As a small business owner, your main priority is mostly focused towards growing your business. You want to move past the startup phase as soon as you can and establish your company as a prominent brand in the market. And, to achieve this you are most likely cutting costs and investing a significant section of the capital in attracting new leads to increase your client base. This is the story with most business owners. Though there is nothing wrong with this approach, cutting costs in the wrong places can sometimes backfire. Instead of saving your funds, you might have to shell out more money to rectify the mistakes that you have made. Accounting is one such area where small businesses fail to see the need for investment.
Many small business owners choose not to hire an accountant and do all the accounting and bookkeeping themselves. But, the problem with this way of working is that not many business owners are pros at accounting. Even if they are, they also need to manage other business operations. They have to focus on finding effective growth strategies for their business. Hence, if a business owner can earn N10,000 in an hour, then spending 10 hours for managing the business’s accounting needs means a loss of N100,000 for the organization. On the other hand, if you outsource this work to a small business accountant, then you can spend more time in other areas of your business and generate more revenue.
The temptation to save money by doing the accounting yourself can be difficult to overlook. But, the benefits of hiring a small business accountant far outweigh costs. To understand this better, here we have enlisted 9 reasons why small businesses need accountants:
1) To Assist During Start-up Phase
The role of an accountant in the start-up phase of a company is crucial. Most business owners tend to hire an accounting professional only when their business is past the startup phase. But, in reality, taking an accountant’s advice while formulating your business plan can be really helpful. With the financial knowledge and expertise of a small business accountant, you can make sound decisions and ensure the success of your business model. In fact, an accountant can also help you decide the legal structure of your company. Companies can be either classified as a sole proprietorship, partnership, limited liability partnership or a corporation. With sound financial advice, you will be able to decide on the type of company structure which is most suited to your operations.
Apart from this, an accountant can also assist you in choosing the right software such as Sageone and in creating a company bank account to set-up your business’s finances correctly.
2) To Help you Focus on Other Business Aspects
As a business owner you are responsible for each and every aspect of your company, be it hiring new recruits, attracting new clients, deciding on company policy matters or tracking the company growth. You also have to manage the work hours, formulate strategies to handle the workload and be a responsible leader for your employees. Undertaking all these responsibilities can be a bit overwhelming and can leave you feeling overworked. Hiring an accounting firm which specializes in understanding the financial needs of small businesses will take a significant section of responsibilities from your plate and will give you more time to invest on other important things on your list. While your accountant will handle A to Z of your company’s financial needs, you can take control of other aspects of growth. The ability to successfully delegate work to others is one of the signs of a true leader and assigning your accounting responsibilities to the right experts is a good place to start.
3) To Help with Decision-making in the Business Growth Phase
Once you have the wheels rolling, in some time your company will graduate from the start-up phase to the business growth phase. At this stage, your business will face a new set of challenges and the expertise of an accounting professional will be necessary to maneuver through these obstacles. In the business growth stage, you will need a regular update on your company’s financial health, its cash flow patterns, its pricing and inventory management. Your business accountant will be adept with this information at any point in time. And, you will be able to seek advice from him before making key financial decisions. You will also be in a position to create realistic business goals with the help of the financial forecast that your accountant will make.
4) To Handle day-to-day Business Operations
In the growth stage, you will need to have a definite accounting system for your company. You will need your accountant to carry out a few actions on a regular basis. Some of them are ensuring that you present a good profile in front of the tax authorities, overseeing the company payroll and payment processes, compiling and submitting all necessary paperwork, doing the required tax calculations, closing your books and creating your annual financial report. These are some of the crucial tasks that accounting professionals do in every organization and can be easily managed with the help of an experienced accounting firm.
5) To Deal with or Prevent Audits
An audit by the tax authority can be a stressful situation for any business owner. One wrong move and your business can be in jeopardy. But, with the help of small business accountants, you can deal with the situation with ease. A professional accountant will update you on the audit procedure, and help you prepare all the necessary documents that the tax man will require. He will see to it that you are in compliance with the necessary tax laws. This will be helpful as the regulator will be monitoring you even after the audit. Reliable small business accountants will always keep in mind the best interests of your company. It is, therefore, beneficial to hire an accountant if you are about to face an audit. Having an accountant on your team beforehand can also help you reduce the chances of facing an audit.
A small business accountant has a fair knowledge of all the relevant tax laws. You can use their tax planning services to reduce your tax liabilities legitimately. If you hire a professional at the beginning of the year itself, then he can suggest ways and means to reduce your taxes.
Your accountant will also ensure that your tax filings are done on time and in the right manner. Late filing usually results in penalties. But, with the help of a professional, you can ensure that you have a smooth and stress-free tax filing season.
7) To Ensure Compliance
When you set up a business, you need to ensure that you follow the laws and guidelines set by the major governing institutions. And, there is a lot of paperwork and compliance formalities that need to be completed in this regard. Doing all of this on your own can be a daunting experience. But with an accounting professional on board, you can be less stressed about the necessary legal and compliance documentation for your business. Your accountant will also keep track of the latest laws that are relevant to your business and keep your company’s status updated with the relevant authorities.
8) To Seek Advice while Franchising, Selling or Buying a Business
An accountant plays a major role in key company decisions like franchising or selling your business or buying another business. It is only when a business is sufficiently established that it considers adopting a financial model like franchising. For a relatively new business owner, it can be difficult to decide on the important decisions pertaining to franchising. This is where an accountant can help. Your accountant will help you understand the total profits that you will make after taking on a franchise. He will calculate and deduct the fees and percentages charged to help you estimate the total revenue the parent company will make.
In order to buy another company or sell your company, you need a good understanding of your company’s financial statements. Only a proficient accountant can help you with that. Hence, the role of an accountant is crucial while franchising or buying another business.
9) To Avoid Accounting Mistakes
When your car breaks down, do you struggle with fixing it on your own or take it to a garage? Most of us take it to a professional. We rely on professionals because they know their work better than us. They are specialists in their field and ensure that the task is completed efficiently and in lesser time. Same is the case with doing accounting and bookkeeping for your company on your own versus having a team of professionals onboard. A good accounting professional will ensure that there are no mistakes and that your finances are in order.