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A business owner deciding when to hire an accountant while reviewing his finances.

When to hire an accountant: 10 signs it’s time to ask for help

On the day your successful small business gets big enough to hire an accountant, you may relish the thought of delegating this responsibility to someone else. 

At the same time, the decision is nerve-wracking, since you will be entrusting an outside professional with sensitive financial information.

Whether you’re starting a new business or navigating a complex payroll process, a small business tax accountant can help you find new deductions and file your taxes on time. There are ten signs that can tell you it’s time to hire an accountant:

  1. You’re starting a new business
  2. You’re creating a business plan
  3. Tax season is here
  4. You’re being audited
  5. Your payroll is more complex
  6. You’re applying for a business loan
  7. You're interested in franchise opportunities
  8. You’re selling a business
  9. You have multiple businesses
  10. You’re short on time

Let’s dive into each a bit more.

1. You’re starting a new business

8 signs it's time to hire an accountant. 1. Starting a new business. 2. Creating a business plan. 3. Tax season is here. 4. You're being audited. 5. Your payroll is more complex. 6. Applying for a business loan. 7. Open to franchise opportunities. 8. Selling a business. 9. You have multiple businesses. 10. You're short on time.

Accountants can help you with everything from daily bookkeeping to representing you in a tax audit (if they have the proper accreditation). They are well-versed in the complexities of starting a business and can help you catch problems early on.

Hiring a professional business accountant that specializes in small businesses can help you keep track of the following details as your company begins to grow:

  • Hiring employees: they can collect personal information during the hiring process that will be needed during tax season
  • Taking on new clients: accountants can help you onboard clients with the right documentation and economic strategies
  • Paying business taxes: they have the business experience that you need to successfully file taxes
  • Managing inventory: accountants can help you craft a sound financial plan for your inventory usage
  • Analyzing cash flow: they are capable of detecting problems within your business model and sourcing new cash flow opportunities
  • Bookkeeping: accounts can track your business expenses

It’s a good idea to think long term when hiring an accountant. Look for someone with whom you can build a relationship that will grow with your business.

2. You’re creating a business plan

Do you want someone to advise you in crafting your next business plan or help you prepare financial projections so you can secure a business loan? Will you want these or other services in the near future?

Accountants can help you avoid early pitfalls in your business plan with their great attention to detail and years of experience. Take your time to find an accountant that meshes well with your financial goals.

The best way to find an excellent accountant is to ask colleagues and friends for referrals. You can also find certified public accountant (CPA) listings online on the website of the American Institute of CPAs (AICPA).

3. Tax season is here

When should you hire an accountant for taxes? Whether you're starting a new business or adding new ventures to your current business model, hiring an accountant for taxes can reduce the stress of tax season for your small business.

Small business owners, freelancers, and contractors can all benefit from the expertise and attention to detail that a financial accountant can provide. 

Here are a few ways an accountant can help your business during tax season:

  • Finding tax deductions
  • Tracking business expenses
  • Preparing financial statements
  • Navigating complicated tasks
  • Inputting employee information

Although an accountant is especially helpful during tax season, growing small businesses, freelancers and contractors can benefit from their skills all year long.

Talk to at least three accountants or accounting firms before choosing one. Remember that professionals work for you; don’t be afraid to ask questions and thoroughly vet accountants who might handle a vital aspect of your business.

4. You’re being audited

Benefits of hiring an accountant. Lets you focus on more important tasks. Helps you find new tax deductions. Allows you to learn from a professional. Catches problems early on. Assists in navigating complications.

Tax audits happen when the IRS wants to review your or your business’s tax return to ensure that the data is accurate. Although this process can induce anxiety, a CPA can help streamline the process.

An accountant or CPA can help make the IRS auditing process a little less stressful by showing you how to navigate the auditing process.

