Contributor III




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When And Why Your Small Business Needs an Accountant

When you own a small business, the money matters never end. You have your accounts payable, accounts receivable, sales figures, annual statements, payroll, projections, cash flow and taxes, to name a few considerations. The hours can really add up, especially on the taxes. We asked one of our Strategic Partners, Baker Tilly, what they saw and what they would advise. Baker Tilly Advantage leader Todd Bernhardt says, “My number one suggestion is to start working with your tax team early.” Baker Tilly Advantage is a bundled tax, HR and accounting service offering that scales for any size company and has a specialty in the contracting industry. “The most common issues we see are not providing all the supporting information – we often get a trial balance and that’s it – and receiving inaccurate financials that require adjustments while preparing the tax return. Both situations require more time and resources to correct. If you start working with your tax team well in advance of tax season, we can provide tax planning ideas in real time which saves you time and money in the long run.”

Sometimes, when a business is just starting out, by financial necessity those tasks fall squarely on the owner’s shoulders. It can be tempting to maintain that arrangement once the money starts to flow, not only to avoid paying someone else to do it but also to avoid allowing someone else to do it. Few entrepreneurs love giving up control.

But if there’s one place to delegate a task to a dedicated expert, accounting is it!

Accounting errors can cost you.

When you’re trying to handle every aspect of the business yourself, details can get overlooked, especially as your business grows and your finances get more complex. Chances are, unless you own an accounting business, your business’s financial picture will stretch the limits of your expertise quickly.

Accounting errors, especially tax-related accounting errors, can get expensive. You could argue taxes alone justify the cost of handing over your finances. That cost may end up being less than the cost of doing the work yourself; remember, you’re paying yourself for all those hours you spend recording, sorting, calculating, inputting, researching the latest changes in tax law, etc. Even if the accountant’s hourly rate is higher than yours, it takes the accountant significantly less time to complete the work, and they do it more accurately.

What are the benefits of sound accounting?

Accounting isn’t just about taxes. It’s also record-keeping, analyzing, financial planning and forecasting, and complying with state and federal regulations. To reap all the possible benefits of good accounting practices, you need to set up a strong accounting system, keep it thoroughly up to date with all relevant data and effectively use that data to understand the financial state of your company as the business changes and grows.

For some of this, you don’t necessarily need an accountant. A good bookkeeper can handle a lot of it, including the daily tasks of updating records and customer payments, inputting invoices and employee hours and tracking transactions in the accounting system. Bookkeepers charge less than accountants and go a long way toward establishing and maintaining effective financial accounting systems.

When do you want an accountant?

In some areas, it can be worth your while to get an accountant on board because they have knowledge and areas of expertise you and your bookkeeper may not. If your tax situation turns into an audit situation, for example, you’ll want an accountant on that — a certified public accountant (CPA). CPAs are state-certified to possess up-to-date knowledge of tax codes and processes and any applicable legislation — the kind of knowledge that can improve your tax picture overall.

It can be wise to hire an accountant to take care of the truly consequential tasks — basically, the stuff where if you mess up or miss something, it will really hurt. Some of the tasks that might benefit from accountant input include:

  • Addressing government requirements and communications: tax filings, legal/compliance documents, audits.
  • Preparing annual statements of accounts, financial statements, quarterly financial reports.
  • Forming the big picture: periodic breakdown and analysis of company financial conditions.
  • Preparing financial data and analysis for financing requests.
  • Weighing financial decisions regarding company growth.

Accountants don’t have to be on staff.

None of this means you must get an accountant on staff right now, though that may make sense for your business. Be sensible, it may make sense down the road depending on the size and goals of your company. If you’re not ready to add the salary and benefits to your payroll, you can always outsource. When you outsource your accounting work to an on-demand professional, you pay for the expert time you need, which might just be a few hours a week.

As your company grows, so will the complexity of the financial recording, analysis, compliance and reporting required to keep it on track and in good standing, at which point accounting tasks will take a lot longer than a few hours a week. At that point, it makes more financial sense to get an accountant on your staff. It could prove highly beneficial across the board: An accountant who knows your business is a big asset when it comes to the big picture and financial decisions.

Until a full-time accountant makes sense, think about at least getting an accountant for the big stuff. It ends up costing so much more — in both time and money — when you get it wrong.

When you are ready to grow, I strongly suggest you team up with a Company like Baker Tilly. Why do I suggest this? The answer is simple they can do much more than accounting for you and keep your eyes on your business to grow it and take your legacy to levels you will not believe.

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