9 Important Benefits Accountants for Small Business Provide
Small business owners thinking of hiring an accountant often wonder the kind of value they'll add. If you're on the fence of bringing on an accountant, click here to learn about benefits accountants for small business can bring to your organization!
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When you started your business, you likely wore every single hat from customer service to bookkeeper. It's the plights of the entrepreneur.
Unfortunately, this leads many business owners to keep doing everything even when it's not necessary or prudent. A common example of this is accounting duties.
Accounting is a skill, and it's usually best to leave to professionals. They know what they're doing. You don't do your own dental work, after all.
Of course, using accountants for small business offers business owners a wide range of benefits. Let's dig a little deeper and look at some benefits a small business account can offer you.
1. Maintain Focus
Every small business excels at a certain set of tasks. These are your core competencies.
A restaurant, for example, excels at preparing and serving food to customers. A photographer excels at capturing images in the best possible way.
Unless your business is accounting, though, accounting probably isn't a core competency. That means that things like Form 941 probably exist outside of your knowledge base.
Hiring an accountant, or outsourcing any task really, lets you focus on core business tasks.
2. Advise on Strategy
Granted, an accountant likely isn't an expert in your industry. They do, however, understand healthy finances.
They can help you develop a good strategy for when you should invest profit back into the business. They can also provide advice about how much of your total revenue should go where in the business.
Just as importantly, they can help you define specific goals and metrics to track over time.
3. Help You Avoid Tax Mistakes
Tax codes at the state and federal level change on a regular basis. Exemptions expire and new tax credits appear. How closely do you follow these changes?
If you live like most small business owners, the answer is some variation on, "The tax code changed?"
Unlike most small business owners, accountants must stay on top of these changes. In fact, accountants in most states must meet continuing education requirements as part of keeping their license.
Professional accounting organizations often impose their own continuing ed criteria for membership.
These requirements help ensure that your accountant is up to speed on tax code changes. It also reduces the odds of mistakes when filing.
4. Save Freelancers' Sanity
Freelance writers, graphic artists, and other contractors often get a Form 1099 from businesses. What is not always clear to new freelancers is what they should do with that 1099.
They know they must pay taxes on that income, but not necessary when, where or how. When they fill out their end of the year 1040, does the income go on the first page, the Schedule C, or both?
This is all standard fare for accountants. They know both where the information goes and why it goes there. Your taxes get done right and your sanity is preserved.
5. Offer Perspective
Like it or not, you'll get bogged down in the daily minutia of your business.
There's a pile of boxed up orders that need shipping labels. Customers call about services. You must wrangle employee schedules.
That's all before you even think about vendor meetings, supply chains, and software upgrades. Speaking of upgrades, just how old are your servers?
All of those details make it difficult for you to step back and get a clear view of the business. Unless your business does very well indeed, your accountant only sees your books periodically.
That puts her in the ideal place to offer perspective about your finances and overall business health.
6. Mind Your Cash Flow
Otherwise solid businesses can get driven under by cash flow problems. No matter how loyal your employees, no one will stick around if paychecks start bouncing. Vendors take a dim view of unpaid bills as well.
Many businesses experience cash flow problems during their slow season. If you work with a good business accountant over time, they can help you develop plans for managing that season.
For example, they'll help you figure out cost projections. That lets you set the minimum cash reserve you need to survive the slow season.
7. Deal with Outstanding Invoices
Speaking of cash flow problems, overdue invoices create another source of financial woe for businesses. Worse still, those invoices often get lost in the shuffle.
Some accountants will take on the task of dealing with unpaid invoices. They can automate reminder messages for invoices over a certain age.
They can even help you select an accounts receivable financing company that will buy up those unpaid invoices at a discount.
8. Debt Management
Most businesses take on debt periodically, especially in growth periods. Of course, some debt only looks good on the surface. Your accountant can help you pick the financing option that best serves your business while incurring the least interest.
They can also advise you on when it makes sense to pay down debt early.
9. Add Credibility
Say that you see an opportunity for expansion by buying another business. The other business owner seems interested. So, you ask about their financial projections, current debt, and so on.
Which of the following answers sounds better to you?
A) "Yeah, I've got all that on my computer."
B) "I'll ask my accountant to put that together for you."
Choice B sounds better, right? When financial information comes from an accountant, it's more credible.
The same thing holds true when banks or potential business partners ask about your financial situation.
Parting Thoughts on Benefits Accountants for Small Business Provide
The benefits that accountants for small business provide are many.
Some of those benefits are the ones you expect, such as properly filed taxes and advice on cash flow.
Some of the benefits don't look obvious on the surface, such as credibility, offering perspective, and letting you maintain focus.
A business accountant is, in many ways, someone who provides a financial sanity check. They help keep your business grounded in the practical reality.
BRW Tax & Accounting offers a range of accounting services to Colorado businesses. Some of our services include tax prep and filing, business coaching, and payroll services. For more information, please contact us today.