Every dollar counts when you run a small business. And when you’re ready to level up, deciding to hire an accountant can be a smart way to put your dollars to work. That’s because a good accountant can help you optimize your taxes, increase your cash flow, and plan for the future.
If you’re still questioning whether or not it’s time to hire an accountant or if you’re not sure how to hire one, this article will break everything down for you. You’ll learn how accountants can help, how much they cost, and the steps to hiring one.
Should You Hire An Accountant For Your Small Business?
What does an accountant do?
The short answer is that accountants can provide financial analysis, help you develop a business plan, offer tax advice, and help you prepare your taxes. They can be a massive help to a small business, but hiring accounting support can be a game-changer no matter what stage your business is at.
Here’s a more detailed explanation of how a business accountant can help you:
Business advisory services
Accountants can use accounting software to create financial projections and reports that will help you write a business plan. Using data-driven numbers in your business plan means you’re more likely to write a realistic business plan, and that’s when you’re more likely to succeed.
Another advisory service they can offer is with your company’s legal structure. LLC, S-Corp, partnerships, etc. — what’s the best setup for your business? An accountant can advise you on the benefits and downsides of each to decide which is the best structure for your small business.
I hired my first business accountant for this reason — taxes are daunting and they can help you deal with the government. And so many small business owners hire an accountant when it’s time for their first tax filing for the same reason.
An accountant will be able to:
- Prepare annual and quarterly tax statements
- Keep your company up to date with the most recent tax laws
- Complete and file legal and compliance documents
- Help you find and take the right deductions
- Ensuring employees’ tax codes are recorded correctly for payroll
- Record and organize share/stock allocation
Not only are accountants helping you save money on taxes, they keep you compliant, which saves you fees. Many business owners find that hiring an accountant saves them more than the initial cost of the investment.
Accounting and record-keeping
Many business owners hire an accountant to help them with the basics of managing their day-to-day records. They can help you set up accounting software, input all of your information, and help you use it. As a result, you’ll be able to track your business budget, monitor expenses, and be ready to produce financial statements for tax time.
Running an audit
When you apply for a business loan, hiring an accountant can help you prepare financial statements and ensure that all of your financial information is accurate. Banks may require you to hire an accountant when you apply for a loan, but an accountant can improve your chances if the bank doesn’t require professional help.
Handle growth transitions
Growing your business is the goal, but many small business owners experience growing pains that the help of an accountant can ease. They can help as you hire employees or contractors, introduce a new product or service, or expand your office space. In addition, accountants can handle the financial details of your growth while you focus on the bigger picture.
Selling your business
I know you’re probably not here yet, but there’s a chance you’ll want to sell your business in the future. Accountants can gather financial records and prepare reports, talk to potential buyers during the due diligence process, and structure your financial affairs so you get the best deal possible.
How much does it cost to hire an accountant for a small business?
The typical hourly rate for an accountant is anywhere from $50-$400+ per hour. Of course, that’s a wide range, and it varies based on the type of work they’re doing for you, size of the firm, experience, and location.
Accountants may have different cost structures too — some basing fees on business revenue or flat rates followed by variable costs. Hiring a CPA will put you on the higher end of that scale, and they offer higher-level services that some businesses need.
You can save money when you hire an accountant by hiring a bookkeeper or doing bookkeeping on your own. An accountant will cost more if they also need to provide bookkeeping services. In case you’re unfamiliar with the difference in bookkeeping and accounting, bookkeepers record daily transactions, and accountants use that information to produce financial models. Bookkeepers do more transactional work, while accounting is more subjective.
You don’t have to hire an accountant to do everything for you. Instead, look at where you need the most help, and start there.
If you can’t afford to hire an accountant, investing in some good financial software, like Quickbooks can be a major help until you’re ready to make a larger investment.
How to hire an accountant for your small business?
When you decide it’s time to hire an accountant, the steps I’m about to outline will help you find the best person for the job:
Step 1: Identify your needs
Your small business has unique needs, and understanding those needs will help you decide what level of accounting service you need. For example, having cash flow problems or getting ready to sell can mean you need someone full-time, at least initially, while they get everything in order. But if you just want help at tax time, a part-time accountant who specializes in tax services can be a good choice.
It’s also important to think about your industry. For example, some accountants specialize in helping freelancers, ones who know more about restaurants, and so on.
Step 2: Decide on part-time or full-time help
The first step prepared you for this one, and knowing if you want part-time or full-time help helps you search for an accountant. Part-time accountants typically charge on a per-hour basis, while full-time ones may charge on retainer or based on your business revenue.
Step 3: Look for candidates
Fortunately, there are a number of ways to find qualified candidates, and you shouldn’t limit yourself to one avenue. Here are some options:
- Post a Job on Upwork. Upwork is an online freelancing platform, and you can either post a job and let people come to you or search through their database to find a candidate.
- Use 1-800Accountant. This online platform helps business owners and individuals find accountants and bookkeepers to help with taxes, payroll, and more.
- Search for an accounting firm. Firms offer less individualized support because you might have multiple people working for your business. The benefit is that you’re only paying for the services you need.
Those are just a few options, and you can literally Google, “accounting services for small business owners.”
Step 4: Get ready for the interview
Once you’ve found your candidates, asking the important questions will help you hire a person who will meet your needs. Here are some questions you may want to ask:
- Are you a CPA?
- Who are some of your clients? And call them for more information.
- What areas do you specialize?
- Here are the areas I need help, how could you help me with them?
- Do you belong to any professional organizations? How active are you in those groups?
- What kinds of accounting software are you comfortable with?
- How have you helped drive real business results for your clients?
Don’t be afraid to ask more personal questions that will help you decide if they’ll fit in with your team.
Step 5: Onboard your accountant
Once you’ve hired an accountant, you can’t just let them loose and expect good results. You need to take some time to show them around your company and set some guidelines. A seasoned accountant will probably be ready to dive in without much guidance, but you can set guidelines for checking in and measuring success.
Your accountant will need to know your preferred reporting practices, but there’s a good chance they can offer guidance here.
The final word: Does my business really need to hire an accountant?
Not every business needs an accountant, but many small business owners find that accountants are worth the cost for tax planning services alone. In addition, they can help you find deductions you didn’t realize were there, and could be money back in your pocket.
Deciding to hire an accountant is also a way to outsource time-consuming and stressful work that has to be done. You’ll free up time to devote to other facets of your business, which can promote growth.
You’ll have to weigh up the benefits with the cost to decide if it’s time to hire an accountant. I wish I had hired one sooner, and that’s the case for many of my entrepreneur friends. When you’re ready to hire one, check out Upwork and 1-800Accountant to find qualified professionals.
But if you’re not quite there, investing in some good accounting software, like Quickbooks, can be a huge help in the meantime.