For most startups, DIY bookkeeping is often a cheaper and more practical approach to accounting. In most cases, all you need is to set up accounting software or hire a bookkeeper to handle the day-to-day tasks. However, a time comes when your business needs the services of a professional accountant. How do you know it's time to take this step? Below are three instances when your business could benefit from the services of an accountant.
Business incorporation
Are you thinking of incorporating your business? Different business structures have different legal and compliance requirements. A sole proprietorship differs significantly from an LLC. Business structure determines the licenses you require, taxes you pay, potential liability and other crucial issues. Thus, when incorporating your small business, it's essential to seek the services of a professional.
Besides walking you through the process, an accountant can handle the financial aspect of incorporation. They can help you better understand the implications of moving from sole proprietorship to a limited liability company. An accountant will also handle taxes, prepare your financial statements, and protect your business from facing audits.
Planning for future growth
Business growth comes with numerous changes. For example, you may hire more employees and expand your departments. Your cash flow increases and your business financials are exposed to risks that didn't previously exist, such as internal fraud and cybercrime. You need a professional to help you manoeuvre the various aspects of business growth.
For example, an accountant can help simplify payroll and avoid errors and delays during payments. They can set up automation software to ease and streamline business accounting. An accountant can also set up programs to limit internal fraud from employees. As the business grows, a professional accountant can help manage cash flow, provide predictions and offer advice on improving the firm's financial standing.
Handling analysis and reporting
There's only so much accounting work you can do as a business owner. While it's easy to take care of daily tasks such as bookkeeping, other advanced duties require professional help. Unless you are a CPA, you may have a hard time handling accounts analysis and reporting. Can you generate accounting reports and interpret them? Can you use the statements to deduce your financial position or make future projections?
Accountants do more than just handling the day-to-day accounting tasks. They also prepare and interpret accounting reports. They use the information to provide valuable insights regarding your business. For example, you can find out areas where you need to cut back and save money. If you have plans for future growth, you can make future financial projections based on the revenue and cash flow data.
A time comes when a small business owner needs to delegate accounting tasks to a professional. If you're going through any of the above transitions, consult the services of an accountant.
Share30 December 2020
Good day. I’m Linda and I run two family businesses — building contractor and aged care staff agency. It is quite a feat to juggle schedules and keep track of finances. I have become quite an expert with business management software. I have also learnt the vital importance of having good accountants to give advice and keep bookwork up-to-date. Prior to starting our family businesses, I honestly thought accountants existed to organise tax returns. I now understand that their jobs are much more complex and they can help your business prosper. I started this blog to highlight the numerous ways I’ve found that accountants can contribute to financial success. Please browse through the posts and I hope you find something useful within.