The temptation for many small businesses is to hang on to as much of their finances as physically possible. This can be to the detriment of the company. As entrepreneurs, we can feel somewhat reticent to come around to the “spend money to make money” ethos of doing business. But, this is an essential process to undertake. You might worry about the financial problems that arise, and you immediately regret not having a better understanding of your finances early on. But the real consideration to think about when it comes to your finances is if you need someone to look after your accounts receivable and accounts payable. Lots of us feel that it’s not necessary to hire an accountant, because we know exactly how to cook the books, so why waste money? But, having an accountant onboard will save your business in so many ways. Here are some of the signs and moments during your business’s life that you need an accountant.
You Are Formulating A Business Plan
Business plans are one of those essential processes that need mapping out before the business is up and running. Of course, this is always the case, and while it is common sense to have a business plan ready, you might find that you don’t develop one until your business is up and running, and you need some essential funding. One of the main positives of a business plan, apart from the fact that it can map out your business, is that it can gain you additional funding. But your business plan requires a lot of comprehensive research, research that you might not be equipped to tackle. Business plans require financial projections into the future, roughly between one and three years, but also considerable financial reports. This is where an accountant will save your bacon.
The Business Is Growing Too Fast
Yes, there is such a thing as too much growth. Well, to put it in better terms, if you are growing at an exponential rate, and you were a modest start up who had control over every aspect, this can spiral out of your control. As the revenue increases, so does the financial obligations. If you don’t have the structure in place to keep a handle on your financial obligations, your company might not survive the transition. Many companies talk about upscaling, but this is a very complicated task to manage. While you’ve got so many different things to keep a handle on, an accountant is the backbone of managing your growth. In addition to this, your business could be growing so much that you feel almost invincible, and could fall prey to making foolish purchases. An accountant will help to keep you in check.
A Lack In Understanding Of Your Taxes
With additional growth comes heading into uncharted territory. When you have a handle on your finances, you’ve only got a handful of things to keep track of; when your business expands, there could be certain mistakes that could put you at a loss. For example, certain business tax deductions could be overlooked that might increase your refund. Many businesses in the ascendance could fall down on certain administrative duties that completely slipped their mind, that could put them in hot water; missing your company’s confirmation statement deadline, the replacement process of the annual return, could cause further administration problems. It’s certainly a worry that can rear its ugly head when it’s too late for you to fix the problem. Instead, having an accountant keep tabs on these changes means that you don’t have to.
You’re Planning On Investing
Another part of expanding your business means making wise investments. When you look at purchasing new assets, whether it’s a new building or equipment, you need an accountant to give you the guidance on how to depreciate those assets to get the biggest possible tax benefits. It’s a lot of research to undertake whether local incentives are better than national ones, or if you can get tax credits on a certain investment. But it’s important not to confuse an accountant with a financial planner. The financial planner would give you the ins and outs of any given investment, but then accountant can do some preemptive research to give you an idea of whether it’s beneficial to invest in certain assets. Investments are all about common sense, and so, having an accountant on board will give you a considerably more holistic opinion on investments and assets.
Your Accounting System Is Limited (Or Non-Existent)
Arguably one of the more obvious reasons to get an accountant is if you have a filing system that only you can understand! We can stretch ourselves so thin when it comes to running a business single-handedly, that we could make many glaring omissions in our administration. And if the day comes when you are to be audited by the IRS, or you have to submit receipts on your last tax return, and there are gaping holes, you could get in a lot of trouble. So if you really don’t want to get an accountant right now, least hire one to set up a system for you that everyone in your business can understand. What would happen if you were to suddenly go off work sick for a lengthy period of time? The business would collapse!
Your Industry Knowledge Is Minute
If you have no knowledge of the industry you’re working in, you’re either starting out at the very bottom, or you’ve been flying blindly for so long that it’s a wonder you are still in business! If you have very limited industry knowledge, having an accountant to provide that essential structure is something you should never underestimate. For small business owners who require as much help as they possibly can, the dichotomy in choosing to save money, or to invest it in worthwhile talents can be a big struggle. An accountant does a lot, and so it’s vital for you to implement one as soon as possible. This takes a lot of pressure off you, leaving you with the opportunity to do the more pressing duties, and improve your business the way you see fit.