You don’t need to contact an expensive big accounting firm to find a competent accountant for your small business.
More than 80% of small businesses fail within months of their inception. Improper planning is one of the main reasons for their downfall, and failing to hire an accountant is one of the problems.
Most business owners believe they can do their accounting themselves, and yet they fail miserably because they don’t know accounting. In this article, we shed light on what it is that accountants do, why small businesses need to hire accountants, and how to hire a good accountant.
What Do Accountants Do?
The main job of an accountant is to prepare and examine financial records in accordance with the country’s tax and corporate laws. Accountants make sure that an entity is paying their taxes correctly and on time.
For a business, accountants perform the following primary duties:
- Financial Reporting
One of the main responsibilities of an accountant is Bookkeeping; it involves maintaining immaculate financial records of a company’s business transactions. An accountant monitors the expense, income, assets, and liabilities of a company for tax purposes, and also to show the financial position of a company. Accountants create profit and loss statements, income statements, and balance sheets to show the financial stability of a business.
- Regulatory Compliance
Whether your business is small or large, there are a lot of rules and regulations that you must follow to operate legally. Every country and even every locality has its own regulations for filing tax returns, registering a company, maintaining company books, and so on. It is an accountant’s job to make sure that your company is complying with all the regulations.
- Financial Consultancy
Accountants give business owners financial advice so they can make well-informed business decisions. The advice can be about setting a budget, developing the financial structure of the company, managing business assets, and assessing contracts, among others.
Why Should Small Businesses Hire Accountants?
An accountant is the last thing on a small business owner’s mind – it is understandable since small businesses usually have a small budget, and business owners are not looking to spend it on unnecessary overheads. But here is where most people are wrong, accountants are 100% necessary to get your business started on the right foot.
Here are a few reasons why hiring accountants is worth it:
- No, You Can’t Do It Yourself
Unless you are a certified accountant, you don’t have what it takes to perform an accountant’s job. Even if you have watched a few online tutorials on how to balance books, you won’t be able to perform the full spectrum of tasks that an accountant does. What is more, you will lack an accountant’s intuition that’s born out of knowledge, training, and years of experience. It’s the same reason you take your car to the mechanic instead of tinkering with it yourself. Investing in a professional saves you time, effort, and money.
- Get It Right from the Get-Go
Hiring an accountant ensures that you start your business on the right foot; an accountant can help you draw financial plans and projects for your business plan, which is essential to attract investors. Once you kickstart your business, accountants can help you in budgeting, setting the most suitable financial structure for your business, implementing an accounting management system or simple accounting software, setting up a business account, conducting financial feasibility of investments, and so on.
- Audit Approval
If you hire an accountant, they will make sure that your company is in compliance with all corporate and tax laws. Therefore, if your organization is audited, it will receive an unqualified or qualified opinion, which will give your company credibility and invite stakeholder trust. Moreover, with a qualified audit rating, it will be easier for you to get loans from commercial banks.
- Sound Business Decisions
Accountants are experts in financial matters, and therefore, they can give you sound financial advice when you are purchasing an asset, drawing up a contract with a vendor, or renegotiating your lease. They will save you from any illegal or shady deals and get you the best and most secure investments.
For instance, if you want to obtain a license for a business like Carpet Cleaning Hertfordshire, your accountant can help you draw up a favorable contract. What is more, accountants can also help you manage routine financial activities such as managing payroll accounts, paying your bills, and helping you collect your dues from difficult clients.
- Corporate & Tax Laws are Tricky
I don’t need to tell you how tricky it is to file taxes – the taxation code is complex, and most of the time, a layman can’t make sense of it at all! What is more, the tax law is often updated, so it’s hard to keep up with the new laws and modifications. However, the entire process is a piece of cake for an expert accountant; they can file your taxes in no time. Think how much time and effort you will save if you weren’t doing your taxes yourself; you could use that time to do something which you are actually good at.
- Save on Taxes
Since accountants know all about the tax code, they can help you save a lot more on your taxes. Most small business owners often don’t know that they are exempt from certain taxes or that they can use certain methods to save more. On the other hand, accountants give business owners useful tips to lessen their financial burden comes the tax season. For instance, they may advise a business owner to take out tax deduction from employee payroll each month instead of taking a large chunk all at once.
How to Find a Business Accountant?
You don’t need to contact an expensive big accounting firm to find a competent accountant for your small business. Here are a few tips to keep in mind when searching for an accountant:
- Develop a Job Description – what are your accountancy needs? Draw up a job description to narrow the search and find the right accountant.
- Hire a Certified Accountant Only – Its better to hire a certified public accountant because they are the pros.
- Ask a Colleague – If you are in business, you must know other people who are running a business as well. Ask them for recommendations – chances are that they know a competent accountant who will give you a friends and family discount as well.
- Ask Your Local Small Business Association – Small business associations can give you great recommendations for experienced accountants.
- Check Credentials and Ask For References – Never hire an accountant after just meeting them once. Check their background, follow up with the references they provided, and vet them thoroughly before hiring.