A small business owner's life is full of day-to-day responsibilities, from bookkeeping and taxes all the way down to hiring employees and marketing products. But if crunching the numbers becomes too time-consuming and overwhelming, it may be time to consider hiring an accountant for the job.
Here, we'll break down the reasons why you may need an accountant, and how to go about finding one who's a good fit for your business.
Doing your own accounting can save you the money you'd spend on a professional, but it comes with its costs:
Maybe you're starting to notice subtle signs that your venture would benefit from the support of a dedicated numbers person. Or maybe you feel so overburdened with taxes and payroll that you need to onboard an accountant as soon as possible.
Hiring an accountant, either as a full-time employee or a contractor, makes sense if:
An accountant can interpret your business's financial reports and provide valuable insights into your income, expenses, and cash flow helping you make better informed decisions about how to grow your business.
If your business has outgrown spreadsheets or fallen behind on its accounting tasks, it might be time to hire a professional.
Unless you're expecting a windfall refund, tax season tends to be stressful for most small business owners——especially if you haven't kept your records current. In addition to the work of getting all your information up to date, there's also the worry of an audit or penalty for late filing. An accountant can give you peace of mind that your taxes are done correctly, provide thorough tax planning to maximize deducitons, and will provide necessary support should you be audited.
An experienced accountant is not only a lifesaver at tax time, but also a trusted advisor who can give objective financial advice on growing your business. They can also assist with the financial analysis of your business plan.
Additionally, as your business grows, so do the scope and complexity of your financials. An accountant can be by your side during this time to ensure everything remains compliant and accurate.
The tax structure of your small business can also determine the complexity of your accounting needs.
If you are running your business as a sole proprietorship, for example, your business needs are simple and you can probably tackle your own books. Your taxes are simply filed on your individual return, and you include a Schedule C to report total revenue or gross receipts as well as expenses.
On the other hand, if your business is structured as an S or C corporation, you're paying dividends to shareholders as well as processing payroll for employees. Now your business needs are more complicated and an accountant has a bigger benefit.
In addition to more detailed reporting requirements, business tax filings for S corporations and C corporations can be more time-consuming and include additional components such as payroll tax. In these cases, it's wise to have an accountant oversee everything, or at least work with a bookkeeping and tax service.
Nonprofits have potentially the most complex business finances. In particular, they need to track how grant funding is spent and their year-end tax reporting is under the heaviest scrutiny. Having an accountant's experience guiding your financial information can save massive headaches down the line.
Now that you know the differences between the CPA and a general accountant, which do you hire?
The answer will largely depend on your business's financial reporting needs and budget, as well as your plans for the future. If you plan on expanding your business, or expect your fiscal reporting obligations to increase and your taxes to become more complex, hiring a CPA may be in your best interest.
There are several places to search for an experienced and knowledgeable accountant.
If you're still interested in doing your own accounting, consider some of these easy small business accounting software options:
While there's definitely "œgood accountants," there's no one-size-fits-all approach to finding the right accountant for your business.
But there are some steps you can take to ensure that you end up with a great match, whether you decide to hire a CPA or a general accounting professional.
Once you've found your new accountant, you want to ensure you get the most out of your relationship. Here are a few tips.
By working together closely and communicating openly and honestly, you can be sure that you're using their expertise to help you make the best decisions for your business' success.
While it may be tempting to try and do everything yourself, especially when you're first starting out selling on Amazon, there are some tasks that are simply better left to the professionals. If day-to-day bookkeeping and filing tax returns have become a burden for you, or if you're struggling to find the time for other essential business tasks, it may be time to consider hiring an accountant.
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