Maybe you’ve just started your company and aren’t sure if you need to hire an accountant. Perhaps you’re still in the planning stages of a new company and are debating whether or not you need someone committed solely to accounting before going all-in.
You can be sure that if you ask an accountant if you should hire someone to support you with your books professionally, they would say ‘yes’.
However, you can be assured that they are not saying “yes” for their own gain. The majority of successful business owners who work closely with an accountant would tell you that having an accountant is a must.
Even so, it’s fair to question whether every small business needs an accountant. Isn’t hiring an accountant overkill for a small business? Is it possible to only “wing it” before you reach a certain sales level?
A resounding “Yes!” is the answer. “No!” as well. We’ll clarify… because that’s incomprehensible. But it will happen.
When is it Time to Hire an Accountant?
The majority of accountants would tell you that they could have saved their small business clients a lot of time, money, and headaches if they had done things differently. That is if those clients had not waited too long to seek assistance. The bottom line is that there are many critical moments in the course of your company when you don’t want to go it alone.
- Establishing Your Business.
This is a critical step in the formation of your company. An accountant will assist you with the following tasks;
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- Writing your business plan.
While an accountant might assist you in drafting a business plan, do you really need one if you are not securing funding? Rather than winging it, it’s a good idea to have a plan and set goals for your business. - Provide you with guidance on the entity structure of your business
While most companies begin as sole proprietorships, your business type or personal financial circumstance can determine that a different business structure is more suitable. As a freelancer, you should at the very least consider forming an LLC for legal and financial protection. This is something an accountant can assist you with!
- Writing your business plan.
2. Tax and Compliance Issues
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- Sales tax issues
In the United States, sales tax enforcement is rapidly becoming a nightmare. If you’re exporting your goods out of state—or even inside the same state in some cases—you’ll want to make sure you’re following all applicable tax laws. There are applications that will help you with this on a regular basis, but you’ll need the assistance of an accountant to get it set up. - Complex payroll issues
The most prosperous small businesses can be ruined by wage and labor compliance problems. There are apps and programs that will help you stay compliant on a regular basis, much as with sales taxes, but you’ll want an accountant to look over your shoulder at least quarterly.
- Sales tax issues
Why Would You Want to Work With an Accountant All Year?
The majority of accountants want to talk to their clients before the end of the year. Remember that it’s too late to start planning for your small business at tax time.
Tax planning isn’t the only reason accountants want to consult with their clients before the end of the year. Certain enforcement problems, such as underpayments of payroll taxes, are much easier to resolve before the final reports for the year are submitted.
How Accountants Can Assist Every Small Business
If your company is expanding—and we hope it is!—meeting with an accountant on a quarterly basis will help in a variety of ways. Meetings with an accountant every three months will help you ensure that:
- You’re becoming more knowledgeable.
Growth, believe it or not, can sometimes be detrimental to your business. Meetings with an accountant on a regular basis will help you from rising too quickly or in the wrong direction. - Your quarterly tax payments are adequate.
Your tax liability rises in tandem with your salary. If your company grows significantly, the projected tax payments you began with will not be enough. Meetings with an accountant on a regular basis will help you prevent a nasty tax underpayment surprise. - You have the ability to see through your own blind spots. Despite the fact that small business owners know their businesses better than anyone else, it can be difficult to see the forest for the trees at times. An accountant will assist you in taking a big-picture view of your business, which is critical for long-term success.
When It’s Actually Okay to Go It Alone
- Your business is a hobby
You probably don’t need an accountant if your “business” is really just a hobby that makes a little money on the side. However, you must also keep track of your revenue and expenditures for tax purposes. For this, a simple spreadsheet will suffice. - You are a freelancer
You will probably get by without an accountant if you’re a freelancer with just a few clients. You must keep track of your income and expenditures, just as you would for a hobby company. Avoid the temptation to “guesstimate” your expenses and don’t depend on 1099s to disclose your income for the year. - Your tax situation is very simple
You may be able to wing it without an accountant if your company is a sole proprietorship and your personal tax situation is easy, particularly if you understand the accounting formulas and resources at your disposal. However, if you choose this route, make sure you use the best self-employed accounting software.
Go Find a Small Business Accountant Now
Working with an accountant is beneficial to any small business, but it is not always mandatory. And if you plan to go it alone without an accountant, it’s always a good idea to seek advice from time to time. It can cost a few hundred dollars, but considering the effect an accountant may have on your small business, that is a small investment.
Start looking for an accountant now if you want to be one of the 89 percent of business owners who see a boost from working with a financial pro.
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