Few things are as daunting to the new entrepreneur as managing the books. And for good reason — accountants go to school for a minimum of four years in order to be able to do what they do!
If you’re serious about taking your business to the next level, then you need to hire an accountant. In this article, you’ll learn nine key reasons why your business needs a CPA.
1. Tax Laws are Ever-Changing
Few things can kill the momentum of a budding business than running afoul of the Internal Revenue Service. The IRS doesn’t like it when a business doesn’t pay all of the taxes that they owe to the government and can penalize your company significantly if it fails to do so.
Due to how much tax laws are always changing, you could also completely unintentionally fail to pay enough taxes.
An accountant, on the other hand, is paid to stay up to date with all of the little variations that occur in tax law. Hiring an accountant will give you peace of mind that your business is operating in the appropriate financial manner and paying all of the taxes it owes.
2. Reduce Debt
Another reason to hire a CPA is to reduce debt. Over a CPA’s career, they will see hundreds of businesses similar to yours that face similar financial situations. Thus, they’ll have a wealth of experience when it comes to using finances to grow a business.
They’ll be able to offer you sound advice on when and if you should take on debt in order to grow your company. The right accountant will offer you good strategies on how to reduce debt and pay down any loans or lines of credit that you may have opened with the bank. The financial models they build you can adhere to as you have revenue coming in.
3. Advice on Investments
If your business is a little bit further along than most other starting entrepreneurs’, and you have a little money in the bank to play with, then you definitely need to hire an accountant. An accountant can give you advice on how to invest the money, whether in the stock market or in a mutual fund or in some other kind of asset, to produce the best return.
An accountant’s experience in the industry will also have given them a network of other financial professionals that they can open up to you if you need further, more specialized investment help.
4. Complete Your Payroll
One of the most daunting tasks for any new entrepreneur is completing payroll. There’s a reason why most accountants go to school for four years to learn this kind of thing. It’s complicated!
By hiring an accountant, you can ensure that your business completes payroll on time, without making any mistakes. This will lead to higher employee satisfaction and retention in the long term.
5. Manage Real Estate
If your business has physical locations, then you need an accountant that specializes in the management of real estate assets. Just as with tax laws, there are a whole host of real estate laws that are ever-changing.
The right accountant will enable you to manage your real estate in a way that not only appreciates each property’s value but also enables the addition of the property as an asset to your bank statement in a way that improves your company’s financial health.
6. Become Professional
As an entrepreneur, your dream is to be seen as legitimate. You’ve probably been subject to friends, family, and even peers thinking that you aren’t a professional, legitimate entity. The legitimacy of professionalism that you crave, however, is closer than you think.
Hiring an accountant to manage your company’s bookkeeping will go a long way towards building that sense of professionalism. One of the biggest factors contributing to a professional outlook is having specialized people take care of specialized tasks. Thus, you need to hire a CPA to take care of the specialized task of bookkeeping. If you do this, then there’s no doubt that people will start to look at your company with a different air.
7. More Time to Grow the Business
Have you ever heard of the law of comparative advantage?
The law of comparative advantage gives you a basic reason why you need to hire an accountant. An accountant can do the bookkeeping tasks that you need done faster than you ever could unless you too have an extensive background in financial management (which isn’t unlikely).
Thus, the accountant has a comparative advantage in bookkeeping over you. While you might take 2 days to close the books for your company and record all journal entries and reconcile bank statements, it might take a specialized accountant only two hours!
By hiring an accountant with that comparative advantage, you’ll open up those two days that you would have spent on bookkeeping. You’ll be able to reinvest this time back into growing your business, rather than completing the maintenance tasks that bookkeeping is concerned with. This means better long-term growth for your company.
8. Financial Analysis
Another key reason to hire an accountant is for financial analysis.
The right accountant will have some experience in financial analysis that can be useful for your budding business. By taking an in-depth look at your financials and journal entries, the accountant will be able to make some basic recommendations on where you can save money and how you can develop better financial health.
9. Save Money
Just like how it’s easy to pay the IRS too little money, it’s also pretty easy to fall into the trap of paying the IRS too much money! The right accountant will make recommendations on how to structure your charitable donations, expenditures, and income statements in a way that reduces tax liability. In the long term, this will only save you money.
This alone makes the investment into hiring a CPA worth it when one considers the ROI of money saved in tax relief.
Why You Should Hire an Accountant
Now that you have a good understanding of why you should hire an accountant, all that remains is for you to start talking to the right one for your business!