Today, millennials are ready to sail the entrepreneurial ship. After all, kicking off a venture in this digital age has become effortless. You have to raise some capital, hire a proficient team, and start selling on social media. Although it sounds all fun and games, keeping the business operational and ensuring profitability is quite challenging. Some days, you will come across workplace conflicts, while at times, the company might run out of cash. Honestly, financial problems are the worst of all.
So, any idea how to tackle them? Since money-related matters require expert financial knowledge, consider hiring an accountant. They conduct a comprehensive assessment of finances to get an idea about the company’s performance. Likewise, they create forecasts throughout the year to ensure the business is meeting its goal. In short, partnering with an accountant will direct your company in the correct direction, setting you up for long-term success.
Besides, all your essential decisions, such as purchasing machinery and expanding the business, depends on finances. Thus, having an accountant on-board will let you make informed decisions. However, if you are still cynical about this, have a look below. Here we are listing six reasons why having an accountant in the business is inevitable.
1. Handles Tax Matters
Unless you enjoy reading about tax codes, staying up to date with tax laws is impossible. From evolving tax rates to filing procedures – the legal world is changing rapidly. As a result, handling annual filings and tax payments by yourself can be quite troublesome. Surprisingly, accountants are well-versed with the taxation world and legislative changes. In addition to fulfilling the federal and state requirements, they handle corporate, payroll, and sales taxes for the company.
However, leaving everything to an accountant is never a wise decision. Thus, consider overseeing the filing and tax calculation procedures. If you don’t have any idea, complete an online llm tax program to learn about taxes. Since it offers eLearning, you can finish it while running the business. It develops in-depth knowledge of how to maximize deductibles and minimize tax billings. Hence, using this tax knowledge and working alongside an accountant can help you pinch some pennies.
2. Offer Expert Financial Advice
Undoubtedly, accountants are the finest financial experts and an excellent source of advice. They are aware of all accounting and international reporting standards, ensuring the company’s compliance. Similarly, they have a keen understanding of all liquidity, profitability, and debt ratios, throwing light on your financial performance. For instance, if the debt ratios exceed 50%, accountants will alarm you about the organization’s poor performance.
Moreover, accountants can offer brilliant advice when it comes to external financing. They dig into the company’s financials and prepare forecasts to determine your repayment capability. If cashflows and income statements are positive, they will give a green signal for financing. In addition to saving from significant losses, you can make more informed decisions.
Besides this, accountants can also advise on investment opportunities. They highlight lucrative investment options, letting you expand income sources and earn lucrative returns.
3. Brings Cost-Cutting Measures to Light
Usually, businesses think hiring an accountant only adds to their long list of expenses. Well, it is certainly not true because an accountant helps curtail business costs. They provide a financial map, highlighting areas that are consuming a significant chunk of profits. At the same time, they also propose measures to help you cut back on those costs. If carriage charges are increasing material costs, they might find you an affordable logistics company.
Similarly, if electricity bills decrease the profits by a substantial amount, accountants will encourage owners to invest in solar panels. Although the one-time expense will be high, it will reduce the costs in the long-term. Alongside increasing business profits, you can lower prices to captivate price-sensitive audiences. Believe it or not, these cost-cutting activities can offer companies economies of scale and an edge over competitors.
4. Improve Business Cashflow
At times, the business is making hefty profits yet doesn’t have enough cash to foot daily bills. And if this continues for months, your company can land into a severe liquidity crisis. In addition to bringing more cash into the business, accountants know how to handle cash flow problems. Firstly, send receipts to customers and draft payment attractive payment terms. For instance, you can offer debtors a 2% cash discount if they pay within ten days. They also negotiate smart payment terms with the suppliers and creditors.
Moreover, if cashflow problems arise due to a lack of credit sales, accountants will limit them. It will bring in more cash to the business while reducing the chances of bad debts and default. Besides this, accountants liquidate old inventory to get money coming into the business.
5. Support Funding Acceptance
Are you thinking of acquiring a business loan? Many entrepreneurs are afraid of debt, but it is the only way out when you need money. However, seeking out a loan is not easy either. Banks have multiple regulations, collateral requirements, and interest rate variations. Sometimes, they offer a variable loan, which means your interest payments will increase with changing interest rates. Luckily, a business accountant can sway decisions in your favor, getting you the best deal.
They will maintain a brilliant credit history with optimal ratings to help you get loans readily. Since they have extensive knowledge about financing options, you can explore loans suitable for the current business situation. Suppose you need money to fund routine expenses instead of a conventional loan. In that case, accountants will advise you to open a credit line. It would save extra repayments and interest expense.
6. Jumpstart Stalled Growth
Often, businesses encounter a slowdown at some point in time. Perhaps, due to insufficient sales, excessive debt, or the lack of demand. During this challenging time, hiring an accountant can help in restructuring the company. A proficient accountant can identify unprofitable business lines, realign prices of products, and consolidate debt. They also play a crucial role in advising executives on how to devise financial plans and strategies.
Moreover, accountants will unfold expansion opportunities to move back company into growth mode. They can help you launch a new product, expand the existing product line, or purchase ownership of another company. After all, they have extensive knowledge of stock market trends and returns. They can also unfold lucrative financial instruments to increase the number of assets on your balance sheet.
The business owner’s life can be quite overwhelming, especially when you have to work with piles of receipts and invoices at the month’s end. From paying suppliers timely to filing taxes – you have to stay on top of all financial matters. But does it always have to this challenging? Of course, not. An accountant can save you from all this hassle and paperwork. They maintain records, oversee money-related matters, and analyze financial statements. In short, they guide you throughout the journey, making your business flourish.