Being a small business owner can often feel like you’re spinning multiple plates as you turn your hand to different aspects of the business.
When it comes to accounting, it is vitally important that you get it right. That’s why so many business owners choose to hire the services of a qualified accountant rather than go it alone.
However, there is lots of advice available pertaining to how to run your own accounts, and many still decide this is the best course for their business. Below, we highlight some of the benefits to each method, allowing you to make a more informed decision for your business.
What is the role of an accountant?
Effectively managing your finances is imperative to the success of any good business. Not only will an accountant deal with the accuracy of financial documents, ensuring a company doesn’t breach any laws or regulations, they also forecast financial futures and offer guidance after careful analysis.
An accountant will also deal with a company’s taxes, more specifically ensuring tax returns are completed and filed correctly to avoid any financial penalties. On top of this, they will fulfill an advisory role, offering expert advice on ways to enhance revenue and maximize profit.
Doing it yourself
If you’re committed to being in charge of your own accounts, there are a few things you should already be doing. It is crucial to start recording all expenses from the very beginning. This can include anything from payroll to travel expenses. When it comes to filling out your tax return, you will need to have an extensive list of your expenses to hand in to ensure you complete the form correctly. You will also need to make yourself aware of all rules and regulations relevant to your business, such as ASC 842 lease accounting compliance if you deal with leased equipment for example.
Fortunately for small business owners today, there is an abundance of information and software available to help when it comes to ‘accounting’ for your business. As your business grows and finances become more complex, you might choose to upskill and undertake an online accounting course.
When it comes to finding the right software for your business, it is important to familiarize yourself with the differences between each of them. For instance, if you’re just looking to invoice customers, Wave offers a free service allowing you to do this. If your business deals with leased equipment, software such as GASB 87 lease accounting may the right choice. For a more comprehensive service, you may investigate alternative paid options such as QuickBooks or Xero.
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Hiring a professional
There are many pros to take into account when considering whether to employ the services of a professional accountant. Firstly, and perhaps most importantly, an accountant will be able to keep you on the right side of the law. There can be many pitfalls to managing accounts, in particular when it comes to tax returns, but a qualified accountant will have the know-how to avoid incurring any financial or legal punishments.
Secondly, it’s hard to stay up to date with the changing rules and regulations of accounting. For example, if your business relies on leasing assets, it has to be familiarized with all lease accounting compliance rules, among many others. If you are not a professional accountant, you will never be up to date with the changing regulatory landscape.
Two things any business owner wants more of our time and money. An accountant can offer you both. Yes, they don’t come cheap, with small companies paying between $1,000 and $5,000 per year for their services. However, an accountant will be able to take on lots of the work that was previously done by you or your employees, meaning your business can become more productive as a whole.
Furthermore, when it comes to self-assessment tax returns, a professional will help you to retain more of your profits, due to knowledge of relevant tax incentives and reliefs. In the longer term, an accountant will give you a more accurate picture of your company’s financial future, allowing you to budget more accurately and further enhance profits.
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To sum up
There is no hard and fast rule to say every business must employ a bookkeeper or qualified accountant. In fact, you will soon find, particularly with relatively small businesses, that many of the responsibilities can be carried out autonomously.
There is a middle ground between taking sole responsibility for your accounts and handing this off to an accountant. As businesses start to grow, it’s not uncommon for owners to use accountants for some elements of their finances, without relinquishing complete control. For example, you might be comfortable managing your bookkeeping, but need professional assistance when it comes to tax returns.
As many large business owners will testify, once you develop a professional relationship with your accountant, you will likely rely on them more and more as you continue to grow.