Accounting is a crucial part of every business, from small boutiques to multinational corporations. You can't ignore your accounts, and doing so for even a short period of time can damage your business. However, accounting is complicated, and mistakes can be costly. Hiring a professional accountant can save you a huge amount of time and money, which are often one and the same. Let's take a look at how hiring an accountant can benefit your business.
Accountants vs. Bookkeepers
The terms 'accounting' and 'bookkeeping' are often used interchangeably, they're not the same thing and it's necessary to understand the difference.
Bookkeepers record and organise financial data, whilst accountants interpret that data. A bookkeeper records all of your revenue and costs, but an accountant prepares that information as a tax return or financial statement. Simply put, bookkeeping is entirely objective whilst accounting is more subjective. These roles certainly overlap, but you may need to outsource both or consider buying software.
Save Time, Tax and Mistakes
One of the biggest draws of hiring a professional accountant is that they will save you significant time and energy, even if you only use them once a year for your tax returns. These are hours that you could be re-investing in your business, thus saving you money, too.
Accountants are also able to use their expertise to help you reduce the amount of taxes you must pay. They can even help you to create a tax-efficient financial plan for your business going forward.
Furthermore, your tax returns have to be 100% accurate and mistakes aren't cheap. A professional accountant ensures that you won't be hit with a hefty fine for an innocent error and provides peace of mind, allowing you to focus on what's important.
The Importance of Accountants As Your Business Grows
Accountants are useful in different ways during the various stages of growth. You may not think you need accounting services before you launch, but professional help can really set you up for future success. Here's how an accountant can help you throughout your business journey:
Pre-Launch:
An accountant can help you to put together a feasible financial plan for your business and help you to secure investments. They are also able to offer advice regarding pricing and securing equipment. Hiring an accountant this early in your business also helps you to avoid accumulating financial errors which can be difficult to sort out later on. Additionally, their services free up your time to concentrate on other areas of your business that may require attention.
Start-Up:
An accountant will help you put your best foot forward, financially speaking, during the start-up phase of business. It's well worth having a professional on hand as you're learning the ropes. Amongst other things, accountant can help to set up an accounting system and choose suitable accounting software that will serve you going forward.
Expansion:
Whilst it's advisable to hire a professional accountant as soon as possible, it's absolutely crucial when your business reaches the point of expansion. Hiring more staff means that you'll need a payroll system and advice on employee benefits. As your business grows bigger, it's also more likely to be audited and an accountant can help you to prepare for this. Increased costs also mean that you're likely to need advice on how to improve your cash flow, since this is essential for the financial health of your business.
Exit:
Although it may seem a long way off, you may want to sell your business or retire from it eventually. For the former option, you'll need an accountant to help you maximise the business value so that you can sail off into the sunset. As for retirement, an accountant will advise you on pensions, retirement plans and personal investments.
Accounting Software
If your business accounts are fairly simple and you're not sure whether or not you need an accountant, it's worth considering accounting software instead. If you go down this route, it's best to use cloud-based software for a more seamless and accurate experience. However, if you're looking to expand your business then it's worth paying extra for the financial advice of a real-life professional.
Conclusion
There's no question about it: your business needs an accountant. If you want to hit the big time, then the advice of a financial expert is worth every penny. However, accounting software may suffice for smaller operations. Whichever route you choose, it's important to stay on top of your finances and remember that accurate accounting saves significant time and money for your business.