When You Need to Hire a Small Business Accountant

The key feature of every small business is having the right people by your side. From employees to team leaders and part-time advisors, forming a team of reliable associates is crucial for continuous professional growth.

When it comes to part-time advisors, they can serve different purposes. IT-experts, marketing professionals, and financial counselors are only some of the advisors you might need. Since the major issue for every small business are finances, you should always keep financial professionals close to you.

Sometimes it will be enough only to visit them for a counseling session. Some other times, however, you will need a full-scale package from such professionals.

For a business owner with a pretty limited budget, knowing when to go for which of these solutions is extremely important. In this piece, we’ll show you when to hire an accountant, how to collaborate with them and how to negotiate the best terms for your business needs.

Working desk

Choosing equipment for business premises

When you’re buying various products as a business entity, it’s different from regular purchases. For example, some types of goods have different tax rates, since the state wants to invest more in some fields of work, offering lower rates for some equipment – computer equipment has such a status in many countries.

Apart from those special categories of taxes, business purchases are done in a different way for administrative and financial reasons, as well. This is why an accountant will be more than valuable to a small business owner who’s about to buy the equipment for their business premises.

So, before you set for your business purchase, prepare a list of the necessary items. Then call your accountant and make an appointment. Their staff will make a research on the most affordable deals and offers on the market.

Also, they’ll check the tax deductions for each of these purchases and save some assets from your budget.

Extra hand with taxes

Every business has to pay taxes to the state. Nevertheless, not every business has the same tax obligations. If you have to learn about the tax regulations in your business surroundings on your own, your productivity will suffer. Moreover, you might also miss something important when writing and handing in a tax return. Such a mistake could lead to tax penalties, affecting the work and cash flow.

For all these reasons, you shouldn’t do everything on your own, but use an extra hand (or a calculator) and go through your balance sheet with an experienced accountant. They’ll know what tax deductions you can claim and how to do it. In addition to that, accountants always know whether the local or federal authorities are giving some business grants.

Winning for such a budget add-on would be more than useful for a small business, so talk to your accountant and find the best options for your venture.

Setting or changing the business status

When you’re only at the beginning of your professional quest, you’ll have to choose how you’ll register your business. For instance, if you’re planning to work on your own, without any employees, you can register your venture as a sole proprietorship. This is the simplest type of business and the owner of such a business is personally liable for all the financial matters.

However, your business will (hopefully) grow. The development of a business will result in hiring new employees, making alterations in business plans and dealing with higher revenue. Here’s where you need to hire an accountant. Firstly, when you want to change the structure of your business, say register a general partnership as a limited liability partnership, your tax obligations also change.

Failing to meet those new demands and regulations could lead to serious issues with the tax authorities.

Secondly, a new business status will generate a higher cash flow. Even if you managed to hold the budget reins when the revenue was lower, its sudden increase might be more than you can handle.

Finally, when your business is about to leap to a new stage, it’s wiser to discuss the new business conditions with a reliable accountant. They’ve already been there and they have a few aces up their sleeve, just in case of emergency. That way, the challenges you come across will be dodged in an elegant and, more importantly, financially painless way.

Expanding to new markets

The global nature of contemporary business creates wonderful opportunities for business owners to work with businesses located in different countries. Such collaborations can bring multifold benefits. For instance, a small business owner can lower their budget expenses if they manage to hire employees at lower rates.

On the other hand, skillful employees from developing countries have a chance to make a better living by working for foreign enterprises.

From an entrepreneur’s point of view, expanding to new markets always brings certain legal and financial matters. How will they register you? What will be the registration fee? How will you pay your taxes?

Due to the fast-paced character of the modern market, it’s more than realistic that a small business has associates of departments in several countries. Since it’s impossible to follow the legal and tax law in each of them, an accountant should be hired when you’re planning to expand to a new market.

They will gather all the necessary information regarding registration, contact the local authorities and prevent your business from any potential legal and tax issues.

