By Nishi Patel
For small business owners, there is always a need for accountants. They prepare taxes and provide financial advice. In the US, almost nine out of ten entrepreneurs believed that hiring an accountant is worth the expense.
The Cost of Not Hiring an Accountant
Around half of American small business owners and self-employed individuals obtain an accountant or bookkeeper’s services for their tax returns. Many of them managed to cut their paperwork by at least two hours. It’s also far cheaper for letting them do the work since you can focus your effort in running the business.
Meanwhile, business owners can take an average of nine hours to finish their own tax preparation and payment. Since your time is precious, it’s better to let finance professionals handle such tasks.
Do You Need an Accountant or a Bookkeeper?
Depending on your financial requirement, you may need an accountant or bookkeeper or both. Whilst these two are finance professionals; they performed vital but different functions:
Bookkeepers keep records of the daily financial transactions such as listing down all revenues and costs. They can also handle the payroll and invoices.
Meanwhile, accountants can help prepare tax returns and present an overall view of your company’s finances. They can:
- Prepare and study your company’s financial statements
- Create reports
- Provide crucial business video
The Importance of Accountants During Various Stages of Business
Aside from making your taxes, they are also essential partners in different stages of your enterprise.
While creating your business plan, you’ll need an accountant to check or review your financial data. This is essential, especially if you’re applying for a loan or capital from investors. As financial experts, they can also provide how to:
- Buy or lease equipment
- Price your products or services
- Help maximise your start-up capital
Accountants can provide vital advice and services as you’re starting your business. They can help:
- Set up an accounting system using either cash or accrual basis
- Choose the right accounting software for your business
Depending on your industry, an accountant can provide valuable insight into using specific or customised software.
Once the company starts growing, your accounting process will need a few upgrades, such as:
- Implementing a payroll system for employees
- Assess the financial impact of various employee benefits
- Generate financial reports and aid you in the review
- Advise your business on how to improve your cash flow
Someday, you may have to leave you’re the business and retire. So you’ll need the services of an accountant to advise you on the following:
- Retirement plans
- Personal investments
An accountant can also aid you in maximizing the business value if you want to sell it as part of your exit strategy.
Benefits of Accounting Software
Accounting for small business today often requires the use of software or apps. Soon, you can use one that’s powered by a robust artificial intelligence. While nearly half use cloud-based software, around one third use software that doesn’t connect online. However, such method has several disadvantages such as:
- It can get confusing if you and your accountant or bookkeeper are using different software versions.
- You can only gain access to books in your office. Unless you save the files in a USB or email, you won’t have access to it in your home or during your travel.
- If you have multiple copies of a record, there’s a high chance of errors.
Keeping your books online or using cloud-based accounting software is more accessible today. Also, you don’t have to spend much time learning about accounting concepts such as:
- Double data-entry
- Reconciling accounts
Even by merely figuring out which spreadsheet version to use, can save you time. You can also use that to focus on running and expanding your company.
Accounting software can come in all kinds of different forms. For example, you can invest in something all-encompassing like QuickBooks, which will help you account for all elements of your business. You can also find specialized software to help with complicated components of accounting, such as lease accounting software.
Lease accounting involves accounting for agreements to finance or rent the rights to use a specific asset. The need for lease accounting is more widespread than you might think and serves as a perfect example of bespoke accounting software that can help you and your business. With software like this, you might not need to hire an accountant at all. On the other hand, if you run a larger company with many lease agreements, your dedicated accountant might suggest specific lease accounting software to help them accurately account for all of your business activity.
That’s just a small example of a particular element of accountancy software that can help your business. There are thousands out there, and if you’re finding yourself wasting large amounts of energy hunched over your accounts, it might be worth seeing if there’s specific software that can save you time.
In any business, a bookkeeper or accountant is an essential part. Without them, it’s going to be challenging to run your company. You can have human financial experts, accounting software or both. It’s also vital to hear and follow advice from your accountant regarding financial matters.Featured photo credit: Depositphotos