As you continue with your business, you may have thought of asking, “Should I hire an accountant”?It is quite helpful to understand when it is appropriate to involve an accountant to avoid additional costs and frustration. In this blog post, we will describe the options for engaging an accountant at different stages of business: setting up a business and developing and implementing growth strategies as well as preparing for external transactions.
Let’s explore the pros of professional accounting services in your practice that include business automation, effective cash flow management, handling of tax issues and compliance, and cloud transition among others.
Content Outline
The Right Time To Hire An Accountant
One of the most crucial strategic decisions for any small business is identifying a suitable time to recruit an accountant. The experience of an accountant may be helpful at the different stages of the company’s development such as at the beginning of its functioning, after the company experienced the first financial concerns, or before making vital financial decisions. For a small business, recognizing such factors can make all the difference in the future of the enterprise, therefore educating yourself on specific crucial moments is an essential step.
In the early stages of a business, the accountant can provide general advice, estimates, revenues, and sources of funds among others. As the business grows, its financial requirements become more complicated, and dealing with income and expenses will require the services of an accountant. Also, regarding important financial decisions, it is useful to consult an accountant for an initial review and recommendations.
At The Beginning Stage Of Your Business
Establishing a new venture is always exciting and, at the same time, very daunting. It is advisable to engage the services of an accountant from the time that you establish the business since the expert can assist in handling the legal requirements, estimating revenues, or seeking funds. Accountant’s financial reports are all important in use and therefore they should be accurate and timely as they provide key information on business for decisions making by investors.
A migration from a single-entry system to a double-entry system can enhance the credibility of your accounts. Selecting the correct legal business entering strategy like a limited liability company can save you from losing your assets if the business faces some financial problems. An accountant will also work through this process with you and set your business on the right footing.
When Financial Management Become Complicated
Initially, a small business is registered and entails simple or few financial structures, but as time goes on, the complexity of the business translates to the complexity of its financial structures. This can be expressed in a decrease in cash and profit, changes in client’s behavior, problems in repayments, and the need for new instruments and assistance. The essence of business finance problem solving, planning and advice, financial data interpretation into usable information, KPI analysis, and outstanding strategic input is where an accountant can be incredibly helpful in managing to grow your business’s financial environment.
It goes without saying that with the extension of your business and its finances, compliance with applicable rules and regulations is crucial. The following is how Accountants can help with this;
- Determining the relevant laws and regulations
- Keeping updated on any other new regulations
- Putting internal procedures and controls in place
- Working along with other departments
- Conducting proactive business compliance by continuing the professional development of your business.
Before the Major Financial Choices
Some of the biggest economic challenges that any businessman can face are the important financial decisions concerning the business. Seeking advice from an accountant before making such decisions is very vital to make the right decision. For example, before going into a business, an accountant can determine whether the firm’s assets are fully owned, on a lease, or partly paid, or if the firm has any liabilities.
It is important to have an audit trail where the transaction has to be recorded to allow not only you but also the authorities concerned to keep track of the authorizations of that particular transaction over some time. Audit insurance was put in place to cover the cost of fees in response to a tax department official inquiry, review, investigation, or audit. These measures can be useful in the case where large financial operations are planned or in the process of implementation.
Improving Efficiency With the Assistance of Professional Accounting Services
Accounting services from a professional can be useful in minimizing effort for small businesses that wish to run more efficiently. From better working and effective management of cash flows, and understanding of the tax laws and rules, to the adoption of cloud technology in business, accounting for small businesses will be great benefits.
They are indispensable when it comes to handling your financial information to present to the authorities, shareholders, or owners. Also, small business tax accountants perform tasks like business accounts, tax compliance management, tax returns, financial statements, and business activity statement preparation.
Now, let’s look at how these services can be helpful for your business.
Optimising Cash Flow Management
Keeping cash flow positive is critical for any organization to thrive. Precise cash flow forecasting is useful in identifying any gaps and determining whether borrowing is required. To maximize cash flow, an accountant can help by:
- Carrying out analysis and projections of the cash position
- Identifying the avoidable costs and avoiding them.
- Ensuring your tax is properly planned
- Establish guidelines for managing working capital.
- Creating strategies on how to improve cash receipts and payment management
- Advising based on evaluation outcomes and expert information on finance
A cash flow forecast is normally prepared in the format of a cash flow sheet or a model that shows the expected income or earnings and expenditure or costs of the business for a given period say monthly. It includes information such as:
- Estimated financial inflows and outflows
- The opening and closing cash balances
- Receipts and payments
- Expenditures
- Net cash flows
- Ending balances
The forecast is used in business activities where it is an estimate depending on previous performance to help a business forecast its future cash flow.
