Small businesses play a huge role in the health and wellbeing of our economy. According to the U.S. Small Business Administration, 99.7% of all businesses in the US fall into the small business category (under 500 employees), and those businesses provide jobs for roughly half of all U.S. employees. While the life of a small business owner is incredibly rewarding, it also brings its share of stress.
What is the top cause of small business failure in this country? Cash flow problems. What do the majority of small business owners report as one of their biggest challenges? Regulatory burdens.
Fortunately small business owners can find a major ally to help with both of those things by hiring an accountant.
Most businesses owners cite regulatory burdens as a major challenge.
Often independent small business owners, accustomed to handling matters on their own, shy away from hiring an accountant due to the perceived expense. But when it comes to the problems, stress, and uncertainty of owning a business, hiring a professional accountant can often be the best solution – one that saves money in the long run. Let’s take a look at the most important ways an accountant can reduce your workload and increase your peace of mind at every stage of business.
Getting off on the right foot
If you want to grow at a healthy pace and focus on doing what you love, rather than spend costly hours putting out fires every day, you want to put systems in place that will support your success from day one. Hiring an accountant in the early stages is one of the best ways to do that.
Setting up your accounting properly and choosing the best accounting software for your business type are just a couple things a good accountant can do to minimize problems and maximize your business potential right from the beginning. Backtracking, cleaning up disorderly books, and switching systems will be a headache later and divert attention away from your most critical and profitable business activities.
An accountant can help you put systems in place that will save you time in the long run to focus on what you love.
Tracking your numbers
Another solid reason to find and work with the right accountant early on relates to your financial reports. Having an expert set of eyes trained on monthly reports like your P&L can be invaluable. A good accountant can help you to set measurable business goals and track your progress towards meeting them. That adage in business, “if you don’t measure it, you can’t manage it,” holds true. These days software like QuickBooks can generate financial reports with one click and allow you to drill down to the most minute detail. But taking the time out to study and understand those reports is another matter.
If you don’t have a regular practice of analyzing your Accounts Receivable Aging reports or running detailed Purchase reports, you’re not alone. Business owners are the busiest people. And most would need several extra hours in the week to fit in the kind of financial analysis that accountants often perform. Consider the advantage to your bottom line of having a dedicated and knowledgeable person on your team who can help you keep an eye on the most critical numbers, learn from them, and act on them.
Most business owners simply don't have time for the financial analysis that accountants can perform.
It seems like the regulatory burdens on small business owners increase daily. The IRS has a handy online calendar for businesses and the self-employed, and it’s chock full of filing deadlines. Depending on your business structure and the type of business you’re in, there are multiple deadlines every month of the year. And for every reporting deadline, you bet there are corresponding fines and penalties for filing late. Having your own accountant means federal, state, and local deadlines won’t sneak up on you, and you’ll avoid the last-minute rush. A good accountant can also direct you to the best resources for automating the most tedious tasks. The pressure that automation takes off your shoulders cannot be underestimated.
Making informed decisions
A business owner is adept at juggling many roles at once – acting as hiring manager one minute and head of marketing the next. Some days feel like a constant flow of decisions to be made. And one thing is clear when you look back on a day like that: the more information you had at the time, the better decisions you made. Having an accountant who has a grasp on the financial health of your business will mean having access to quality information when you need it.
Did hiring extra help this time last year actually save you money in the end, and is it a good idea this year? Is there a possible shortfall of cash on the horizon which would make purchasing new equipment a bad idea right now? This is the kind of information that makes decision making easier and makes you more effective in all your roles. A good accountant will help you have this information on hand when you need it.
A good accountant can help you access the financial information you need when you need it.
The end of the year is the time for the holiday rush and new year’s resolutions. It’s also a time to get the input of an accountant. When it comes to closing out your books at the end of the year, a few small changes can make a big difference to your bottom line. Are there steps you can take to minimize tax liability? An accountant will have the answer. It’s also time to look at year-long financial reports and perform a complete health check on your business. An accountant can be one of your best assets in this process.
Managing cash flow
As mentioned earlier, and as a business owner knows, cash flow can make or break any business. Behind every healthy business is someone who keeps their hands on the cash-flow wheel. On the other hand, a timing misstep when it comes to cash flow has brought businesses large and small to their knees.
An accountant knows what reports need analyzing, when, and what the red flags are in this area. Has there been a change in a customer’s paying habits that could signal trouble ahead? Do you have a larger tax liability this year than last? Is it time to re-negotiate payment terms with one of your vendors? The answers to these questions relate directly to your overall cash-flow picture and are found in the financial reports. An accountant is there to help you minimize unwelcome surprises and plan ahead for maximum profitability.
Your accountant is there to help you minimize unwelcome surprises and maximize profitability.
In the event of an audit, an accountant can take the burden off your shoulders and guide you through the process as painlessly as possible. Having an accountant who knows your books well, and having an accounting system in place that was set up to conform to accounting standards will put you ahead of the curve if the IRS comes knocking. Staying in compliance when tax rules change many times per year can be challenging, especially at the state level. An accountant who keeps your business in compliance can save you expensive fines and penalties, as well as hours of labor.
Local regulations, tax rules, state and federal laws that relate to your -day to-day operations, all change often. Knowing the financial and tax implications of all these changes is part of the business of accounting. And it’s another area where a good accountant can save you hours of reading and searching for the best, most up-to-date information. Consult regularly with an accountant and you’ll be able to spend those valuable hours running your business instead.
It’s the irony of the business world, but it happens every day: too much growth too quickly can kill a business. Planning ahead means having a clear picture of the implications of any changes you may make, like additions to your product line or expansion to new locations. This type of planning, using information accountants can provide easily, is the only way to manage growth successfully and prevent disaster. Don’t let a banner year be your last year in business due to lack of foresight. Even if your style is to make quick decisions and take the big risks, having an accountant on your team will be a huge asset – not to keep you from moving forward, but to help you work out the best path to greatest profitability.
Having an accountant on your team will be a huge asset and can give your business a huge edge.
Paying employees properly
One area where busy business owners can often benefit from the experience of an accountant is in the area of payroll. Accountants often see the same mistakes when it comes to paying employees correctly, such as assuming overtime pay won't be required. A good accountant knows what to look out for and will advise you on your specific situation. Making sure each worker is properly classified, as well as knowing when an exemption applies and when it does not, are examples of the expertise you can rely on when it comes to payroll challenges.
Avoiding costly mistakes
Some of the past legends of business seemed to have a magic-like power to see into the future and position themselves and their businesses accordingly. It would be great to be a business owner with a crystal ball, but the next best thing is to know your numbers inside and out as you navigate your business forward. Hiring an accountant is the best way to ensure you’ll have the information you need. Mistakes like non-compliance, missed due dates, and cash shortfalls are much less likely to be in your future when you hire the help and expertise you need.
The right accountant and an orderly accounting system will save you time and money in the long run, allow you to put your energy and focus on what you do best, and position your business for maximum profitability and success.
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