Accountants can help out at various stages during the growth of a small business.
Like all small business owners who are looking to save money, you may think you can’t afford an accountant. But look at how long it would take you to do certain tasks (such as taxes), and ask yourself, is that a good use of your time? Investing in professionals can bring considerable returns. They’ll keep control of your tax obligations, identify savings, and help you grow your business.
As a small business owner, you have to do a lot yourself. There simply isn’t the money to outsource much. In deciding whether or not to get outside help on something, you have to ask if doing it yourself creates extra risks or costs.
Here are the potential downsides of DIY bookkeeping:
· You miss out on tax breaks by failing to claim valid expenses
· You fall behind with invoicing (and with chasing unpaid accounts)
· You underestimate your tax bill and get into trouble with the government
· Tax returns and other compliance paperwork is filed late, resulting in fines
· The books end up with mistakes that take hours to fix
· You don’t have reliable information to help you make business decisions
So when should you hire an accountant?
There are good reasons for hiring an accountant at different stages of your company's growth. From company formation, loan application to government audit, an accountant can make life easier for you at each step.
You’ll need advice about your company’s legal structure
Not all businesses have the same legal structure – there are different types that are determined by several factors.
You should carefully consider each type before deciding which one best suit you.
For example, you may do business as a sole trader or sole proprietor, working on a self-employed basis and invoicing under your own name. If this is the case, you might be able to offset some of your living expenses against tax.
However, this also means you could be held personally liable for any business-related obligations. If your business fails to pay a supplier, defaults on a debt or loses a lawsuit, the creditor could legally come after your house or other possessions.
With a limited liability company structure, it's different.
An accountant can explain the legal business structures available and help you choose the one that best suits you.
You’ll need an accountant to help with the processing, debtors and creditors
Small business accounting can quickly become complex if you do it on your own. If you feel you're losing control of who owes you money and how much, an accountant can help you get back on track.
If you make use of cloud-based accounting software, they'll be able to share your business accounts with you quickly and easily. And they can produce reports that will help you understand your company's current financial situation at a glance. This will help you monitor the pulse of your business and keep track of important things like cash flow.
Hire an accountant when you're ready to delegate
If you’re left feeling overworked and stressed. At some point you will have to let go and learn to trust other people to handle some parts of your business so that you can look after the rest.
Once you've handed over your company's finances to someone experienced in accountancy, you will have more time to concentrate on other aspects of your business.
An accountant can tell you what to do to ensure your company pays the least possible tax while remaining compliant. An accountant can often reduce the amount of tax you have to pay. If you engage them at the start of the year and ask for tax planning services, they’ll come up with a strategy that keeps more money in your business.
Your invoicing system is central to the health of your business. If you don’t bill efficiently, you won’t get paid quickly – and that’ll leave you short of money. It sounds basic, but this factor alone undermines a lot of businesses.
As an example, think of the plumbing and heating engineers that might service a building. About two weeks after they’ve been, they send an invoice, which gives 30 days to pay. If the business owner pays on time, their business is waiting more than six weeks for the cash, even though the employees who did the work were paid the week the job was done.
Get an accountant or bookkeeper to set up an automated invoicing system and you’ll be able to:
· send invoices quickly
· check at any time to see which ones have been paid and which haven’t
An accountant can assist when you need financing
Banks like to know they'll get back the money they lend out. Since the credit crunch, lending to small businesses has dropped in most countries. This makes it all the more important that you have a sound business case when you apply for a loan or overdraft.
An accountant can help improve your chances. Your accountant can present facts and figures that back up your application for funding. They’ll also be able to answer any questions your bank might have about revenue projections and expenses. Your accountant can compile financial statements as requested by the banks.
When you have to do the books yourself, you often don’t get onto it straight away. That means you don’t always have reliable, up-to-date information about your business.
And when you fall behind, it limits your ability to manage well. You don’t know how profitable you are or how much cash you can afford to spend on improving the business.
When you get an accountant, they’ll ensure you always know where you stand. You’ll be able to see income and expenses as they happen, which will give you a good picture of short-term cash flow and long-term profitability.
When your company is growing, hire an accountant
Companies don't always grow at a steady rate. A new client or a big project can mean you need to grow your business more quickly than expected.
An accountant can help you handle growth transitions, such as hiring employees or taking on more office space. They'll look after the detail (payroll, employee tax management, property tax, utility payments and so on), leaving you free to look at the bigger picture of the way your business is growing.
An important aspect of an engaged accountant is that they are always working behind the scenes. This is critical because it allows you to focus on your business and not your accounts. For example, if you ever need to submit documents to CIPC or SARS, your accountant will take care of it. This saves you tons of worry and stress. You can rest assured knowing that accounts are in order and that your business is compliant.
Accountants can help you every step of the way
As you can see, accountants can help you out during every stage of your company's development. That doesn't mean you have to hire one, but an accountant should make life easier for you, so you can concentrate on what you love doing.
Your speciality is running your business. Leave the financial details to an accountant.
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