Read more: Streamlining Cash Flow: Xero’s Receivables & Payables
Managing Taxes and its Compliance
Taxes are complex and complying with the set laws is always challenging, especially for small business owners. An accountant can assist in handling tax exemptions since he or she will need to consult on the various legalities that concern the business. Some of the typical challenges that businesses especially the small ones face in their quest to meet their tax compliance are:
- improper record keeping
- lack of complete tax invoices
- misrepresenting workers as subcontractors
- ignoring purchases made via a cash register
- failing to understand tax responsibilities, including payroll, income, and GST taxes.
The other crucial responsibility that an accountant has to ensure is the aspect of legality in terms of tax compliance. They are responsible for:
- Proper compounding and submission of tax returns for individuals or companies
- Continuing to update the current level of taxation regulation
- Helping the clients to be knowledgeable of the taxes and regulations
You will never get your business on the wrong side of the law when you engage an accountant since they will help you adhere to all the laws that govern the issue of money in your enterprise while eliminating the possibility of you making financial mistakes.
Related article: Streamline Business Tax Management in Malaysia – Xero Accounting Software
Implementing Cloud-Based Accounting Software
Adopting cloud-based accounting software is one of the most powerful ways to redesign your business’s financial processes. If an accountant can get involved when it comes to the implementation of this software, then it can positively enhance the handling of the company’s financial transactions. Web-based system accounting is through the use of the Internet which enables users to access and monitor their financial data, perform accounting processes, and share data with other people in different locations.
Here are the steps that are usually included when implementing cloud-based accounting software :
- Evaluation of the existing accounting system
- Developing an implementation plan as a way of expanding the above-stated comprehensive plan.
- Choosing the right software
- Putting the correct information regarding the business
- Assembling the company’s account structure and departments
- Migrating and porting data into the new software.
- Demonstrating to the employees the proper way of using the software
- Ensuring responsibility for the maintenance of the product.
Implementing an accounting software system on a cloud basis benefits the organization with efficiency and accuracy.
The Expansion Stage: Elevating Your Business with
Typically, these are changes in the internal and external environment where the business operates as its size and structure develop. Thus, professional accounting services in this growth phase will assist you in managing your growth and expanding appropriately. As the company begins to grow, some of the other roles that an accountant can help include opening of different stores, recruiting more employees, and providing services to more customers.
In a further section, we will look at the role of an accountant during such a growth stage for your business.
Organizing the growing payroll needs
The expansion of your business means that your requirements for the payroll are also going to increase. An accountant is in a position to also manage payroll for your employees which includes the following tasks:
- Activity involving calculating the amount to be paid to the employees and the amount to be subtracted from the pay such as taxes and other benefits.
- Securing the timely and proper allocation of benefits to employees
- Assisting your company in adhering to relevant requirements
- Creating an atmosphere of positivity at work.
Besides, accountants can provide quantitative assessments and recommendations on how to effectively design and operate employee benefit programs to the best fit of your business’s financial capabilities and visions. As you do this, your business will be in a good position to manage raised payroll demands and expand as well.
Optimize People, Payroll, and Productivity.
Business & Expansion Advisory
When you are at the expansion stage of business, business consulting is an essential element to take into consideration. Here are the issues an accountant can assist you with:
- Identifying growth opportunities
- Offering analytical information in the financial decisions for business growth
- Counseling on how to get a loan or an investment for the business.
- Ensuring auditing accuracy
- Managing increased payroll requirements
Growth opportunities may include:
- Efficient management of the company business through professional accounting services
- Transitioning and ownership changes
- Flexible consultation to meet your company’s needs
This means that by consulting an accountant, you make the right decision with a view of transforming your business.
Managing Financial Relations with External Partners
It is always challenging and exciting to engage in financial transactions with other entities. Some of the interactions that require assistance from an accountant include business funding like a business loan or an investment and accuracy during audits. Innovation in these interactions requires effective management of the financial affairs of your company.
Accountants are useful in helping to disseminate the financial records of your company, prepare financial statements, produce financial tables and charts, negotiate with other accountants of prospective buyers during due diligence, and arrange the financial affairs in a way that will yield the greatest return from the sale of the business.
Getting a Business Loan or Investment
Whether you need funding for expansion, or for working capital needs, obtaining a business loan or capital is a major milestone in business. An accountant can assist in increasing the probability of receiving a loan by:
- Presenting accurate financial information
- Evaluating your financial requirements
- Evaluating repayment periods and interest rates
- Based on business credit checks and cash flow provisions
The consultation of an accountant to advise on the loan application process and in terms of financial forecasting to give your loan request a better chance of approval and availability of financing for the growth of your business.
Ensuring Accuracy During Audits
Business owners experience anxiety and stress anytime they undergo audits. It is advisable to engage an accountant during an audit to get assurance of accuracy and to also help the business in dealing with the complexities of the audit exercise. For purposes of accuracy during the audits, an accountant:
- Select a suitable accounting technique
- Keeps thorough records
- Review financial accounts on a regular basis
- Verifies numbers
- Respects auditing procedures
- Ensures precise financial data
Having an accountant during an audit is a wise decision since it enables you to avoid costly mistakes and ensure your business complies with all the codes.