If you think your business might need any of the special services CPAs can perform, or if you feel more comfortable hiring a certified professional, a CPA might be a good choice. If your budget is tight and your needs are fairly straightforward, an accountant who is not a CPA (who likely costs less) might meet your needs.

5. Your payroll is more complex

Unlike a bookkeeper, professional accountants go beyond recording business transactions. They can help you manage your small business payroll, inventory, and taxes.

If you are a freelancer or contractor that is growing their business, a personal accountant can help you simplify the payroll process by:

  • Showing you how to track your expenses
  • Organizing your employee’s personal information
  • Sharing tax forms with your employees

If you are operating a small business with multiple employees, consider opting for a business accountant or CPA that can handle more complex financial planning.

6. You’re applying for a business loan

Accountants and CPAs help freelancers track expenses, small business owners find tax deductions, contractors apply for loans.

An accountant can help you get all of the necessary information together to apply for a business loan, including:

  • Current business plan
  • Recent financial statements
  • Annual revenue
  • Credit score

Don’t leave the fate of your next business venture to chance. A CPA or business accountant will ensure you meet all of the application requirements and set your business up for a successful application process.

7. You're interested in franchise opportunities

Starting a franchise is much different than starting a business. A business accountant can help you track franchise expenses:

  • Amortizing initial fees
  • Royalty fees
  • Marketing fees

Working with the franchise owner, an accountant can help you navigate which fees you are responsible for and identify areas where you can save money.

Since your franchise will benefit from brand recognition, there is an opportunity to spend less on marketing fees.

Ask potential accountants about their turnaround time for filings and reports. Also, find out from their references how responsive they are to requests.

8. You’re selling a business

If your business is not generating enough cash flow to meet your professional goals or you are ready to start a new venture entirely, selling your business might be the right move.

However, you do not have to undergo this transition on your own. A professional accountant can walk you through every step of the selling process.

From doing taxes to selling your physical assets, a CPA can also help ensure that every detail is documented and submitted to the relevant authorities.

9. You have multiple businesses

Multiple streams of income means more documents to prepare for tax season. An accountant can help you wrangle all of the receipts and reports to create a successful tax return.

A single accountant can help you file tax returns for multiple businesses. Their accounting can help you choose the right tax forms for each business type and find the appropriate deductions.

10. You’re short on time

If running a business has you short on time, an accountant can help ease the stress of tax season. Allow them to prepare your financial documents while you focus on more pressing responsibilities. Accountants can go beyond taxes and assist with bookkeeping for your business as often as you need.

Benefits of hiring an accountant

Hiring an accountant can benefit your small business past tax season. Here are a few ways an accountant can benefit your small business:

  • Save you time
  • Track your expenses
  • Find new deductions
  • Apply for loans
  • File your taxes
  • Bookkeeping

If you still need help after tax season, live bookkeeping services can ensure that your financial statements are always kept up to date.

Accountant expectations for small businesses

You can expect your accountant to be detail-oriented and well versed in financial documentation. They will be have a grasp on the latest accounting software and applications needed to file tax returns and track modern day expenses

An accountant will also compile detailed reports of the health of your small business, provide possible solutions and inform you of legal risks or considerations.

Where to find expert accounting help for your SMB?

Accountants can provide personalized support to your small business. They can help you find the right documentation for your business type and source tax deductions that are appropriate for your type of business.

You can find accounting software services online, with options ranging from software to live accountants who are there when you need them most.

Setting yourself up for accounting success

Even if you have an accountant and are seeking a tax professional to help you this tax season, consider investing in accounting software to mitigate the time it takes to prepare your financial documents and complete a successful tax return.

Accounting software can continue to help your small business well after tax season by helping with daily bookkeeping tasks, tracking expenses and inputting payroll data.

Ultimately, it’s up to you to know when to hire an accountant for your small business or yourself.

Remember: An accountant isn’t a monetary wizard, so don’t make them solely responsible for your financial success. Build a basic understanding of your business’s finances before you start searching for an accountant.

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