As a small-business owner, you wear all the hats, make all of the decisions, bear the brunt of the risk and reap the rewards of success. One important decision you will need to make is to know when to seek help and advice. There are various stages to the growth of your business and a good accountant can help guide you through its life cycle. Accountants can provide much more than just your payroll and tax return compliance.
A good rule of thumb is to outsource what you don’t enjoy doing, don’t have the time for, lack the knowledge about or what someone else can simply do better. With this in mind, let’s explore some of the circumstances under which you should consider hiring an accountant for your small business.
- You Don’t Know Accounting
Sure, software programs like QuickBooks can help you to manage your money even if you don’t have much financial knowledge or experience. But as your company grows, you may not have the time or expertise to do yourself justice. If financial statements confuse you, you have a hard time producing reports, or accounting terms seem like Latin to you, it may be time to seek the services of a good accountant. An accountant who can talk to you in plain English, manage you through your finances and act as a sounding board, can be an invaluable asset who will keep you on track.
- Bookkeeping Prevents You From Growing and Managing Your Business
Even if you have a working knowledge of accounting, keeping your books is time consuming and will eventually prevent you from doing what you do well – running your business by performing tasks such as acquiring new clients, exploring new markets, troubleshooting customer issues or addressing employee management and staffing problems. By retaining an accountant, you can focus on winning more business, making innovations to your product or service lines and developing and managing your team
- Your Investors or Lenders Require Financial Statements
One of the most important services that an accountant can provide is financial statement preparation. There are various levels of this service namely – a preparation, a compilation, a review and an audit. Your investors or lenders will determine the requisite level of service. An accountant issued financial statement, together with his report thereon are detailed, thorough and accurate and provide a third party professional presentation of the financial position and results of your business.
- You Don’t Know Taxes
Ignorance of the law is no excuse. The US Tax Code (not to mention the various state regulations to which your business may be subject) is complicated. If you fail to pay the correct taxes for your business type and industry, you will sure to be hit with penalties and interest. An accountant can evaluate your tax responsibilities early, keep you in tax compliance, make an audit less likely and, in the event of one, manage you through the process. Of even greater importance, is his ability to identify tax credits and deductions to which your business is entitled, prepare and monitor your tax projections and to make tax season less daunting for you.
- You Need a Business Plan
If you are raising capital, seeking financing such as an SBA loan or simply have partners or others involved in your business, you will most likely be required to develop a business plan. If you involve an accountant in the process, they will be able to provide the requisite financial projections and reports as well as act as a vital member of a team that most likely includes your attorney as well as others. This will ensure that you create a successful business plan that is realistic and professional while grooming a trusted professional that has obtained intimate knowledge of your business.
- You are Determining Whether to Buy a Business or to Take On a Franchise
Some entrepreneurs don’t have the stomach to start a new business from scratch, but instead seek an established turn-key or franchise. That is not a bad thing unless you try to do it without an accountant. They will be able to look under the hood and find any skeletons that exist by examining the company’s books to determine whether its assets are fully owned, leased or still partially unpaid or if the business has any secured or unsecured outstanding debt. He will also be able to consult with your attorney to determine whether to structure the transaction as either a stock or asset sale to minimize any tax impact to you. Working together, your accountant and lawyer should discover all facts and circumstances pertinent to your target business.
A franchise is a popular way to start up a business in industries such as auto detailing, tire stores, soft drink bottlers, cosmetics supply and fast-food restaurants. With a franchise, you can still be your own boss, but in return for a share of the revenue or business equity, the franchise company will support you with brand marketing, sales, product supply and management expertise.
A franchise can take some of the risk out of starting a new business in exchange for some loss of commercial freedom and increased overhead as some of your income will go to the franchisor in the form of franchise fees. An accountant can assist by reviewing the franchise contract to determine fees and percentages charged, estimate your income after those costs have been deducted and whether it’s worth taking on the franchise.
- You Are Considering Your Business Structure
There are various types of legal business formations such as proprietorships, limited liability companies and corporations. In addition, there are tax structures and elections such as S corporations and disregarded entities that determine how a legal business formation is taxed. You should carefully consider each type before deciding which one best suits your new business.
You may also be considering a change in business structure of an existing company that may involve specific tax issues. An accountant can explain the legal business structures available and the tax aspects of each to help you make the right decision and to process any required tax elections.
If you have questions, please contact Victor C. Belgiorno at 516-861-3704 or .