Legal and Compliance Confusion: Signs Your Business Needs the Expertise of an Accountant
As a business grows, your finances can become more and more complicated. If you’re wondering how to manage it all, don’t. Here’s how to simplify your life by hiring an accountant so you can focus on what you do best.
When You Can’t Handle Quickbooks Anymore
DIY solutions are OK when you’re just starting out, but eventually you’ll want someone to professionally manage those books. It could be a bookkeeper or a full-fledged accountant. Most small businesses can get away with a bookkeeper for a little while.
But, consider upgrading when you can’t handle Quickbooks on your own, and you need the services of an accountant to manage all of your business expenses and receipts.
When You’re Not Familiar With Accounting
If you’re not familiar with accounting terminology, processes, or best practices, it might be time to hire a professional. An accountant can translate all the complicated technical stuff into everyday language. That’s helpful when you need advice about taxes and special accounting problems.
When You Struggle With Your Taxes
Speaking of taxes, the U.S. tax code is really very complex. If you fail to pay the right amount of taxes for your business type and industry, you’ll probably get whacked with penalties and fines. That’s not something you want to deal with. An accountant can advise you early on so that you don’t run afoul of the law.
If you need specialized tax help, see Brown Smith Wallace CPA for more information.
And, last but not least, an accountant can help simplify tax season which, for many business owners, is stressful and daunting. The accountant will file your taxes for you, taking the pain out of the process. If you’re working with a good accountant, you’ll also get additional help with deductions like:
- Home office deductions
- Startup cost deductions
- Inventory deductions
- Accounting fee deductions
- Bad debt deductions
- Bank fee deductions
- Health insurance premiums
- Interest on loans
- Self-employment taxes
When Your Bookkeeping Takes You Away From More Important Tasks
When you find that your bookkeeping activities are detracting from your ability to run your business, it’s time to hire a professional. After all, if you’ve got that much to manage, you have the money to hire help.
When You Grow Too Fast
Most businesses see growth as a good thing. And, for the most part it is. But, when you grow too fast, something unexpected happens. You end up with a lot of new expenses (usually, labor and materials costs), and those expenses need to be managed.
Unless you already have a system in place that’s automated, you can’t easily scale your operation. You need additional help – professional help.
A professional can help you sort out the paperwork and additional number crunching. And, if you expand into another state, there’s even more paperwork and legal complications because you need to set up a corporate structure that is capable of managing the cash flow, you need to file tax returns in all of the appropriate states, and you need to make sure your reporting satisfies the IRS.
When Revenue Is Up, But Profits Aren’t
If you’re selling more than you’ve ever done before, but you’re not seeing a higher profit, or if your profit margin is shrinking, then you’ve got a problem. A problem an accountant may be able to help you solve.
An accountant can look over your costs, point out where you’re wasting money, and help nudge your company back into the black.
A lot of startup companies are really surprised by the fact that revenues don’t equal profits. And, many business owners underestimate how much overhead costs, maintenance costs, and other fixed and variable costs eat into profit. And, without profit, there’s no way to expand and grow the operation.
When You Have Investors
Investors won’t accept your numbers on a napkin, no matter how savvy you are or how slick your sales pitch. If you plan on getting angel investors, or you want to take your company public, you need an accountant.
At the very least, you need someone who can give your company an objective valuation. Unless you’re an accountant, don’t try this yourself.
Accountants can also help you satisfy SEC regulations concerning issuance of stock and taking on investors, help prepare disclosure statements, and make sure that your books satisfy the IRS compliance rules for public companies or companies that sell stock to outside investors.
Accountants aren’t always a necessity. But, they can become one as your business grows. Your job is to know when that time is – when you need to pull the trigger. And, do it before it’s too late.
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