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Owning a small business is rewarding, but it comes with many responsibilities. For example, you need to stay on top of your business’s finances to ensure you are paying your bills, paying your employees, and keeping accurate and up-to-date financial records. Suppose you fall behind with your accounting responsibilities or do not manage them properly. In that case, you might run into problems in the immediate future, not to mention when it comes time to file your business taxes. To keep track of your expenses, income, gross margin, cash flow, and debt, it is a good idea to seek outside help from a business accounting professional if you do not currently employ one at your company.
A certified public accountant (CPA) can handle the full spectrum of tasks and typically charge an hourly fee. The average monthly accounting fees will increase as your business grows. That said, a CPA can help you save lots of time and money and help you stay out of trouble with Uncle Sam. This Balboa Capital blog post explains why you need a business accountant.
You cannot do it yourself.
You can fly solo with lots of business-related tasks, but accounting is one task that might prove to be too challenging and time-consuming. Sure, many accounting software programs are available, but they can be challenging to understand. Moreover, not every software program is equipped with customizable options, data import and export capabilities, and bank reconciliation features, to name just a few. Accounting software’s affordability is undoubtedly appealing, but do not forget that time is money.
Spending too many hours each week managing your accounting tasks with a software program might not be worth it in the long run. Instead of paying bills, inputting data, and balancing your books, you could be focusing your time on other essential responsibilities like managing employees, generating new business, or working on new products or services. Lastly, using accounting software is not the same as hiring an accountant. Accounting software quickly becomes outdated, especially when tax laws change or new ones are introduced. An accountant stays current with all of the latest tax laws.
Your books will be accurate.
Hiring an accountant gives you the peace of mind that comes with knowing that your business’s financial data management and financial reporting will be adequately updated and managed. Your accountant can track your income and expenses, keep your financials accurate, and provide you with a complete picture of your financial position on any given day. Maintaining accurate financial books is necessary to keep your business moving forward and ensure that you comply with current accounting systems and tax laws.
Failing to report the correct amount of income or claiming too many deductions will increase your chances of being audited. Your accountant will have the knowledge and expertise needed to ensure that everything related to your business’s finances is up-to-date and accurate and that you have no issues with the IRS. A financial audit can end up being very expensive, but a CPA can help you avoid one. If you hire a CPA and still get audited, they can represent you and provide the auditors with accurate books and records. This enables the auditors to review everything quickly and easily and, hopefully, leads to a decision in your favor.
You might save on your taxes.
Tax season sends shivers down the spines of ill-prepared business owners who need to round up a year’s worth of financial documents at the last minute. This almost always results in tax form errors, filing delays, or extension requests. When an accountant takes care of your books throughout the year, you will not need to deal with these common scenarios. On top of that, your accountant might be able to help you save money when it comes time to file your taxes.
You are a business owner, not an accountant. So, there is no way for you to know the complete list of exemptions you might be entitled to or understand what you can do differently to keep more of your hard-earned money. This is the job of your accountant. Since your accountant sees the entire financial picture, they can recommend strategies to help maximize your deductions based on the most recent tax code changes.
Summary.
Some small businesses hire outside accountants to manage their financial bookkeeping and reporting tasks. If you are tired of wearing the “accounting hat” at your small business because it takes too much time, or if your business is growing and needs the help of an accounting professional, it is time to look at your options. Start by asking around for referrals, which is a great way to find someone with an excellent reputation.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.