Most entrepreneurs overlook the need to hire an accountant, thinking that they are only essential for larger businesses. Besides, as a small business owner, you’re probably trying to cut costs as much as possible. Avoiding an accountant, at least in the short-term, seems like a good business decision but it really isn’t. Intuit, the company that created QuickBooks, conducted a study among small US businesses and found that 89% claimed to have more success having hired an accountant. How could this be? Why is it so beneficial to hire an accountant for your small business? Well, there are several reasons
An accountant helps you get started the right way
Most people assume that starting a business is as easy as renting a space and advertising your products and services. Most people are wrong. Anyone who has ever run a business knows that there is a lot of work behind the scenes, especially on the legal side. You will need a license to operate, lease agreement, business permits and on and on. Technically, you can get all these on your own, but an accountant can advise you on what you need for your particular business.
Things start to become complicated if your business has special requirements. For instance, technical professions require special licenses and permits. As an example, doctors intending to start a medical practice must get a license from the RACGP. Plus, consider zoning and environmental issues that determine which businesses can be set up in which locations. And if you happen to have employees, then you would need to consider wage and labour compliance issues that arise. Add to that, different locations have different requirements, and that can cause headaches. If you plan on importing/exporting stuff, that is another extra requirement.
As you can see, there are a lot of considerations to take. Instead of fumbling your way into business, you can start off having complied fully with the law. An accountant also helps you get your company ready by helping you create a feasible business plan and structuring your company. Most small businesses operate as sole proprietorships, but you may want to consider setting it up as an LLC, partnership or corporation. The choice is determined by your particular situation, and once again a CPA guides you through that.
Keeps your business running through the years
This is where the true value of an accountant becomes obvious because 80% of businesses fail because of cash flow issues. When a business is still small and just getting off the ground, it’s easy to keep track of every aspect of it. Over time, things start to get out of hand, slowly but surely. Entrepreneurs ignore collecting sales, hire more employees than they need, incur unnecessary expenses sometimes through credit cards, lower their prices too much or many other potential problems. The thinking usually is, ‘As long as the business is making money, I’ll keep coming to work every day as usual’. That is a completely wrong approach to accounting as these costs add up and even lead to you closing your doors when you’re actually losing more money than you make.
An easy way to keep track of your expenses and cash flow troubles in check is to have bookkeeping software. Your accountant will guide you on the appropriate software to buy and help you set it up to suit your specific business. While there may be some good accounting apps to install on your phone, these specialized software are more robust. By having this software, you won’t have to learn finance lingo that accountants use to dazzle clients.
The accountant’s main role in your business is to keep track of your expenses and help you cut costs whenever necessary. Your business should be able to generate enough revenue to keep itself running as well as the employees and yourself; with a little saved up in the bank. If this is not the case, then you have to look at your pricing model or consider eliminating some of the essential costs. Establishing tax procedures is also crucial to avoid any run-ins with the law. Tax obligations vary depending on many factors such as the type of business, sales revenue, imports/exports, etc.
Growing your business
At some point in the business cycle, you may want to expand your business. To do so, you have to consider a lot of factors about the present state of your business. At Sunshine Coast TW Accounting, you can get all this done for you at a fair quotation whether on a permanent basis or otherwise. Before you jump the gun, an accountant needs to monitor your cash flow patterns, goods’ pricing, business financing, etc. It is only then that you can be advised whether or not it may be the appropriate time to grow the business and by how much. This obviously has to take the business plan into consideration and make any tweaks if need be.