5 Reasons Your Business Should Hire an Accountantcustomonecfo
As a business entrepreneur you probably thrive in a DIY environment, but the more hats you wear, the less likely you will be financially successful. A solid accounting strategy is an important step to becoming profitable, and as your company grows software can only take you so far. Here are five reasons your business might need an accountant:
1. The startup phase.
There are so many things to think about when you’re just starting out:
- Business structure
- Business plan
- Bank accounts
- Government regulations
The way you set up operations can have a serious impact down the road; hire an accountant early on to set yourself up for success. They can help you determine the most appropriate business structure, analyze your business plan for financial compatibility and assist you with making educated financial decisions throughout the startup process. Trust us, you don’t want to have to spend more money to correct mistakes later.
2. Business growth.
When it’s time to started hiring and onboarding new employees an accountant can make sure you have the infrastructure in place to help your business grow. Accountants should be able to:
- Ensure employees and independent contractors are classified correctly.
- Oversee payroll and payment processes.
- Create processes to help protect cash and other assets.
3. Cash flow projections.
The pressure of cash flow can be overwhelming. Growing businesses often struggle to make vendor payments or meet payroll due to poor organization and budgeting. With a stressful influx of new employees, increased inventory levels and an ever-increasing accounts receivable list who can blame them? An experienced accountant should be able to project cash flow six to 12 months in advance and handle the organization of various accounts. Cash projections provide business owners with ample time to arrange increased credit lines or raise additional capital when they may fall short or encourage them to rein in their budget. Preparation is key to successful business growth.
4. Banking relationships.
The Small Business Administration reports that small businesses borrowed over $6 billion last year. At some point your business will probably need additional funding, whether it’s for expansion, new equipment, purchasing property or even establishing an emergency fund. Before you approach a lender, an accountant should prepare a financial statement to increase chances of approval.
5. Your budget is falling short.
According to the Bureau of Labor Statistics, about half of all businesses will fail within five years of opening. Although there are many factors related to failure, not meeting budget goals can decrease the chances of your business survival. An accountant can analyze your budget, assist in making changes and perform a trend analysis to help keep a budget on target for success.
Businesses big or small need accounting help. In your search for a qualified accountant make sure they have a CPA designation and sit down with them to discuss their qualifications. Most accountants are technical in nature and know tax laws, however the accountants that can help you the most will be able to articulate their thoughts and easily communicate with you. Above all, it’s critical that you feel comfortable having a conversation with them.