Hiring a Professional Accountant: Before and After

Professional Accountant

Last Updated April 30, 2024

Running a small business involves many daily responsibilities, from managing finances and taxes to hiring staff and marketing products. However, if handling the numbers becomes overwhelming, it might be wise to bring a professional accountant to lighten the load.

Doing your accounting might seem like a cost-effective option, but it can have its drawbacks:

  1. Time-consuming: Managing your accounting can eat up six or more hours each month, equivalent to almost two full workdays.
  2. Setup complexity: Setting up your bookkeeping system is crucial and time-consuming; errors here can invalidate a year’s worth of work.
  3. Costly mistakes: An untrained eye can lead to missed tax deductions or penalties for incorrect tax filings.
  4. Reporting deadlines: Missing deadlines can result in a stressful rush to catch up on your bookkeeping.
  5. Financial missteps: Incorrect financial statements can hinder your chances of securing loans, grants, or other financing options.

Signs you might need an accountant include feeling unsure about your business’s financial standing or if you’re overwhelmed with tax and payroll tasks. Hiring an accountant, whether as a full-time employee or a contractor, makes sense if:

  1. Financial clarity: You’re uncertain about your business’s financial status, and need someone to interpret reports and offer insights to aid decision-making.
  2. Time constraints: You no longer have the time to manage finances, and your business has outgrown simple spreadsheets.
  3. Tax season stress: Tax season is particularly stressful, especially if you’re behind on record-keeping; an accountant can provide peace of mind.
  4. Business expansion: Planning to expand your business warrants the expertise of a professional accountant, who can also assist with financial analysis for your business plan.

Your business’s structure affects your accounting needs; for instance, a sole proprietorship requires simpler accounting compared to an S or C corporation. Nonprofits have the most complex financials, needing to track grant spending meticulously.

Deciding between hiring a CPA or a general accountant depends on your business’s needs and budget. CPAs offer in-depth tax knowledge and can serve as financial advisors, while general accountants are more budget-friendly and suitable for simpler financial records.

When looking for the right accountant, consider their familiarity with small businesses, industry expertise, experience with your accounting software, and knowledge of tax laws. Regular communication and setting clear expectations can ensure a fruitful relationship with your accountant, helping you make informed decisions for your business’s success.