Why You Should Hire An Account for Your Business

What are the benefit of hiring an accountant when you start a business and how he/she can help you tremendously not only in the startup but also in future business growth.

Many small business startups think that only bigger businesses need the services of an accountant. This could not be further away from the truth. If you are a small business start up, it could be true that you need less services from an accountant but nevertheless, because you are likely to be starting with a limited budget when you start a small business, an accountant can be of interest was able help in keeping an eye on the cost of the startup and controlling your finances.

If you are starting a business for the 1st time, an accountant can help you understand the various costs as well as help you get an estimate before you begin. This helps you in getting the required funds and capital ready beforehand rather than finding yourself short of the required amount of money at a crucial business juncture.

Even after the business has started up, this time is likely to be a very busy time for you. Many business owners do not have an accurate idea of how much money they are actually making. It is extremely important to know how your product is doing and how much money your business this making in terms of profit to know whether you have got certain things like such as the amount of cash flow, funding, capital investment and the pricing of your product as well as the profit margin. An accountant can help you clearly see this picture.

Another point to consider is that people starting off with a small business think that they can do the accounting job themselves using the accounting software. There are several excellent accounting software available in the market which are easy to use. However, one must understand that an accounting software only does what you tell it to do. An accounting software cannot be a replacement for the expertise and knowledge of a good accountant.

The services of an accountant go beyond just crunching numbers. Most of the accountants today, specially those working for business startups work in the capacity of financial advisory as well. The accountant has an intimate knowledge of how profit and loss, costings and business financing work. If you involve an accountant in your business right from the beginning, he will understand your financial goals better and have a know-how of helping you move onto the next step. An accountant can not only help you manage your business goals but also keep in mind your personal financial agenda as well.

It would be wrong to think of an accountant for business as mainly someone who prepares your tax return.

Accountants have a wide knowledge of finance and are an invaluable asset to the business. These are some of the areas of expertise in which an accountant can help your business.

  • Business advisory services.
  • Accounting and record keeping.
  • Tax advice.
  • Auditing.

If the accountant is closely involved with the business these areas of functioning overlap with each other. For example when the accountant is preparing your profit and loss statement, he can also advise you on increasing or decreasing a profit margin and taking a better control of your overhead costs. He can pinpoint certain costs that are inflating the cost of running a business and hence reducing your profit margin. When filing your tax returns he can also make suggestions regarding investments and business realities to reduce your year-end tax liability.

Five Services That An Accountant Can Provide For Your Business

These are the 5 common functions that an accountant can perform for a business.

An accountant is not someone who only prepares the tax returns for your business. Neither is he someone who only does that count and record keeping. In fact, an accountant is a person who has extensive financial knowledge. If he is someone who has experience with doing accounting for businesses, then he can give me some valuable insights and guidance regarding all matters pertaining to finance about your business. While he may not be the person to recommend design and the relevant enhancements in your product, he could be the person who tells you how to cut down your overhead costs and manage your year-end tax liability. A business accountant is also the person who gives you a clear picture of how much money the business is making. When clever accounting, you will be able to see exactly what the profit-making areas of your business and which are costing more than necessary.

These are five common functions that an accountant performs for business.

Business Advisory Services

An accountant is someone who has extensive knowledge of finance matters. If he has been involved in your business right from the beginning, he will also be knowledgeable about your business environment, your business lands as well as a personal financial status. Accountants can offer advice on everything from insurance to business expansion. They can help you acquire extra assets, tell you when the time is right to expand business, invest or to make changes in certain costs and expenditure of the business to enhance your profit-making. An accountant can give you advice on which areas of your business is profit-making and where unnecessary expense is going. An accountant and a good accounting system is required to get a clear picture of how much money you are making and how the expenditure and cost of running the business is being managed.

Accounting and Record Keeping

Accounting and record keeping is one of the most basic functions that an accountant performs. However, many small business owners prefer to keep their own books and records instead of having an accountant do it. The reason for this is easy to understand. A person is responsible for the accuracy of their financial records and is held accountable for them when examined by the lenders or the Internal Revenue Service. Therefore it makes more sense for the business owner to maintain them and keep them accurate. However, the great utility of the accountant is in setting up of the effective accounting system which allows the business owner to easily maintain his financial books and records. An effective accounting system will allow the business owner to evaluate the profitability of the business at any given point of time. He will be able to track expenses and see which areas allow him to cut down costs and increases profitability. The business owner can control the cost of this product and profit margin as well as keep things within a business budget using the accounting system set up by his business account. The business owner will be able to keep track of the sales and expenses and take advantage of any seasonal trends that happened to show up in the accounting statement. Accurate and effective maintenance of financial books: business also results in a greater ease when it comes to filing tax returns.

