If you own a small business and are thinking about hiring an accountant to handle your bookkeeping, this blog post from the Rules of Thumb blog from MoneyThumb is specially written for you. There are a lot of good reasons to hire an accountant rather than do your own bookkeeping or have an amateur do them if you are a small business owner. One of the most important reasons is that a professional accountant can find ways to save you money at tax time. An accountant knows all the ins and outs of doing taxes for small businesses, tips, and tricks that you are not aware of.
Below we have listed the other main reasons small business owners make the decision to hire a professional accountant:
- You’ll need advice when you write a business plan
A professional accountant will be able to use accounting software to add financial projections and other reports to your business plan. This will help you create a business plan that’s realistic, professional and more likely to succeed. Hiring a professional accountant to help with your business plan means you get the benefit of their financial knowledge and advice. That could save you time and money compared with hiring one later.
- You’ll need advice about your company’s legal structure
Not all businesses have the same legal structure – there are different types that are determined by a number of factors. Some might be called limited companies, limited liability partnerships or corporations, others could be sole traders or proprietors. These vary from one country to another.
You should carefully consider each type before deciding which one best suits you. For example, you may do business as a sole trader or sole proprietor, working on a self-employed basis and invoicing under your own name. If this is the case, you might be able to offset some of your living expenses against tax.
However, this also means you could be held personally liable for any business-related obligations. If your business fails to pay a supplier, defaults on a debtor lose a lawsuit, the creditor could legally come after your house or other possessions. With a limited liability company structure, it’s different. As the name suggests, the liability of the business is limited to the assets owned by the business, not you personally (though there may be exceptions in some circumstances). An accountant can explain the legal business structures available and help you choose the one that best suits you.
- You’ll need an accountant to help with the finances
Small business accounting can quickly become complex if you do it on your own. If you feel you’re losing control of who owes you money and how much, an accountant can help you get back on track. You may also want to measure key business metrics, such as the ratio of salaries and other employee payments to total revenue. An accountant can help here by managing your payroll and producing graphs so you can see how the ratio changes over time.
If your accountant uses cloud-based accounting software, they’ll be able to share your business accounts with you quickly and easily. And they can produce tables and charts that will help you understand your company’s current financial situation at a glance. This will help you monitor the pulse of your business and keep track of important things like cash flow.
- Hire an accountant when you’re ready to delegate
As a small business owner, no doubt one of the things you like best is that you have control. You can set your own working hours, craft your business strategy, regulate your workload (at least to some extent) and determine your own finances. And being the master of all of these things is a wonderful and liberating feeling. But sometimes it can stop you from delegating. Business owners can feel overworked, partly due to a reluctance to allow other people to help out. You might feel that no one can possibly know your business as well as you do, therefore nobody can handle any part of your business as well as you can.
Inability to delegate can mean you’re left feeling overworked and stressed. At some point, you will have to let go, and learn to trust other people to handle some parts of your business so that you can look after the rest. Delegating your company’s financial affairs is a good start. You need to choose the right accountant and make sure you trust them with your company’s financial information. Once you’ve handed over your company’s finances to someone more experienced in accountancy than you are, you will have more time to concentrate on other aspects of your business.
The Rules of Thumb blog from MoneyThumb hopes the above information will help you as a small business owner decide if it is time to hire a professional accountant. However, if you aren’t quite ready to hire an accountant, a great help in keeping your own books and doing your own taxes is to use our PDF financial file converters. These tools make accounting for your small business run so much more smoothly and are a great help at tax time. We have a version of the MoneyThumb PDF financial file converters specifically designed for small businesses and offer a free test drive. Check out our PDF financial file converters by following this link.