When Do You Need An Accountant?Accounting - When To Get Started
When Do You Need an Accountant?
Many of us believe we don’t need an accountant. We figure that since we are good with numbers, we can as well calculate our bills, expenses and even how much we need to get a business started. For some of us, it’s the cost of hiring one that prevents us from seeking the services of an accountant.
For a few, it boils down to trust issues. Most people are not comfortable having others snoop around their finances. Money issues are guarded with secrecy, so it could be daunting letting an outsider in on our financial details, especially if we’ve had trouble managing your finances in the past. For a lot of people, the only time they would need an accountant is when they want to file for taxes.
However, many benefits come with having an accountant that the question should be if you can afford to do without one rather than if you could afford one. If you want to get a grip of your finances and improve on your money management skills, then seeking the counsel of an accountant is your best bet. What an accountant means for finances can be likened to what a doctor means to your health.
When You Need an Accountant
Whether you are running your own business or have personal finance issues to sort out, there are quite a lot of benefits that come with having an accountant or seeking the services of one. Let’s browse through the list of things an accountant can do for you.
- When writing a business plan
The effectiveness of a business plan is hinged on its ability to make accurate financial projections. Using an accountant can help you to properly access the feasibility of a business idea based on financial projections. Accountants would help you identify assets and liabilities; including providing an estimate of the amount of operating expenses needed before the business reaches break-even point. This would enable you to create a business plan that is realistic and more likely to succeed. Also, having the counsel of an accountant in the early stage of the business is advantageous as it would enable you to avoid financial mistakes which could hamper the growth and profitability of the business.
- When filing your taxes
Preparing your taxes can be confusing, let alone stressful. You may have trouble filing your taxes, or paying off a tax debt. An accountant can help take this burden off your neck and save you a whole lot of stress. A credible accountant would ensure that you exploit every legal means to minimize your tax liability and take advantage of tax laws so that you pay as little tax as possible. In your business, an accountant should advise you on how to operate the business in a way which gives you the most significant tax advantages.
- To know the actual value of your business
Based on their background, which is steeped in understanding a company’s assets and liabilities and how they intertwine to affect a company’s performance, an accountant can perform financial analysis and evaluation. The core of accounting is understanding balance sheets. Being able to decipher the information contained on balance sheets enables an accountant to evaluate the financial strength of an individual, business or a prospective investment. As such, an accountant can help you know what you are truly worth and what adjustments need to be made to scale up your finances. An accountant brings clarity to the financial position of a company and areas which need to be concentrated on to bring in more revenue or reduce expenses.
This particular skill set is valuable when you want to sell your business. An accountant can prepare your company’s financial records for prospective buyers or investors. By structuring your finances, an accountant makes sure you get the most money from selling your business. Also, by using tools such as financial modelling. an accountant can know the actual value of a business and project its financial performance.
- When you want to make an investment
When you want to make an investment decision, having an accountant is advantageous by no small means. An accountant can proffer professional advice on what type of investments to pursue. They can know the financial health of a company by going through its books. They can know if a company’s assets are wholly owned. They can know if the company has any outstanding debt. Based on such technical skills, they can proffer investment advice to you.
While many depend on financial analysts for investment advice, accountants, come with an advantage. They are also knowledgeable about taxes as well as finances. As such, while a financial analyst may spot a suitable investment, an accountant goes further to check the tax implications of opening such a business. He can advise if an investment idea you are mulling with would give you good returns for your money.
- When your business is expanding
The pace of expansion of a business experience is a function of how well its structure can assign roles and responsibilities. Companies that want to maintain tight control over operations and decisions expand less rapidly than those that maintain a flexible control.
One of the ways to delegate responsibility and control of your business is by allowing an accountant to handle your financial obligations. While this may not result in the actual expansion, it gives you more time and space to ponder on ideas and strategies which could move the business forward and inevitably lead to its growth. By allowing your accountant to focus on finances, you can focus on what’s essential for your business (making profit), while he handles issues such as filing for tax returns or paying bills and salaries on time.
You can lean on your accountant’s expertise to develop your business. By drawing from their pool of your accountant’s financial knowledge, you would be able to make better financial and administrative decisions that would save costs and move your business forward.
- When you have financial issues
If you or your business run into financial problems at any point, an accountant can help you feel it. For example, a CPA can represent you if you have issues with the IRS. An accountant can also make you access a loan or credit facility. An accountant can help you with financial settlements or set up a repayment plan for your debt. Having an accountant improves your chances because it gives your creditors the impression that you’re serious and detailed about your business.
- When structuring your business
When considering what type of structure you want for your business, you could do well by seeking inputs from an accountant. This is because every business structure has tax implications which could affect the investable income of your business and its profitability. It also has implications for the business’ eligibility for tax breaks. An accountant can help you structure your business in such a way that you attract less amount of tax and qualify for tax bonuses.
You Lose More Without an Accountant
The benefits of having an accountant go beyond controlling finance or filing taxes. As seen from some examples above, accountants also make good consultants. They can offer investment advice, evaluate a business, help you process loans or even represent you before the IRS. As stated earlier, when these benefits ( go beyond what has been stated here) are put into perspective, the appropriate question would be: What would I lose by hiring an accountant?