Tax Advice

Apart from all the other functions that an accountant serves, tax planning and compliance with all the taxation rules and regulations is an important part. A business should always be in compliance with the federal, state and county laws of taxation. Planning for tax liability also determines the kind of legal business structure that you create.

Auditing

Almost all businesses required auditing by the third-party accountant in order to file tax returns. Most of the lending institutions and banks require the proper auditing of the business before they can approve the business was alone. Auditing of business includes preparing financial statements as well as an assurance by the content or third-party that the companies financial information is accurate.

Financial planning

Many accountants are moving into this area for businesses as well as it is the most natural extension of their financial knowledge and expertise. An accountant can help you finance your business, plan for future expenditure, requirement of future financial capital input, cost of growth, cost of hiring employees, controlling overhead costs etc. when an accountant is involved with the business right from the inception, he is in a great position to be intimate with the working of the business as well as the long-term goals. This puts them in a great position to be of incredible advisory assistance when it comes to making any decision that involve money and finance.

How To Make the Most Of Your Business Accountant

Maintaining a healthy business relationship with your business accountant and utilizing his/her expertise to the full.

In order to make the best use of your business accountant you should keep good and healthy business relationship with him. Creating and developing healthy business relationship with your business accountant starts with the engagement letter. This letter should contain the understanding you have about the services that he has to perform for you and your business. It should accurately list your expectations from his job as an accountant and even a financial advisor if he is going to be serving in that capacity. Making all this clear in the engagement letter makes sure that there are no misunderstandings in the future and both you and your business accountant understand the limitations and scope of the agreement.

Secondly, do your best to make your accountant’s job easy and effective. Organize your business’s finances such as receipts, check payment records, deposit slips, bills and expense records so that you can give him a coherent account when it is time to prepare the finical statements. Many small businesses keep a close watch over the transactions on a weekly and monthly basis during the startup phase to ensure that things are not going wrong. Get your accountant involved in this right from the beginning.

Meet with your account once a month to go over the financial statements and discuss any confusion that you might have. Such a meeting will also help you understand where and how your money is being spent. It also gives you an opportunity to discuss financial matter to see how things can be better managed.

Getting a good accountant and then using him/her successfully for your business is one of best steps that you can take for the long term success of your business. So work on building the right time right from the beginning.

How to Choose an Accountant for Your Business

How to find a good accountant or CPA for your business.

One of the best ways to find a good accountant is to get the referrals from somebody you trust or somebody with a good professional know-how of running a business such as your attorney, your banker or a business colleague.

You can also refer to the Society of Certified Public Accountants in your state.

When choosing an accounting for your business, do not underestimate the qualification of a fully qualified CPA, which stands for certified public accountant. All certified public accountants have to go through a rigorous today nationally standardized test which ensures that they have some level of knowledge and expertise in the related field of accounting. Most of the CPAs are also required to have a college degree or its equivalent and many states also require post graduate internship work. While accountants usually work for larger businesses and companies, CPAs handle accounting work for small and big businesses.

Hiring a fully qualified CPA ensures that your accountant has at least some level of knowledge and expertise as well as experience when it comes to answering accounting jobs for the business.

Finding a good accountant can take some time and work. Shortlisting your potential accountants on the basis of their qualification is a good way to narrow down your list and ensure that you find success faster. After you have shortlisted a few accountants you will need to interview them.

However, before you start your search for certified public accountant or a business, you should prepare your own criteria. You should fully understand what your business needs are and how much of the work needs to be done by the accountant. You should have the duties you are going to set for your business account and very clear in your mind. This will help you in shortlisting the list of accountants as well as interviewing them when you pass them pertinent questions as to how qualified and willing they are to serve your business needs.

