According to government data, around 20% of small businesses fail within their first two years. Further, only a quarter of new ventures reach the fifteen-year mark. One of the main reasons for failure is, unsurprisingly, money. More specifically, businesses lack the funding or don’t know how to manage it.
In this case, hiring a reliable accountant just makes good financial sense. To give you more information, this article breaks down what accountants can do for you and when you might need them.
What do accountants do?
Accounting dates back to 7,000 years ago when the Mesopotamians started to keep records of trades. This evolved to an ancient yet effective version of bookkeeping when the barter system was in place, which eventually led us to accounting services that are powered by modern technology.
Today, an accountant’s job covers various business tasks, such as auditing, financial statement analysis, and forecasting. This knowledge will be acquired through taking a degree and a certified public accountant exam, which will prepare them for the workforce.
Maryville University's accounting degree outlook lists the wide range of careers for graduates, as they can specialize in areas like auditing, budget analysis, and financial advising. The profession has an average growth rate of 4%, much of which can be owed to the rapid growth of the entrepreneurial world.
Even small businesses can benefit from the expert forecasting of a financial advisor, for example, who can help them set up the business to scale in the future.
When to hire an accountant?
However, that is just one example — here are four instances you can benefit from accounting professionals:
1. Starting a business
Accountants can help you even before your business becomes operational. When writing a business plan, for example. Chron notes they can determine the profitability of your business, which can help you plan for how much sales volume you need, how to price your products and services, and how much you have to spend. On that note, finance professionals can also design a budget, which can inform other areas of the business, like hiring and inventory.
2. Securing funding
One of the functions of an accountant is financial analysis, which you need when trying to secure funding like loans, grants, and investments. Accountants can create a forecast of your business, which you can use when presenting your case to, say, a potential investor. They can also help you establish creditworthiness, which lenders need to get a sense of your trustworthiness. Without an accountant’s financial computations, you might find it difficult to get funding you need to launch or scale.
3. Preparing for tax season
A list of common business tax mistakes by Inc suggests that not knowing how to go about taxes can contribute to failure. For one, poor recordkeeping and underreporting can get you penalized by the IRS. And if you make mistakes on what you can write off as a business expense, you could be inviting officials to conduct an audit of your business. This not only raises the possibility of costly penalties, but also hurts your business’s reputation to clients, investors, and partners.
4. Getting ready for an audit
An audit can be internal or external. In either case, an evaluation of your accounting is necessary to keep your business above board, update your financial status, and optimize operations. Having an accountant in your team is a must in preparing for an audit, covering your liabilities, and representing your business professionally.
Why should I hire an accountant?
Accountants provide a lot of value to a business from the startup stage to the expansion stage and beyond. If you want to spare yourself the headache of taxes, keep your business in compliance with laws, and bolster your business’s reputation, consider hiring or outsourcing an accountant.
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