When should I hire an accountant for my small business?
October 21, 2016
If you are starting a small business, chances are you’re wondering if you really need to engage an accountant just yet – perhaps you are trying to save on startup costs, or you think that the business is too small to warrant having an accountant. But the benefits of hiring an accountant in the early stages should not be underestimated – and in most cases the benefits will far outweigh the costs and help you get where you want to be faster and with less risk. Here are a few reasons why hiring an accountant for your new small business should be at the top of your list:
Your accountant can provide valuable data when formulating a business plan:
Developing a sound and thorough business plan before take-off can help you avoid costly mistakes when starting a new venture. During the exciting, startup-phase business owners can have the tendency to be overly optimistic. There is a real potential for missing critical details – and these details that can have a significant impact on the viability of the business. By engaging an accountant when creating your business plan you benefit from having a trained eye looking objectively at your new venture. Your accountant will be able to set realistic expectations and provide guidance on how to avoid any pitfalls. This advice is especially valuable in relation to the potential pitfalls you didn’t see coming. Remember – you don’t know what you don’t know!
Your accountant can help increase your chances of getting a business loan:
Your accountant will be able to use software to create realistic and detailed financial projections to include in your business plan. Having a comprehensive and realistic business plan could increase your chances of success when seeking to obtain finance. Banks will often look more favorably upon businesses that have engaged an accountant in the planning stages, and your accountant can help you present your information in a way that is appealing to banks and financiers.
Start off on the right foot when setting up your accounting and payroll system:
Setting up your systems correctly from the start can save you time, money and headaches down the track. By selecting appropriate software and having the correct systems in place, you avoid the temptation to “do it now and fix it later”. Having your books in a mess can be annoying to fix down the track, can result in lost tax deductions, and can altogether prevent you from having a clear snapshot of how your business is travelling financially throughout the year. This lack of clarity makes it a lot harder to make informed business decisions regarding cash flow, purchases, hiring and business growth, and it impedes your ability to avoid unnecessary tax burdens and remain compliant with tax obligations such as GST reporting. It’s worth putting in a little extra effort at the start to set up your business with the right accounting software and payroll systems.
Your Accountant can help you choose the right legal structure for your business:
Different legal structures have different benefits and risks involved. An accountant can advise you on the best legal structure for your business by taking into account the tax implications of the various suitable structures, and weigh up the benefits and risks associated with each legal structure. Once selected, your accountant can setup the legal structure for you – making sure it is done right the first time.
Your accountant can help you scale effectively
Sometimes businesses grow more quickly than expected. Winning larger projects or finding additional income streams can be exciting times – but it’s important to be aware of the not-so-obvious aspects of growth such as increases in sales costs, payroll and taxes that will impact your bottom line. Your accountant can help you see the complete picture – by producing detailed cash flow projections and help you avoid any unnecessary tax burdens, and most importantly – to guide you to make the most of your opportunity by leveraging your gains so you can move towards achieving your business and financial goals faster.
Your accountant can help you create a Business Succession Plan – This can be an invaluable tool for navigating future events such as business partners exiting the business due to choice, death or illness. If you are just starting out, this may not be at the top of your mind, but having the appropriate agreements and insurances in place can save a lot of trouble down the road.
These are just some of the ways hiring an accountant can help you achieve success with your small business. So, to answer the initial question “should I hire an accountant for my small business” – the answer is YES - You most definitely should consider it! Even during the startup phase!
The information on this site is of a general nature. It does not take your specific needs or circumstances into consideration, so you should consider your own financial position, objectives and requirements and seek personalised advice before making any financial decisions.