It takes money to make money – it’s what everyone has drilled into your head since the day you first dreamed up the idea for your small business, isn’t it?
But, how do you know when it’s time to spend money to help you manage your money?
Though you may see accounting as an expense you can do without, hiring an accountant can help you guide your business toward the kind of growth you want. An accountant can do so much more for your business than just handle your payroll or file your taxes.
Here are five ways hiring an accountant can help your business. Even if you don’t have one working for you full-time or on a monthly retainer, hiring one to consult for you for even a few hours can make a difference in these – and many more – ways.
1. Help with the major milestones along the way – From day one to the day you retire or sell your business, milestones are different from the everyday keeping of the books. An accountant can help you come up with a detailed business plan that can help you attract investors or get the loan you need for startup costs.
An accountant can also help you come up with realistic projections for both expenses and revenue, as well as help keep you from making costly mistakes that brand-new business owners can sometimes make. Even if you are determined to do the day-to-day bookkeeping yourself, hiring an accountant to get you started, train you in Quickbooks and coach you on how to manage your finances can make a world of a difference, and set you on the path to success.
2. Selecting the right legal structure for your business – What is the best, smartest legal structure for your specific type of business – are you a sole owner or proprietor? Should you be a DBA (Doing Business As), or an LLC (Limited Liability Corporation)? When is the right time to become an S-Corp?
An accountant can help you pick the right classification for your specific needs, as well as help you identify which kinds of expenses you can write off on your taxes. In addition, if you plan to hire help, an accountant can help you figure out whether it’s best to pay them as freelancers or contractors through a 1099, or hire them as employees with a W2 and withdraw taxes, and so forth. And, most importantly, an accountant can help keep you compliant with all government regulations, which can vary greatly by state and even by county or city/town.
3. Be smart with your time, and delegate. How much is your time worth when it comes to running your business? How much time are you spending managing your own finances, when you could be out there marketing your business, helping clients or customers, or seeking new clients and helpful employees? If you’re spending more time on financial management than you are making money, it’s time to hire an accountant. You can hand off time-consuming tasks such as payroll, balancing the books, filing taxes and more to an accountant. Though it is an added expense, many small business owners find that the hourly fee you’ll pay an accountant is less than the hourly revenue you could be bringing in by focusing on other, more important aspects of your business.
4. Keep a clear perspective on revenue vs. expenses – An accountant can give you all sorts of valuable metrics to monitor your business’s progress, such as your ongoing ratio of revenue to salaries and other expenses, the approximate return on investment you’re getting for marketing expenses, and much more. And many accountants can share this info with you via the cloud, saving you time from meeting in person and allowing you to check on progress whenever, and virtually wherever, you want.
5. Satisfying investors – Did you receive investment from one or more persons or entities to get your business started? If so, they are probably going to expect detailed reports on how the business is faring, and how profitable you are becoming. An accountant can prepare detailed reports for you that can not only be eye-opening for you, but can impress and inform your investors, keeping them satisfied.
You work hard – and you deserve to reap the benefits. Let an accountant help you get there!