Running a business often requires making some tough decisions. And the decisions only get tougher when they impact your bottom line.
Fortunately an accountant will help during these times. Many people believe they are limited to doing the books and preparing tax returns, but an accountant can help you with so much more.
They can advise you on the best course of action of your business, based on their expertise and a deep understanding of your finances. Here are some common situations small businesses face where it makes sense to hire an accountant:
1. When you have to deal with the government
Paying taxes and other interactions with the government can be scary and stressful. There are lots of complicated laws and regulations that must followed to a tee, even though they can be difficult to understand.
Accountants are experts in these situations. They can make sure you satisfy any government requirements in the most beneficial way for your business. Take preparing your tax return, for example. A good accountant makes sure your tax obligations are met, while saving you as much money as possible.
2. When you get audited
Audits are rare but they can be very problematic when they do occur. If it happens to you but you’re not yet working with an accountant, you’ll need to hire one. They can get things back on track and prevent another audit from occurring, especially since the government will be watching closely.
All that being said, you shouldn’t wait until an audit arises before you hire an accountant. Most can prevent one from ever happening in the first place. And many offer audit insurance – meaning most your fees will be covered if an audit does occur.
3. When you’re applying for a loan
Having an accountant on your team can be a big advantage when you’re applying for a business loan. Banks lend to businesses they’re confident will repay them and working with an accountant shows you’re serious about succeeding.
An accountant can also help prepare your loan application. They can use your financial data to generate revenue projections and expense reports to present to the lender. It shows you understand your cashflow and have a plan to repay the loan.
4. When your business is growing
Growth is exciting when you own a business but it’s not always easy to handle. An accountant can provide guidance as your business matures – much like a CFO does in a large company.
Growth usually requires making strategic decisions like hiring new employees, taking on new office space or expanding your service/product offering. Your accountant will come to understand your finances better than anyone and can advise when it’s the right time to make these moves.
5. When you’re considering buying or selling a business
Your accountant can essentially act as your agent when you’re buying or selling a business. If you’re looking to buy, they can review the company’s finances and let you know if it’s a sound investment.
The same goes for when you decide to sell. Your accountant can prepare financial reports for prospective buyers and make sure you get the best value for your business.
There are a lot of hidden responsibilities that come with running a business, and they can often be far outside the scope of what your business actually does. An accountant can take many of these responsibilities off your plate so you can focus on what you do best. If you’re interested in learning more about the advantages of working with an accountant, check out Xero’s guide “When to hire an accountant.”
Dave Anderson is an inbound marketing specialist for Xero – an accounting software provider and Expensify integration partner. Originally from New England, he now lives in San Francisco where he enjoys good food, great coffee and following his hometown team, the Red Sox.