Accounting services by an accountant can be divided into 3 broad categories which are recording transactions, assembling the transactions and generating returns and financial statements. It is usually the last part of generating returns and financial statements that is the most difficult and requires the highest level of expertise. Ideally, you should choose an accountant who has some level of experience in handling business accounts. Generating income and financial statements for a business is very different from that of doing it for people for personal tax returns. Make sure that the accountant you choose is well versed with this aspect. It is a good idea to see if the accountant does this kind of work for other business clients. If he does, you can get a better idea of the reputation of the accountant and even ask referral from some of his existing clients.

When choosing an accountant for your business you need to look at three aspects, which are Services, Fee and Personality. All 3 of these are important to develop a long term relationship.

Services

As already mentioned before you can choose an accountant for a business, you need to prepare your own business requirement. You should know beforehand what services you will need an accountant to perform. Based on this criteria you should interview the accountant and see if he can handle the jobs that you intend him to do. On the most basic level accountant will be able to offer you tax and auditing services but we also developed a bookkeeping and finance management system which will enable you to track the financial performance of your business? What about estate planning? Other services that you may consider and need your CPA to perform include preparing, auditing, reviewing and compiling financial statements, managing investments and representing you before tax authorities. If you are dealing with a small accounting from, it is a possibility that they may not be able to offer you a huge myriad of services . However, it is equally possible that they may have tieups with another firm who can do so. When looking at the services that an accounting firm has to offer, you should also consider the fact whether they already have experience in your particular field. If they already render those kind of services to other clients it means that they are already familiar with your business requirement and will not waste time in getting up to speed and delivering results. Being familiar and having experience in your business will also mean that the accountant can give you more reliable and up-to-date advice.

Fees

You should definitely inquire about the free and charges of your accountant up front. Different accountants charge at different rates which can very from $75-$300 per hour. This can seem like a big overhead expense. But accounting and bookkeeping is something that is very essential for a business. Determining the legal structure and the tax liabilities as well as accurate calculation of taxation is also extremely important. Which is why it makes extremely good sense to discuss the kind of fee structure that you accountable with. Most of the accountants and even accounting firms might be comfortable working on a monthly retainer as well. The cost of an accountant is not the only parameter on the basis of which you should decide. For example, a more experienced accountant may charge a higher fee but also do you work in a faster and more competent manner. A less experienced accountant may charge less but at the end of the day she’s going to take longer to finish the job, not only do you end up spending the same amount of money but inexperience may also lead to poorer results. A good accountant should be able to give you references and allow you to call or ask a few of his clients as to his services, P and availability.

Personality

You should realize that an accountant is one of the pivotal professionals who you are going to use for the success of your business. As your business grows, your dependents and need for a good accountant will grow as well. It is a good idea to develop a long-term relationship with an accountant. For this reason it is important to be able to find a good accountant right at the beginning of the business so that he can guide you and help you right from the beginning. Having an accountant involved with the business right from the start up stage will make him intimately familiar with lots of things such as your future financial goals, your personal financial situation and allow him to deal with all issues keeping the several business aspects of mine. If you are approaching an accounting from and meeting with someone make sure that you are meeting the person who will be handling the accounting job. Many large accounting firms handle sales and new businesses through their main partners but then pass on the actual account to other people.

You should also discuss how they the accountant will deal with any plans that you intend on incorporating in your business such as changing the business model in the future or having to deal with tax issues if they arise. Listen to the response and see if that is the approach you are comfortable with.

Having an accountant who differs in a post to your natural instinct for doing business is not always a bad thing. For example if you are overly conservative amah having an accountant who exposes you to aggressive side of doing business is not bad. Likewise, if you are aggressive, having an accountant who is conservative in his approach and safeguards your financial interests at all times.

Questions to Ask When Interviewing an Accountant For Your Business

These are some of the questions that you should ask a potential accountant when you are considering hiring him for your business.

  1. Are you a CPA? Do not assume every account this.
  2. Are you licensed to practice in the state?
  3. When and where did you receive a license to practice?
  4. Where did you go to school and what degrees did you earn?
  5. Who are some of your clients? See if you can call some of them and get a reference.
  6. What is your area of specialization?
  7. How big or small are your clients and what size were there when you started working with them?
  8. How accessible are you? Will the accountant be available only on certain days and during certain business hours or will he cater to your business whenever you need.
  9. What professional organization does the accountant belong to?
  10. How active are you in those groups?
  11. What are your fees and charges? Ask to see some current invoices.