Transitions and Ownership Changes
The transition period and change of ownership is a delicate and vulnerable time for any business owner and manager. An accountant could be especially valuable for such changes; for example, when selling a company or evaluating acquisitions, an accountant can assist as a knowledgeable financial advisor.
In the event of selling a business or buying another, an accountant assists in presenting the financial documents, reports, and accounts, making them tax-compliant and beneficial for the process. We will then examine how an accountant can help in the organization in dealing with such changeovers and ownership transfers.
Enabling the Sale of Your Business
The sale of a business can be complex and may involve an emotional process. An accountant can help prepare financial records, statements, and charts to optimize the position for taxation based on the best result. They also can give guidance on the deal in terms of structure and financial impact for the business, helping you in decisions for the sale of the business.
Hiring an accountant when selling a business makes sure that your business’s financial records and returns are credible and professionally presented to potential buyers.
Evaluating Transactions Through A Financial Perspective
The purchase of a new business endeavor can be a great way to expand one’s enterprise. Consulting an accountant to evaluate acquisitions would help you rule out squeezed credit balances and enable a smooth financial integration. Based on financial records, an accountant is capable of analyzing the financial capacity of the company in order to acquire:
- Financial records
- Lawful agreements
- Income tax forms
- Partnerships
- Additional relevant documentation
This ensures that the business has been evaluated in all the aspects needed so that a conclusion can be made.
Financial input from an accountant when engaging in an acquisition ensures that the proper decision-making process is made to enhance the business transaction’s success.
Personalized Consultation: Adjusting Services to Meet Your Requirement
It will be impossible to have two similar businesses or two similar projects within one business. Expert advice and recommendations with matters that need an understanding of the specific business in consultation with a small business accountant involves issues like shifting from sole trading to a limited liability partner or even developing unique business plans.
An accountant is especially useful to help you navigate things that are legal as well as financial in your business besides offering advice on how to register for GST and the change of structure of your business. Now let us explore in detail how personalized consultation impacts your business and brings profit to it.
From Sole Trader to Limited Liability Partnerships
The change of business entity from a sole trader to a limited liability partnership can be advantageous in many ways such as:
- Joint responsibility
- Opportunities for investments
- Limited personal responsibility
- Tax optimization
- Enhanced reliability and credibility
This has legal implications that an accountant can explain to you and some financial implications that an accountant can be of great help in making sure that you are in line with the law in regards to this move as well as being able to advise on how to protect your assets.
As your business grows you may need an accountant to assist you with changes to incorporate new legal business structures which would assist your business in being ready for growth, profitable, healthy, and legal.
Personal Financial Plans For Your Organization
Having financial strategies created specifically for your company with the help of an accountant will help with development and accomplishments as well as more careful spending. An accountant can help you establish a practical approach to how to approach the situation due to the preparation of a balanced and coherent plan in line with the goals and objectives of the business.
When you have all of your financial calculations worked out individually, you are ready to face all the other difficulties and opportunities that are in store for you in the chosen business, while the business plan will remain true to the plan.
Summary
To sum up, it is very important to identify the signs that may indicate when it is the right time to hire an accountant that would contribute to the success of your business. Even in matters as straightforward as establishing your new business, acquiring new equipment, increasing your production rates, and managing any business interactions involving money, an accountant can prove to be an invaluable resource. They incorporate more professional accounting help to enhance the business’s general management, effective coordination of the cash flow, managing the tax aspects and compliance, and adopting cloud accounting systems to propel the business forward.
So always bear in mind that the right accountant is your powerful tool for your business vision and goal. Therefore, do not waste any more time; seek professional assistance from a well-qualified accountant to release your business’s full potential.
In case you have any doubts about taxes or need professional help with business tax or taxes in financial planning, our advisors at FastLane can get rid of time and extra charges. At FastLane, we provide accounting solutions to help you have an efficient and effective tax structure.
Frequently Answered Questions
One of the reasons that makes it necessary to hire an accountant is if one has little time, several income sources, or maybe requires a helping hand in tax reductions. They can also help properly monitor finances and analyze important business performance parameters.
An accountant makes the business easy for you puts you in control of financials and keeps telling you your scorecard in business. Consequently, it is necessary to employ an accountant.
A small business owner can expect to gain insight from an accountant and have certain tasks done which will enable the owner to manage his or her business smoothly. It can also be able to come up with some tricky ways of opening up some hard-earned cash or increasing income.
Combined with applications in the cloud provides many advantages that relate to cooperation, reduction of costs, enhanced accessibility, integration, and real-time additions, which makes accounting more efficient.
An accountant is useful in sourcing a business loan or capital since he or she is responsible for preparing financial statements, assessing the business needs, assessing the repayment terms to the interest rates, and the credit and cash facilities.
