When to Hire a Small Business Accountant

Small business owners sometimes feel reluctant to seek out extra help for their business, especially because help tends to cost money. This is especially true when it comes to finances, which most leaders understand at least at a basic level—making it easy to convince themselves that it’s fine to do it on their own. 

But accounting for small businesses isn’t quite the same as basic bookkeeping, and it’s important to decide whether your business needs some extra support. 

Can you take care of your own small business accounting?

Some business owners swear that a good accountant can save you significant money and headaches down the road. After all, business finances can be incredibly complex at times, and it sometimes pays to have peace of mind. But the truth is that your needs depend entirely on your situation—because doing it yourself can be a perfectly viable option. 

You may not need a financial accountant if you have a simple, uncomplicated business, such as a sole proprietorship, or if you’re a freelancer with just a few clients. In cases like these, go ahead and do your own small business accounting by managing your own income, expenses, budget, and taxes, as long as it doesn’t eat up the time you need to run a successful business. Remember to always calculate the value of your time in your business when making spending decisions. Are you better off doing your own accounting, or in spending the time in your business?

In what situations should you reach out to a professional financial accountant?

While less complex business structures don’t necessarily need the help of an accountant, there are times where the extra help can pay off—literally. One study by Intuit, the maker of QuickBooks, found that 89% of small businesses say they’re more successful when they work with an accountant. Specifically, there are a few cases where larger organizations will definitely want the expertise of an industry professional, even if you do part of the work yourself:

Filing your taxes. This one is obvious, as it’s one of the most well-known parts of an accountant’s job. When it comes to your business, an accountant can help you determine the correct forms and deductions to fill out, giving you a little more peace of mind.

Forming (or reforming) a business. A financial accountant can advise you on the best legal structure in terms of taxes and liabilities, and help you do the financial analysis you’ll need to write a business plan. If you’ve started out with a simpler business structure that’s limiting your growth, an accountant can also help you reshape your business’s structure in a way that makes the most financial and legal sense.

Acquiring relevant licenses. An accountant can help you obtain the licenses and documentation you’ll need, including a business EIN, employment accounts, sales tax permits, and more. This can be especially useful if you run a business in more than one state, or in some cases multiple cities, as your needs can vary from place to place—and an accountant can help you find and fill out the documentation you actually need. 

Bookkeeping assistance. While you may not necessarily need an accountant to do your bookkeeping for you, you can still ask for their insights and expertise to help you run your business’s numbers on your own. To help you get started on the right foot, an accountant can also create a tax plan for your new business, which can help you understand which deductions to record for tax purposes. They can also work to find the right bookkeeping software for your needs, and offer advice on tracking expenses and other day-to-day financial issues that might come up.

Compliance. In certain states, compliance issues can be difficult to navigate, and the problem is worse if you do business in more than one location. A professional accountant can help you ensure compliance with everything from sales tax to payroll complications.

When should you hire a financial accountant on an ongoing basis?

While it’s true that doing your own bookkeeping is a great way to cut costs in the early stages of your business, you may eventually want to have an accountant manage your books in order to free up your time, or the time of key leaders in your growing organization. But even if you keep all of your bookkeeping work in-house, it may still be a good idea to reach out for financial help on an ongoing basis. While some small businesses choose to only get in touch with their accountant during tax season, it can be helpful to meet more regularly. Depending on your needs, once a quarter or once a month might be as often as you need, but even this can make a world of difference to your organization’s finances. 

Having an ongoing relationship with an accountant can help keep you on top of potential financial issues before they grow more complicated. For example, an accountant can help you navigate any compliance issues as they crop up. They’ll ensure that your quarterly tax payments are correct, especially if your business is currently growing, as the numbers will change over time. 

Best of all, as an outsider approaching your organization with fresh eyes, a good accountant can help give you big-picture financial feedback to help you manage your organization. This can mean things like offering overviews of your cash flow patterns, insights into your inventory management or pricing structure, and advice on your property leases. Breaking these complicated patterns into charts, graphs, and financial forecasts, an accountant can help you find any potential areas for growth and better understand the ins and outs of your business. Essentially, as you work toward specific business goals, an accountant can help provide the financial expertise and support you need to get there.

Ultimately, the amount of contact you have with your accountant is your decision, but seeing one regularly can help you stay on top of financial concerns as they arise—and eventually start bringing in more profits in the long term.

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