If you’re drowning in a sea of invoices, receipts, and cash flow statements that you can’t make heads or tails of, it might be time to call in professional help. An experienced accountant can help you organize your records, tighten up your budget, and make sure you’re staying on the right track financially. As with hiring outside help for any area, there are a number of good reasons to opt to hire an accountant for your business but there are also some potential downsides. Here’s a rundown of the arguments you should consider before outsourcing your accounting needs.
Pros of Hiring an Accountant
1. Accountants know what they’re doing
There are a lot of technical details that go along with managing your small business’s finances, and even a simple mistake like putting a decimal point in the wrong place could come back to bite you. This is especially true when it comes to filing your taxes, since inaccuracies or accidental omissions could end up attracting a great big red flag from the IRS. An accountant’s job is to make sure all of your records are error-free and that the numbers add up the way they’re supposed to so you don’t land in hot water with Uncle Sam.
2. They can save you time and money
Your accountant wants to see your business succeed. One way to do that is by looking for unrealized savings. For instance, your accountant may review your monthly expenses to see where there’s room to trim the fat or come up with a way to streamline your record keeping so that it’s less time intensive. When tax time rolls around, your accountant is the one combing through your financials to uncover every possible credit or deduction, leaving you free to focus on other aspects of running your business. That can be a major advantage if you want to dedicate more hours to expanding your customer base, developing new products, or improving your marketing strategy.
3. They do more than just crunch numbers
In addition to balancing your books, your accountant can also offer expert advice on everything from determining your pricing structure to obtaining financing. If you decide at some point you need to close your business or sell it, they can give you tips on the best way to proceed. That kind of input can be invaluable, especially if it’s your first foray into entrepreneurship.
Cons of Hiring an Accountant
1. Their services aren’t free
Accountants expect to be paid for the work they do and for some businesses, the added expense can be a real budget buster. Accountants’ rates vary based on what’s involved, but according to the the latest rate survey from Intuit, the average rate for basic accounting services was $65 an hour in 2013. What you end up paying may be lower depending on what kind of business you have or how good your relationship with your accountant is, but the bottom line is you’re still increasing your overhead by hiring one, even if it’s just on a part-time basis.
2. There’s no guarantee against mistakes
Accountants, like everyone else, are human, and there’s no way to guarantee they won’t make an error at some point. If it’s something small that can be corrected quickly then it’s usually not a big deal. But on a larger scale, it may be disastrous. For example, let’s say they’re importing your expense information into their accounting software and a key expenditure isn’t transferred. If they don’t pick up on it, when it’s time to file your taxes you may miss out on a valuable deduction, making your tax liability higher than it needs to be.
3. It’s easy to lose touch
Delegating your small business accounting to someone else makes sense when you’re stretched for time, but that doesn’t mean you can take a completely hands-off approach. Even though your accountant may be doing all the heavy lifting, it’s still your responsibility as the business owner to check in regularly and make sure things are moving along smoothly. The relationship you have with your accountant should be a partnership, with both of you taking an active role.
Taking a look at where your business is and what the scope of your needs are is probably the best way to guide your final decision on whether hiring an accountant is necessary. If staring at numbers all day has you at your wits’ end or you need an outside perspective on what direction you should move next, bringing in a fresh pair of eyes is most likely to your benefit. On the other hand, if you’ve got the time and the know-how, the solution may be as simple as investing in small-business accounting software and taking the time to understand the numbers.