Accountants are in the business of recording financial transactions and extracting key insights from that data. In short, they have a bird’s eye-view of your entire business and the pressure points that can be your sinking points.
That’s why you need them and why they will save your business. Forget what you have heard about accountants “counting beans” and enforcing austerity. When it comes to building a solid business with a firm financial foundation, your accountant is your best friend. So, how does that help save your business?
Proper Business Setup
What is the most appropriate setup for your business? Sole proprietorship? Limited liability company? Partnership? Or is it an S-Corporation? How does the structure of your business affect your personal finances and your taxes? What is the best structure to hold your disparate hobby businesses and online undertakings?
These are all valid business questions for any budding entrepreneur. An accountant can help you decide on the best setup given your individual financial circumstances. This enables you save on costs, wasted efforts and taxes!
Tax preparation is perhaps the most recognized role of accountants. Every year around tax-time accounting services rise in demand as people and business scramble to submit their returns on time. An accountant can help prepare various taxes and ensure compliance with relevant state and federal regulations.
Truth be told, taxes can be well, taxing, and complicated. From payroll and sales tax to income, state and federal taxes.
Moreover, an accountant helps you setup proper accounting systems that make it easy and painless to submit returns. They can also help you minimize your tax burden by exploiting legal deductions and loopholes that allow businesses to save on taxes.
Budgeting and Cash flow
According to a survey of top Australian SME business owners referenced here, cashflow (mis) management is among the leading causes of business failure.
Those results are not surprising. Cash is the lifeblood of business. Run out of it and your business sputters to a dying end. An accountant can help you create budgets and establish systems to better manage cash coming in and going out of your business.
They will guide you on the best practices of managing money and advice you when committing money to a project. Consider your accountant as a voice of reason in a sea of emotion. Let’s face it. Entrepreneurs runs on passion. It’s not always that passion will align with financial reality on the ground.
Your average accountant is exposed to business trends through experience, industry events and work with other businesses. In a way, he does have a sort of “insider information” regarding your industry that may give you an edge. She can act as a proactive partner in shaping the strategy of your business by contributing insights with regards to what is happening in the market.
Additionally, he can tell you areas of your business either making or leaking money. This helps your decide on where to focus your efforts. Of course you can glean these insights on your own. You may not however, have the emotional will to let an under performing “business duckling” of yours go.
An Accountant is the Best Person If You Ever Get Audited!
It’s inevitable. One day you’ll do something that attracts the ire of the IRS! Nobody likes being audited. It’s a hassle. In case that ever happens, an accountant can help you better navigate the murky waters of the IRS code. This will save you time and money and keep your business intact!
In The Millionaire Next Door by Thomas J, Stanley, the author points out that millionaires form close relationships with their accountants. And for good reasons. Accounting is the language of money and business. Any person who can help translate its difficult code will enable you smartly navigate its choppy waters. Accountants can offer insights and advice on your business based on their years of experience with other businesses.
They can act as the voice of financial reason and keep you from committing grave mistakes that can ruin your business. Whether you take that advice is up-to you. You determine the direction your business takes. Having expert financial advice does help though.