Slower growth with debt

Growing debts

Being a business owner requires an extremely high level of self-discipline. Every single payment has to be made on time. Nonetheless, if you’re late with your payments, you’ll earn a bad reputation, which is the worst thing that can happen to a small entrepreneur.

Your business partners and clients will become suspicious. So will your bank, as well as the tax authorities. Furthermore, if you become an unreliable payer, you won’t close any new business deals, which will lead to even bigger problems, such as damaged liquidity, a lower cash flow and the complete demise of the business.

Because of that, when you notice that your business is struggling to cover all its expenses, turn to an accountant. What you should do first is analyze the balance sheet and other financial reports. Don’t hide anything at this stage, because it’s essential that the accountant gets a thorough insight into your finances. When they’ve calculated what expenses can be reduced and where you can increase the income, your debt crisis will start waning.

However, you need to listen to their advice, even when you don’t like them. Otherwise, you won’t resolve your debt issues and you’ll have to pay them for their work. After all, it’s not the accountant who made those debts, so don’t blame them for anything.

Managerial issues

Sooner or later, every business owner comes across some managerial obstacles. Sometimes they’re related to personal issues among employees, but more often than not problems arise from financial difficulties.

If the partners and clients from the previous paragraph lose their faith in you (in case you don’t meet your obligations on time), the same will happen with your employees. However, not paying your employees is even worse because if there are no employees, there are no business partners, either.

Therefore, if you notice that this month you’re having problems finding enough assets to give your workers their payments, contact an accountant at once. Also, get ready for some harsh measures. They’ll offer you practical and functional solutions based on the figures they see in your financial documents.

Reduced productivity

Even if the demand for your products is high and the revenue is on a winning streak, your employees’ productivity might still fall. Since your employees are also the inseparable part of your business success, first ask the team leaders or managers to talk to them. Handing out an anonymous survey about their satisfaction with the work conditions is a smart option, as well.

So, when you’ve analyzed the results of those actions, you should join an accountant to your emergency team. What often happens these days is that employers don’t share profits with their employees. When a worker notices that the office is getting equipped with new items or that the managers are buying expensive cars, they will be disappointed if they don’t feel this progress, as well.

An accountant can easily spot the key problems in the distribution of the income in your business. They’ll find a solution to alleviate employees’ discontentment. Also, just like we advised in the previous section – behave in accordance with your accountant’s guidelines. When you manage the assets you earn in an equal way, the productivity will grow and you’ll have a chance to indulge in fancy things in the near future.

Calculating business sales

The cost of it all

One of the factors that will influence your decision on hiring an accountant is the prices they charge for their services.

First and foremost, you’ll have to work with an accountant that meets your budget. Secondly, when you’ve set your business course and you have no debts issues, you’ll need an accountant only a few times a year, mostly in the pre-taxation period.

So, according to the data obtained by the NSA (National Society of Accountants), a standard deduction with state return and itemized deductions with a federal return should cost you on average $159 and $273, respectively. The majority of small businesses will not have to go any further from these accounting services.

However, when a small business is rapidly growing, its owner(s) should hold counseling sessions with accountants on a monthly, sometimes even weekly basis. This is where both sides should be smart and look at a long-term perspective. Translated to everyday work – try to negotiate more affordable rates if you need your accountant’s services more often.

Finally, when your small business grows into a company, hiring a full-time accountant is a must. Such businesses require following profit margins, income and taxes daily, which can be done only by an in-house accountant.

The quality of your work will grow if you keep in touch with financial professionals. Although you might think that you don’t have to look for an accountant immediately, your business will develop more successfully if you can count on such assistance from the very beginning. You’ll take care of the professional side of your business, while your accountants will ensure that everything you do is done in accordance with tax and legal rules.

To sum up, an accounting expert will always find a way to keep your finances under control and help you nurture your small business.

Mark Thomasson
Mark is a biz-dev hero at Invoicebus - a simple invoicing service that gets your invoices paid faster. He passionately blogs on topics that help small biz owners succeed in their business. He is also a lifelong learner who practices mindfulness and enjoys long walks in nature more than anything else.
Mark Thomasson

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