You started your own business because you like doing things your own way. You have a skill set that you’re putting to use to make money for yourself.
As your business grows, you quickly move beyond the simple pleasures getting paid for doing what you love. Before long, you’re saddled with retaining receipts, managing taxes, and processing payroll.
Would it be easier to let a professional accountant do some of the heavy lifting for you? When do you need an accountant?
It might be a good idea to consider contacting an accountant, regardless of how much you like working with numbers! Just as others trust you to be the best at what you do, it might pay off to let others, who know the ins and outs of handling money, take care of your accounting needs.
The cost-benefit analysis of hiring an accountant
Any decision you make for your business is going to entail a cost-benefit analysis to determine what will be more costly to spend: your money or your time.
Time – Your time is spent when you decide to continue doing something yourself. Your accounting might be eating up hours of time that you could be spending doing what you love, which is operating your business.
Still, at times it may not be worth spending money on an accountant, especially if you own a new business that is relatively uncomplicated to maintain.
Money – Your money is spent when your time is just not going to cut it anymore: There just aren’t enough hours in a week.
Making the decision to spend money on an accountant means that you value your own time more than you value the money you’ll spend to let an accountant take care of your books. Put another way, this means that your time is better spent on what you do best.
Strengths – The decision to hire an accountant really begins with asking yourself where your strengths lie.
If your business is about numbers and you have no problem staying detail-oriented and aligning with IRS requirements, you may want to wait longer to hold off on hiring an accountant.
If you’re like most people, though, numbers, detail, record retention, and the knowledge that goes along with manipulating money may be a bit beyond what you’d consider to be your strengths. In that case, you may come out ahead by paying an accountant to assume at least some of your accounting needs.
For a full-size view of our “Do I Need an Accountant?” infographic, click here.
It’s best to think about hiring an accountant well in advance. That way, when it is time to file taxes or to run payroll, you’re not scrambling for the necessary paperwork or an available accountant.
Trigger point – Decide where your strengths lie. Also, decide what’s going to trigger you hiring an accountant. At what point will you absolutely need or want an accountant?
Likely, it’s going to be when some aspect of your business (profits, resources, employees, keeping up with other duties) grows beyond your ability to manage it. That is when you’ll have to outsource work to someone.
Gray area – Your decision doesn’t have to mean one extreme or the other (i.e., hire a staff accountant or do it all yourself). There’s a huge gray area between those two extremes. In that gray area, the accountant may just file taxes, or handle your accounts payable and receivable.
Accounting firms will work with you to make sure your needs are met. It’s in a firm’s best interest to provide customized solutions to help you grow — and retain your business.
In the beginning, it may be that you hire an accountant to perform a regular function for a few hours a week or month, like accounts payable or receivable. As your business grows, your needs may also grow. What started out as a few hours on a regular basis may become a few days a month as your business grows and you need to process payroll and manage your tax liabilities.
It pays off for you to have a notion from the start of when you might need to engage an accountant’s services, and how to find an accountant that fits your needs.
Take a meeting. It may sound counter-intuitive, but it could be a good idea to meet with an accountant in order to determine when (or if) you’ll hire an accountant. A seasoned accountant may have seen small businesses with great records and files in disarray. The accountant can recommend certain trigger points and accounting tips.
Recordkeeping plan. Talking with an accountant early on will also set you on the path to good recordkeeping, especially for those who may not be naturally organized. Consulting with an accountant will prepare you to keep your records consistently. Also, it will make an accountant’s job easier down the road when your business grows.
In terms of recordkeeping, it’s not quite enough to just retain everything in one file. One collective file for your finances will lead to a lot of work when it’s time to close your books and pay taxes.
Organize receipts. Accountants will likely advise you to retain receipts and records related to expenses in as detailed and organized a fashion as possible. You may not have time to take notes on why you made a certain purchase, but you may be able to keep a receipt in a folder, or perhaps jot a quick note onto the receipt itself.
Regardless of when you make the decision to hire an accountant, know that it’s best to decide conscientiously and responsibly. In some situations, an accountant will take a significant load off your shoulders. That load gone makes room in your schedule for doing more of what you love.
If your a small business owner that wants to take charge of your accounting, try our easy-to-use online small business accounting software. Try it for free today!