It’s possible to run a business without an accountant – but that doesn’t mean it’s a good idea. Accounting tasks can be complex and stressful, preventing you from focusing on the day-to-day needs of your business.
In fact, the five critical team members your business needs for success are the leader, the strategist, the expert, the executor and the financial guru.
Just 40% of small business owners have a high level of accounting and finance knowledge, and one-third feel frequently overwhelmed by challenges like closing monthly books, managing paperwork, and handling cash flow.
Is it time for your company to hire an accountant? Let’s look at 5 signs that an accountant could be a big help for your business.
1. Basic Tasks are Holding You Back
Routine bookkeeping can be surprisingly time-intensive. Tasks like posting transactions, reconciling entries, and tracking down errors can eat up hours of your valuable time.
A survey by SCORE, an organization that mentors small business owners, found that 40% of business owners call bookkeeping the worst part of owning a business. Yet 26% of them spend 3 to 5 hours a month on bookkeeping, and 28% spend at least 6 to 10 hours a month on it, sometimes more.
If basic bookkeeping is holding you back from accomplishing other things, that’s a red flag. When your attention is constantly needed for little details, it costs you the focus it takes to make big-picture decisions for your business.
2. Business is Booming
Have you recently experienced a period of rapid growth, or you getting ready to expand? Growth is an indication that your company needs professional accounting assistance.
When you’re growing, you’re quickly adding inventory, revenue, staff, and paperwork. It’s easy to overlook important details and make a small accounting mistake that could cause a major problem for the company.
3. Something is Limiting Your Profitability
Here’s another warning sign: The company is taking in more money than it used to, but you’re still struggling to make the numbers work. Revenue is up, but the business isn’t more profitable.
This is often an indication that you have a problem with expenses, payroll, or another part of your financial picture. As a business owner, it can be hard to pin down the exact problem, because you’re busy with running daily operations. An accountant can help.
4. Taxes Drive You Nuts
Do you dread tax season? You’re not alone. About 60% of small business owners spend at least 40 hours on tax preparation each year.
Many business owners also miss out on tax breaks purely because they aren’t aware of them or don’t have time to learn about tax issues. The IRS offers tax deductions for small businesses that can reduce your tax burden significantly.
It’s worth the investment to hire an accountant to handle your taxes. IRS penalties for small businesses filing improperly are steep – in fact, you can owe an extra 5% to 25% merely for paying late or incorrectly, and owe an extra 75% if the IRS thinks you did it on purpose.
5. You’re Being Audited
If you’re being audited – either by the IRS or by any regulatory agency – it’s time to get professional help with accounting. An audit means extra paperwork, oversight, deadlines, and stress. Every detail matters.
An accountant can handle the ins-and-outs of an audit, from the financial details to communicating with regulators. They know the right language to speak and how to ensure everything is resolved with 100% accuracy.
Next Step: Customized Advice
Do the red flags above resonate with you? If so, it’s time to explore accounting and financial services that can provide the support your company needs.
Ascension CPAs & Consultants helps businesses operate more profitably. We focus on reducing the tax burden a business faces and providing accounting consulting services with a customized, personal touch.