Does My Small Business Need a Professional Accountant?

 

When you run a small business, it’s tempting to do most things yourself. You feel you know your business better than anyone, and that includes its finances. Yet for many small business owners, including solopreneurs, hiring a professional accountant saves a lot of hassle and financial stress later down the line.  

Building a new business is an exhilarating endeavor. It’s hard not to feel energized and to work long hours through sheer passion alone. But it’s not all fun and excitement. Creating a small business also involves completing tasks that are less than thrilling – such as doing your business accounts and paying taxes. 

The financial perils of being busy

Unfortunately, most business owners are extremely busy, which will almost certainly apply to you as well. You’re always dealing with emergencies and plowing your way through a schedule that’s fit to burst. Trying to keep on top of your bookkeeping as well as researching compliance and tax issues can quickly feel overwhelming. 

This lack of time and focus is why mistakes happen, research is delayed, records are lost, bad financial habits are developed, and faulty business foundations are put in place. The repercussions can be disastrous. 

Clues you might need an accountant

So what are the signs you might need the help and assistance of a professional account? 

A lack of time is one. A lack of knowledge is another. A further clue is a feeling of anxiety when you try to assess the health of your business finances, especially when it comes time to file an income tax return. 

If you’re unsure what terms like fixed assets, accounts payable, and accrued expense mean – and research isn’t helping you – then it’s likely you need assistance from a professional.  

The professional accountant will explain what all these terms mean. They will show you how they apply to your circumstances and guide you in making the right choices based on your unique business requirements. 

Do I need a professional accountant for my business?

Even if you do have a decent understanding of financial matters and the time to look after your books, there might still be good reasons to hire an accountant. 

For example:

You wonder whether to become an LLC

Forming a limited liability company (LLC) is a popular way for small business owners to gain some liability protection and tax advantages, among other things. But knowing whether it’s the right strategy for your situation, is not always clear, nor is the process of moving to this business structure. 

An accountant can help make things a lot clearer. 

You need to create a flawless business plan

Whether you’re a startup looking for lucrative investor funding or a freelancer seeking a quiet life with a relatively fixed income, a business plan is an essential part of growing any business. For startups and larger small businesses, formal plans are imperative. 

Yet even for solopreneurs, a good plan developed in collaboration with an accountant can give you a financially robust framework from which to work and grow. 

You require the correct licenses

Business licenses, tax permits, state-imposed compliance requirements, are all minefields for busy business owners. Knowing which licenses and permits you need together with which rules to avoid, accidentally or otherwise, is enough to cause an instant migraine or panic attack. 

This minefield of rules and regulations is an area where a local accountant in your state or region can help your business and your emotional wellbeing

You don’t know how new tax rules apply to you

Depending on the type of business you run, where your customers live, and your location, tax laws can be extremely complicated. Plus, they are ever-changing, and for most people, it’s impossible to keep up with developments. 

A professional accountant will know which old and new tax rules apply to you and how to navigate complicated sales tax compliance issues while staying within the law. 

Why you might not need a professional accountant

Do all business owners need the help of a professional accountant?

No.

Freelancers, for example, who work with just a few clients, perhaps on a retainer basis, will have a far simpler financial situation than a more complex small business. 

In this case, good invoicing and financial bookkeeping software are essential, but the services of an accountant might be something to leave for another time. 

The same applies to side hustle businesses, which are primarily hobby-focused and bring in minimal income.

Maybe you need a bookkeeper instead?

An alternative to a professional accountant is a bookkeeper. Although similar to accountants in some ways, bookkeepers focus primarily on recording and organizing financial data as opposed to analyzing and interpreting said data. 

Bookkeepers are more affordable than accountants and are a good option if you need help recording income and expense payments, setting up bookkeeping procedures, and choosing the best bookkeeping software. 

And of course, it is possible to hire both a bookkeeper and an accountant. The latter can be brought onboard occasionally to check everything is running optimally. 

A professional helping hand

Does your small business need a professional accountant? 

The larger and more complex your business, the more likely the answer to this question will be a resounding “yes”. For startups with dreams of success, a meeting with a highly regarded accountant will be essential. 

But even if you’re a freelancer or solo entrepreneur, there are some core benefits of letting a professional take care of your business finances. 

Unless you are trained in matters of money, you’ll never quite know whether you can improve your finances with just some small simple adjustments. 

A professional accountant will be able to give you the bigger picture.