The 28 million small businesses owners in America know how important it is to track their spending and keep their records up to date. However, some business owners, especially solopreneurs or businesses with only a handful of employees, are reluctant to invest in hiring a professional accountant. These companies may prefer to manage their own finances in order to save on overhead but there are a few reasons this could prove to be a costly mistake. Accountants can positively impact companies in numerous ways, here are just a few:
Assist in company success
More than half of new businesses close after only five years of operation according to the U.S Bureau of Labor Statistics. Since the possibility of failure is so high, businesses are actively looking for any help, which often comes in the form of an accountant. It goes without saying that a CPA can help with crunching numbers and preventing costly tax mistakes. But they can also help small and medium size business improve, grow, and expand in other unexpected ways.
Often companies think that company growth shows success, but an accountant can help make sure the business avoids growing too fast or in the wrong direction. Accountants are also able to help gather all the appropriate licenses needed, which may differ in every state or city, and make sure the business progresses to the next level.
Offer professional technology advice
Many small businesses can be as modest as one person and therefore resource-strapped in terms of doing research on technology and other business tools. This is an area in which an accountant can offer assistance.
AccountingWeb recently conducted a national survey of 400 accounting firms and found that small and medium-sized businesses (SMBs) could gain a competitive advantage when they tapped into their accountants to guide them through their technology decisions. The survey revealed that accountants receive up to 20 technology related questions a month from their clients, ranging from third-party apps to data security information. Because many accounting firms have automated their own processes and thereby figured out what works and what doesn’t, they are in a position to offer sound advice on accounting technology to their own clients.
Refine a business plan
Besides sharing financial data, SMBs need to go over their business plan with their accountant. Every business plan should contain a thorough financial analysis. An accountant can help the business do a reality check on that analysis, as well as point out potential tax pitfalls and savings opportunities. The accountant can also offer advice on the most advantageous structure for the business (sole proprietorship, LLC, partnership, etc.)
In short, hiring an accountant or CPA firm will cost money, but it can be a sound business decision that can pay off on multiple levels for businesses, especially in those critical first few years.