The thought of hiring a professional to handle your finances can be daunting, and it’s a valid concern— just think about the substantial fees involved in such a service. Although doing the accounting yourself in your business might seem like the economical solution, there may be some accounting loopholes you cannot do yourself. Investing in a reliable and trustworthy accountant is the way to go. Still not convinced? This article will enumerate specific crossroads you may consider the perfect time to hire an external accountant.
When you do not understand where you stand in your business
It is easy to say that the business must be generating profits as cash flow tends to be positive. However, an accountant may be able to give you more insights not just concerning your current performance but also where the business will see itself in the future. You may be able to pay all your suppliers and employees on time but have you considered longevity? Will your business be able to sustain a loss if another crisis occurs? An accountant can help you give meaning to the numbers across your financial reports. Moreover, an accountant can also help you make sound financial decisions for your business, be it short-term or long-term.
When you need to know relevant financial data for a specific time period
Making major business decisions will require prompt and accurate financial information. Whether it is about taking up a loan or deciding to change suppliers, you will need to take a step back and see if you are capable of such change. An unbiased and professional perspective would be advantageous if you need to formulate crucial decisions from those reports. Preparing the financial statements is no joke—to a new business owner, it might take weeks or even months to consolidate everything and still end up with material misstatements. Presenting misstatements or inaccurate data to important stakeholders would be very risky as it could harm your relationship with the bank or even potential investors. Seasoned accountants are trained and have been exposed to delivering financial statements promptly. Despite the time constraints and tight deadlines, a reliable accountant will not sacrifice the quality of such reports in accordance with regulatory requirements set by the accounting standards.
When you need to focus on other business aspects
The complexity of bookkeeping has a direct relationship with the size and success of your business. The more transactions you have, the more categorizing you need to do. Although you can always automate and systemize this process, there may still be instances when you’re at a loss on how to go about recording new and unique transactions. This is when an accountant’s expertise will come into play. Moreover, some financial tasks may be so complicated that you would need to seek help from an accountant. An example of this is payroll. When your business starts to get bigger, you would naturally hire more employees and processing payroll stops being a one-person job. As a business owner, you will need to oversee all operations and dedicate your time to the more profitable ones. Delegating this task to a professional team will spare you these worries.
When you do not know if you are filing your taxes properly
It is better to be safe than sorry when it comes to filing your taxes. Each country has its own business tax laws you must abide by, along with local tax codes you need to understand to correctly compute your tax due. The Canadian Revenue Agency and other tax collecting agencies in the world compute your taxes according to these laws and codes. You mustn’t take these matters for granted as authorities may come for you upon tax assessment. You would not want to pay the incorrect amount and incur interest and penalties; hence, it would be better if you had an accountant with tax expertise on your side, helping you file your tax returns.
When your budget permits you to do so
When you’ve finally decided to hire a professional, you should not just jump into getting a big firm to do your books. Budget is a big factor when it comes to picking an accountant. The amount you spend on professional services should not be harmful to your bottom line figures. Engaging yourself with an expensive professional might cause you to have a net loss instead. Getting an independent freelancer just might do the job, saving you a lot of money. Large accounting firms or small local practitioners will give you proposals, which contain the fees and scope of services they offer, so make sure to do your research and study each and every last one.
In conclusion, it is solely up to you when you should hire an external accountant. If you run a small business and have an accounting background with enough knowledge of properly filing taxes, doing it yourself may be the best option. But as your business grows and operations start to become complex, it is best to manage your time properly and let the professional do the accounting while you focus on more important aspects of your business. Hiring an external accountant may be a high price to pay, but all the advantages that come with it make this investment worth it.