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Why Small Businesses Should Have an Accountant on Their Team
by Carrie Smith
Many small business owners spend countless hours every week creating financial reports and managing their books. And many feel like there are few results to show for it. As many of us know, the process of trying to do small business finances yourself can be frustrating and time-consuming.
The best way to avoid this frustration is to add a small business accountant to your team. A good accountant can help you with your books and free up your time to be used in other parts of the business.
And while many small businesses think they can’t afford the expense, the fact is that the return on investment in hiring an accountant far outweighs the cost.
Here’s why small business owners should partner with an accounting professional to grow their business.
Getting Your Business Properly Set Up
What type of business entity is the best for your situation? Should you become an LLC or LLP, or remain a sole proprietor? Do you have to pay sales tax or state income taxes, along with federal income taxes?
These are all questions an accountant will have the answers for. He or she can set you up with the business entity that best protects your assets and gives you the most tax advantages. Your accountant can also set up your financial software, income and expense categories, and provide you with a business budget to operate at your best.
Spending Your Time Wisely
Your time is better spent working toward big business goals and securing clients, customers or new business, not daily bookkeeping or admin tasks. You care about running your business and boosting your bottom line, which is why you started it in the first place, right?
Finding the right accountant lets you get back to focusing on your business. That means less time spent balancing your books, inputting data and dealing with daily transactions, so more time can be devoted to growing your business and turning it into a thriving success. An accountant can help you better utilize your time while making you feel comfortable about the day-to-day finances.
Providing Expert Advice and Help
We all know that dealing with numbers all day can be tedious and sometimes confusing. An experienced accountant can provide much-needed strategic advice and insight about the ins and outs of your small business. From determining the best business structure to analyzing your financial plan, they provide the trusted experience and advice you need to be successful.
Having another pair of eyes to review your books and make sure everything’s correct can go a long way. An accountant can ensure you’re spending money where it counts and that you’re not being double-billed for anything.
Focusing on Growth
An accountant can help you determine areas within your business that are primed for growth by reviewing your cash flow patterns. He or she can also optimize your inventory, pricing and any business financing you may need. All of these things will help you focus on the growth aspects of your business instead of getting tied down by the minutiae of admin tasks.
For more information on how cash flow works and a free cash flow statement template, see this article.
Staying Up-to-Date on Tax Laws
Every business owner needs to make time to learn the laws that he or she is subject to, but where does one start when it comes to tax laws?
Staying up-to-date on never-ending tax law changes and business regulations is a full-time job in and of itself. So even if you’re a budget-conscious business owner, there’s undeniable value in partnering with an accounting professional to make sure you stay compliant.
A big part of an accountant’s job is to stay educated on all of the nuanced tax changes and business regulations. This attention to detail will help you get the tax deductions and credits you deserve. You want someone who can help you comply with all the updates and tax laws, as well as provide you with accurate financials.
Reducing Your Tax Bill
It’s no secret that businesses incur many expenses. Some of the main expenses include contracted labor, employee salaries, and quarterly tax payments. This not only includes federal and state taxes, but also sales taxes, which can quickly become complicated.
An accountant will be able to accurately estimate your quarterly taxes and help file monthly payroll taxes on your behalf. He or she can also advise you on the best methods for complying with sales tax regulations in the markets you sell to.
An accountant’s expert advice can reduce your tax bill and save you money on additional penalties and fees for underpayment.
Audit Prep and Representation
Having an accountant on your team is especially important in the event of an IRS audit. He or she will be able to prepare you for the process, walk you through it, offer comfort and support, as well as answer all your questions. In fact, they can likely help you prepare for an audit by suggesting best practices for retaining written records and receipts.
Your accountant will be a trusted advisor who has your business’ best interests at heart. He or she will work on your behalf during an audit situation by being an authoritative representative in dealings with the IRS.
Your accountant knows that if you’re successful, then he or she is successful too.
Accounting Mistakes Are Expensive
Day-to-day mistakes in a small business can cost a lot of money. Likewise, accounting or tax mistakes can be even more costly.
An accounting error can range from something small, like not being able to make your checking account balance with your books, to something bigger, like not filing and paying your estimated taxes. Even worse, you can get into financial trouble by mismanaging your cash flow, which is a common and costly pitfall for many small businesses.
There are errors and omissions that can be even more expensive, such as missing out on important tax deductions and credits. This can greatly affect your bottom line and mistakenly force you into paying more money to the IRS than is necessary.
You deserve to keep more of your hard-earned money, and this means ensuring you don’t incur expensive accounting mistakes.
Don’t underestimate the importance of having an accountant on your team. You’ll be thankful to have an advocate on your side who can allow you to focus on what you do best and help reduce stress and uncertainty. The return on investment far outweighs the cost of hiring one.