WHEN SHOULD I HIRE AN ACCOUNTANT?
Creating a business gives you the freedom to do what you've always wanted, whether you're spotting untapped markets or finding a way to monetise your craft.
In order to make this work, you will also have to properly manage your finances.
Maintaining your business's finances is something you can learn on your own, but it takes up a lot of time, attention, and energy.
The result can be bad decisions, burnout, and even the loss of your spark.
This problem has a simple solution. An accountant is necessary.
To help you make an informed decision when looking for support, we cover what you need to know about hiring an accountant and when to do it.
Should I hire an accountant?
The temptation to do everything yourself can be strong when you own a business. This approach may not be the best for managing your business finances.
A good accountant will be able to tell you how much you'll benefit from his or her services based on:
Your business's mission
Your role preference
Knowledge and skills you possess
Your company's size
Work that needs to be done.
Consider your business as a set of scales if the cost of hiring an accountant is holding you back.
You can see the cost of doing your own accounting work on the left side.
Calculate how many hours you spend doing financial tasks each month.
Calculate your monthly accounting expenses by converting your earnings into an hourly wage and multiplying them.
On the right side, you can see how much it costs to hire an accountant.
Find out what the average hourly rate for accountants in your area is to calculate this.
The estimate is conservative, since an accountant will accomplish more (to a higher standard) in the same number of hours. It is also common for them not to charge by the hour.
In financial terms, it makes sense to hire an accountant if the scales tip to the left.
However, there is more to consider than that:
As a result, you'll have more time to focus on higher value tasks, such as creating growth strategies, managing your team, and making important decisions.
You will make more mistakes than an accountant.
Accounting experts understand financial regulations and will ensure you're doing everything legally correct.
The advice and insights you'll gain will go beyond your ongoing financial management.
When you focus on growing your business, you'll enjoy your role more.
There's a good chance you'll find yourself in this situation. However, there can be times when the scale tips in the right direction.
Most likely, you will only need to keep track of a small number of financial transactions and only analyze a small amount of financial data if your business is small.
By hiring an accountant, you would still receive the benefits listed above, but at a cost.
Just remember to keep those scales in mind if you decide to go it alone.
You'll eventually reach a tipping point where hiring help will outweigh the need for your time and attention as your business grows.
What is the role of an accountant?
Let's say you know you need an accountant. You should clarify what exactly they can help you with before you proceed.
Accountants offer the following services:
Make sure that all of your financial transactions and accounts are audited
Bookkeeping (also available as a specific position)
Budget forecasts should be prepared.
Report financial information on a regular basis
Submit your tax returns and calculate your taxes
Pay your bills and collect your receivables. Reconcile your accounts payables and receivables.
Providing financial advice and analyzing your business plan
Solve insolvency problems
Comply with financial regulations and policies
Free up your time by implementing systems and software
Learn how to spot trends and patterns in your finances so you can make better decisions
Ensure cash flow is protected and advise on how to manage it.
Managing taxes and crunching numbers aren't the only elements (although they're essential).
You can extract value from your financial data with the help of more and more accountants who are becoming business advisers.
Your accountant's help when you need it
By putting your business finances in capable hands, you'll be able to spend more time doing what you love. Zyla Accountants communicate by email, WhatsApp, Slack and phone, all based on our clients' preferences. Some accountants prefer a meeting or a call.
The accountant you initially hired may not always be able to provide you with all the services you need.
Listed below are six situations in which you should seek the advice of your accountant:
1. Investing in franchises
The challenges faced by franchise owners are different from those faced by regular business owners.
Marketing, sales, and supply are more supported, but overheads are higher and you have less money freedom.
Specifics will be agreed upon as part of a contract with the parent franchise.
You can talk to an accountant about these terms and the implications of any decision you make. In addition to providing continuous advice on running this type of business, they will also help you learn more about the company's finances.
2. Business acquisition: Buying or selling a company
You should consult your accountant when buying or acquiring a business. A person should investigate the company's accounts and raise any red flags.
The company's debt, assets, and what exactly you're paying for will be revealed to them. Additionally, they can help you negotiate.
In the event that you sell your business, the buyer will be interested in doing these same due diligence. For this reason, you'll need an accountant.
You can also use the records you keep to present your business in the best possible light to potential buyers.
During the sales process, they'll work with the buying company's accountant to ensure that everything is legally in order, and help you structure the deal so that you get the most money after taxes as possible.
3. Experiencing rapid growth
Over time, growth occurs, but it is not always gradual.
There might be a sudden spike in your business such as securing a big project, recruiting a new team, or having a product go viral on social media.
It is important to seek the guidance of your accountant here so that you can make sound financial decisions. A new office, purchasing materials in bulk, or paying more salaries will also be eased by them.
By analysing the new financial picture of your business, you are better able to focus on growth and make informed decisions.
4. Dealing with legal issues
The best way to comply with regulations is to get expert guidance. There will be many times when you'll have to take legal action as a business owner.
The most obvious example is paying your taxes, but other responsibilities include keeping records, meeting industry regulations, allocating stock, and handling payroll.
All of these areas will be covered by your accountant, so you'll know everything is in order.
The result is peace of mind, as well as a reduced likelihood of costly fines or legal action.
5. Audit preparation
When it comes to legal stuff, having your accountant on hand is a great idea.
A tax investigation will be facilitated by them if this occurs. Someone who knows your business well is best suited to do this.
Your accountant can not only help you prepare for an audit, but also ensure that you follow all legal requirements afterward.
6. Borrowing money for your business or applying for an overdraft
In order to borrow money, you'll have to convince a bank (or other lender) that you can pay it back.
Adding compelling facts and figures to your application can be done by your accountant.
Also, if you aren't sure, they can advise you on which funding source is best for your needs and find a deal that fits your budget.
WRAPPING UP
Small businesses do not always need accountants. Most would benefit greatly from one, however.
You run the risk of falling out of love with your business if you spend too much time on financial tasks.
Leaving your finances to more capable hands will allow you to focus on what got you started.
As a result, it is more cost-effective than handling it yourself, and you can rest assured that you are meeting your legal obligations.
You can take another look at the scales if you're still unsure whether to hire an accountant.
Have you reached the tipping point yet? Contact Zyla Accountants today, our friendly team will be able to support you and your requirements every step of the way.