Sooner or later, your business will need to take that all-important step from financial self-management to bringing in some expert help. Many business owners choose to do their own accounts for as long as possible, and this can work out just fine. However, poorly managed finances can lead to some nasty surprises, so it’s important to not put off getting the help of a professional accountant when needed. You know your business better than anyone, so you’ll most likely be the first to know that you need some expert financial help, but in the event that you are unsure whether it is the right step to take, here are four clear cut signs that your small business needs an accountant.
Finances Are Consuming Your Time
Dealing with finances involves much more than just filling out a tax return once a year. It’s a constant process of recording figures and evidence that allows for both accurate tax forms and a broad overlook of the business’s financial health. The problem here is that the more clients and transactions you make, the more time it takes to record everything. Every moment spent dealing with finances is a moment that could be spent on a core element of your business. Having an accountant manage your finances means that you free up a lot of time, giving you a competitive edge in the constantly moving business world.
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You Don’t Understand the Jargon (Or What You Are Doing)
Bookkeeping, audits, expenses and tax deductibles, exemptions, capital, credit and more. There are so many words used in the accounting world that are loaded with important information, yet if you don’t have the time learn about what they mean (let alone how that meaning might change with legal shifts) life can become very confusing very quickly. If you struggle to decipher the cryptic language of finances, it is vital you seek help from an accountant, as misunderstandings and an inability to correctly manage finances can easily lead to mistakes.
Your Business is Expanding Rapidly
As your business begins to expand, you’ll see a whole heap of new responsibilities and tasks that have to be dealt with. While more business might sound attractive, it can quickly become nearly impossible to manage the financial side of the growth on your own. As a result, you can lose track of bookkeeping and even become complacent with things like proof of transactions as you are too busy juggling new business demands. You may well have been coping well with your finances prior to expansion, but now the increased pressure puts you at risk of making mistakes. An accountant can relieve these pressures, either short-term, while you get accustomed to your new responsibilities, or long-term if the workload is too much.
You Are Facing an Audit
An audit without an accountant is a stressful experience. In such an event, the government has experts crawl over all your tax return details, looking for discrepancies that could be the result of fraud. Now, you may be a perfectly upstanding citizen, with no intention of paying anything other than the full amount of tax required by law, yet that doesn’t mean you can’t make mistakes. Small mathematical errors or little forgotten pieces of information can add up in a big way, incurring serious financial penalties and even legal action against you and your business. An accountant, however, can do two things to help alleviate the problems that may arise out of this situation. First, they can offer counsel in the event such problems might occur, using their prior experience of working with the IRS to help resolve the issues with minimal damage to your business. Secondly, they can assist in filing tax returns in the first place, ensuring they go off complete and are able to hold up against the most stringent of audits.
Author: Russell Smith, director of the Russell Smith Chartered Accountants, is an expert not only in finance, but in operating a small business, having built his from the ground up over the past decade.