances By Yourself

Many small business owners start by managing their very own finances at first. This might seem inexpensive on the surface but the hidden costs of DIY accounting could be big. But this could mean that you are wasting time you could spend growing your business. Plus, mistakes can result in penalties, audits and missed financial opportunities.

Issues with DIY Accounting

Here are some major issues with doing your own accounting:

Tax Filing Errors: In 2023, the IRS penalized five million taxpayers for tax return mistakes. A small error on your tax forms can cause needless fines.
Missed Deductions: You might miss deductions that could help you save thousands without expertise.
False Financial Reports: If your books aren't accurate, your financial planning and decision making suffer.
Compliance Risks: Laws and tax regulations change often. Keeping up could be a full time occupation in itself.

Rather than spending hours on spreadsheets and tax forms, having an accountant for your small business frees up your schedule and guarantees accuracy.

2. When Should You Get An Accountant?

Not every small business requires an accountant from the first day, but several signs suggest that it might be time to bring in professionals.

Signs You Need an Accountant:

Your business is expanding quickly - more revenue means more complex finances.
You get stressed out filing taxes - tax season 2025 is tough and confusing.
You are applying for loans or funding - lenders need your financial statements.
Payroll and employee benefits are complex - managing payroll taxes and deductions is tough.
You spend way too much time on bookkeeping - which you could spend on growing your business instead.

If all of these seem relatable to you, employing an accountant for a small business is a sensible move.

3. How an Accountant Helps Beyond Taxes

Many business owners think that accountants only do taxes. But a professional accountant does more:

Financial Planning & Strategy: An accountant analyzes cash flow, sets budgets and also creates financial forecasts to help you make much better business decisions.
Meeting Tax Compliance: Rather than filing taxes last minute, an accountant helps you meet all IRS deadlines and reduce your tax liability.
Payroll Management: Employee wages, tax with holdings and benefits are complicated. An accountant makes sure everything runs legally.
Business Growth & Expansion: Planning to grow your business? Accountants offer calculated financial info and cost-benefit analyses to help you expand intelligently.
Audit & Legal Compliance: If the IRS audits your business, an accountant prepares you for the worst case scenario.

From budget planning to compliance, a small business accountant can help your company remain legal and financially healthy.

4. What Type of Accountant Do You Need?

Not all accountants are identical. Based on your business requirements you might need :

Bookkeeper vs. Accountant vs. CPA Bookkeeper

Bookkeeper - Performs day tasks like billing and payroll.
Accountant - Performs evaluation of financial information; prepares reports; files taxes.
CPA - Certified Public Accountant - Performs audits, fiscal strategy & tax planning.

In-House V/s Outsourced Accounting In-House Accountant

In-House Accountant-

Ideal for big businesses with complicated finances.
Higher cost (salary, benefits, office space).

Outsourcing Accounting -

Ideal for small businesses needing low-cost expertise.
Pay for what you might need (monthly, quarterly or annually).

The cheapest and best choice for most small enterprises would be outsourcing accounting services.

5. How Much Does Hiring an Accountant Cost?

Cost is a significant reason small businesses avoid using an accountant. But savings and advantages far outweigh the disadvantages.

Average Costs for Small Business Accounting.

Bookkeeping Services: USD 300 - USD 700 a month.
Tax Preparation: Around USD 400 - USD 1,500 a year.
For ongoing Accounting Services: About USD 1,000 - USD 5,000 a year.

Just think about it in this way: An accountant's knowledge can help you save more in tax deductions, financial planning and time compared to their fees. So, it is always wise to employ a professional and reap the benefits of your investment.

6. Can You Use Accounting Software Instead?

Tools like QuickBooks, Xero, along with FreshBooks help small businesses keep tabs on finances. But software isn't an accountant's substitute.

The place where most of the accounting softwares miss the mark:

Doesn't provide financial strategy or tax advice.
Can not ensure compliance with changing laws.
Will not represent you in case of an audit.

The best approach for small business is using software alongside an experienced accountant.

7. How to Hire an accountant for Your Small Business

When selecting an accountant, keep these factors in mind:

Experience & Specialization

Do they specialize in small business?
Are they experienced in your industry?

Services Provided

Do they do bookkeeping, tax preparation, payroll and financial planning?

Cost & Flexibility

Do they bill hourly or flat-fee pricing?
Could they adjust their services as your business expands?

Read Also | Find an Accountant for Small Business

Conclusion: Is Hiring an Accountant Worth It for a Small Business?

Now you must be equipped to answer the question: do small businesses hire an accountant? If you want to save more of your time, decrease financial risk and be tax compliant, the answer is YES. The price of managing business finances by itself might be low, but accounting errors can set you back more than hiring an expert.

A professional accountant for small business will assist you to keep your company successful & compliant. So, whether you are just starting your company or scaling it up in the US market, outsourcing accounting services could be the best option for you.

Frequently Asked Questions (FAQs)

While you may perform basic bookkeeping by yourself, having an accountant available at all times can provide a number of advantages. An accountant specializes in financial management, strategic planning and tax compliance, so your business is operating smoothly and inside regulations. They might also provide insight into financial decision making for your business to develop.

Employ an accountant whenever you want to grow your business, when its financial transactions are complex, or if you need help with compliance and taxes. An accountant can create effective accounting systems, handle payroll and prepare financial forecasts so you can concentrate on main business activities.

An accountant will help you determine tax deductions and credits to stay away from overpaying taxes. They also analyze your expenditures and tell you where costs might be cut. Additionally, accountants assist with budgeting and economic planning for sustainable development and profits.

A bookkeeper records sales and expenses and keeps financial records daily. An accountant, in turn, interprets and analyses financial details, prepares income tax returns, and also gives strategic economic guidance. Where bookkeepers manage the day-to-day financial data, accountants offer much more holistic financial planning and growth.

Many bookkeeping tasks could be automated in accounting software. Still, software can not give personalized financial advice, interpret complex tax laws or even offer strategic planning. An accountant brings expertise and understanding that software can't - so your business can make sound financial decisions.

Pick an accountant with expertise in businesses like yours, with an assortment of services, and also with knowledge of your respective market. Assess their communication style also and whether they can provide the assistance your business needs. Finding a good accountant could require searching on professional networks and personal referrals.