Whether you run a five-star restaurant, a digital marketing agency, or freelance from home, running your own business is no small feat. Between all of the planning and executing, preparing for tax season is a year-round task on your to-do list that requires careful document management and bookkeeping. Though a simple task on the surface, staying on top of your own accounting can be quite taxing.
Accounting is one of the most essential facets of operating a business. An accounting job well done essentially allows you to gain a better understanding of your business’ growth, profitability, and future strategies. By accurately tracking expenditures and income, you can better evaluate the health of your business and remain in compliance and good standing with the IRS.
Can you do your accounting on your own? Absolutely—but without the seasoned expertise, software, or know-how, you may find yourself causing more headaches than necessary. Hiring an accountant is a grand idea for any business owner looking to streamline their accounting and enter tax season stress-free. ‘
Whether you’re wondering “do I need an accountant?” or looking to learn how to hire an accountant, we’re here to provide the insight you need to make the best decision for your business.
What does an accountant do?
An accountant’s job is to prepare and examine your business’ financial records. Their core responsibilities are best summarized as ensuring all of your documents and data are accurate and your taxes are paid correctly and on time. Accountants can provide service to both individual taxpayers and businesses.
With an accountant in your corner, you can also reap the benefits of essentially having a financial advisor on board. The average accountant can also:
- Identify all eligible tax deduction you’re entitled to take to maximize your benefits
- Calculate taxes owed and prepare annual and quarterly returns
- Recognize red flags (such as disappearing inventory, raised costs for merchandise, etc.) before they impact your business
- Keep books up to date
- Identify potential areas of growth by examining cash flow patterns, inventory management, and alternative business financing methods
- Provide suggestions that can help reduce costs, increase revenue, and bolster profits
Do I need an accountant?
Before you’re able to come to a decision on whether or not you should hire an accountant, you must first assess if you really need one. For most small business owners who don’t know the difference between single-entry and double-entry bookkeeping or the complicated intricacies of the U.S. tax code will benefit from having an expert handle their finances and reporting.
Deciding on what type of help you need for your small business can be challenging, especially when it comes to footing the bill for another person’s services. However your business’ financials are nothing to take lightly, so in the vast majority of cases, chalking up the extra dough for a professional accountant is generally well worth it.
So, do you need an accountant? In order to answer this question, assess your circumstances first. Ask yourself the following questions:
Do I have a lot of expenses and income to manage?
If you’re at all overwhelmed with the amount of financial recording on your plate, it’s likely time to outsource the work to a dedicated professional. Beyond simple bookkeeping and tax prep, there’s plenty of other to-dos that require plenty of time to properly assess, categorize, calculate, and report. The more extensive your finances, the more elaborate your expense and income management.
Do I know how to file a tax return for my business?
Many new or early-phase small business owners don’t fully comprehend the tax-filing process for businesses, which inevitably becomes a glaring issue come tax season. If you’re like most business owners, you spend the majority of your time working on getting your idea off the ground, networking, and strategizing growth plans — not learning how to file taxes.
Putting your tax-filing duties on the back burner can leave you in a world of hurt when Uncle Sam comes knocking, so having a designated person to cover your filing can help keep your financial checklist streamlined and manageable.
What are the long-term consequences of not hiring an accountant?
Think about the current state of your business — how quickly is it growing? Where do you see your income and expenditure growing within the next year or so? If business is booming and you’re saddled up for plenty of forecasted success, it is absolutely crucial to begin planning for the inevitable upturn in revenue generation.
Hiring an accountant accomplishes just that.
How to hire an accountant
Before embarking on your search for the perfect accountant, it is absolutely necessary to determine what exactly you need them to do for you. Because an accountant can offer such a wide variety of services, it’s important to distinguish what type of services you need prior to onboarding.
You must also factor in the size of your business — smaller businesses likely won’t need the same level of professional assistance as a larger business. Consult with your team to get a holistic view of your business’ needs. Draft up a list of tasks you need completed to get a rough idea of the involvement you’ll need from your accountant. This will help you gain a more comprehensive understanding of whether or not you’ll need a part-time, full-time, or one-time accountant.
Finding the right accountant
The next step is finding an accountant. Believe it or not, one of the best ways to track down a great accountant is through word of mouth. While searching online and reading through testimonials can lead you to a fantastic accountant, you can rely on the experiences of those within your professional network to link you up with an accountant who they’ve worked with and hold in high regard.
When searching within your network or searching online, be sure to ask or find answers to the following questions before pursuing the accountant for an interview:
- Were tasks completed in a timely manner?
- Were there any roadblocks or issues encountered when working with the accountant? How were those problems handled?
- What was communication like between the client and the accountant?
- How did the accountant demonstrate initiative?
- What were the accountant’s strengths and weaknesses?
- Were the accountant’s suggestions helpful?
- What additional services did the accountant provide?
- What were the accountant’s rates?
Skills to look for
Accountants are responsible for managing a vital element of your business and overseeing sensitive financial data. If you’re looking to hire an accountant for your business, you need to make sure the person you hire is someone you can trust and someone who is an expert in their field. Be on the lookout for the following qualifications and work experience to ensure your hiring pool features the best of the best.
- CPA certification
- Familiarity with common accounting software (QuickBooks, NetSuite, Freshbooks)
- Precise attention to detail
- Business acumen
- Analytical and mathematical proficiency
- Collaborative work style
The final step before entering the final stage of the hiring process (the interview stage) is completing reference checks. It is absolutely essential that you reserve plenty of time to verify that the accounts within your pool have experience in your industry, have worked with a business of your size, and have the software expertise you require. Reference checks provide all of the insight you need to make a calculated decision on the best accountant for your business.
Checking references simply entails contacting previous employers, supervisors, firms, schools, and so forth to confirm the employment, education, and experience levels the accountant presents on their resume. During these calls, be sure to ask any question you may have about the candidate’s work style so you’re not left with any lingering hang ups that might keep you on the fence.
How much does it cost to hire an accountant?
Hiring an account can be a costly venture, however, the rate you’ll pay entirely depends on the type of accountant you want to hire, their level of expertise, and the demand for their services.
When budgeting for an accountant, you will need to determine the type of accountant you want to hire, this means choosing between an accountant or a CPA (Certified Public Accountant).
According to a 2019 Bureau of Labor Statistics report, the median annual wage for an accountant was $71,550. This rate can be greatly reduced if you do not require a full-time accountant. By hiring a part-time or hourly-rate accountant, you can hammer the price down to a number that fits within your business’ budget.
Depending on their education and experience, you can expect to pay anywhere between $30 to $500 an hour for an accountant.
Hiring a personal accountant or a business accountant is a huge next step for your business. By taking your time, using your professional network connections, and carefully vetting your pool of potential candidates, you can narrow down your search and land the perfect accountant.