Every small business owner has a breakthrough point where they must decide whether or not hiring an accountant is in their best interest.
It usually happens when the business owner is struggling to manage their daily cash flow and is finding it difficult to file tax returns.
The only thing that stops them from getting an accountant on board is fear – fear that they might not be the best fit for their business.
Another fear that comes with hiring a small business accountant is the cost. But this fear is easily tackled when they compare the benefits with their relevant cost.
Hiring a small business accountant can truly transform your business.
Let’s explore how they can help you and how you can find the right one.
Key Takeaways
- 34% of businesses handle their own books.
- 62% of small businesses have hired an in-house accountant.
- There are 6 steps to hiring the best accountant for your business.
- A small business accountant helps you set up your account and manage payroll amongst other tasks.
What does a business accountant do?
A small business accountant can help you manage your financial records, ensuring data accuracy and consistency across channels.
In most cases, when a business hires an accountant, they already have a bookkeeper on board.
This bookkeeper may be helping you stay on top of your finances, tracking day-to-day transactions, and maintaining your books.
And the first thing that an accountant does when they come on board is make sense of those numbers.
They analyze your books and tell you how the finances of your business are doing.
Up until now, you were simply tracking the numbers but with an accountant, you turn these numbers into insights for informed decision-making.
34% of small businesses handle their own books.
82% of businesses fail due to cash flow problems. These are problems that arise only when you don’t have a proper accountant to guide you.
How do accountants help small businesses?
Here’s a list of ways an accountant can help you.
- They help you prepare financial statements, like income statements and balance sheets
- They maintain and audit your accounts regularly
- They handle payroll and employee remuneration
- They help you prepare for filing and identify ways to leverage tax deductions
- They conduct financial forecasting and help you find potential for growth and investment
5 steps to finding the best small business accountant
Here is a list of ways you can hire the best small business accountant.
Step 1: Describe their job description
The job description of an accountant depends on what you want them to do for you.
While some businesses hire an accountant to manage their day-to-day financial responsibilities, others only hire them during tax season to ease their burden and help them file their tax returns.
Here is a list of tasks you may add to their job description:
1. Account setup
If you need help setting up your accounting software, hire an accountant to customize its features for your industry.
An accountant helps you set up your account so that it optimizes your performance, helping you save time and money.
2. Payroll
While many businesses choose to work with an external payroll service, you can get an accountant to support you in processing payroll for your employees.
They can further help you generate direct deposits and submit quarterly and yearly payroll forms.
This way not only do you save money but you also centralize diverse functions.
3. Finance management
An accountant can analyze your financial patterns to help you avoid risks and financial failures.
They can also prepare quarterly and annual budgets and forecast financial performance to compare results.
They will further help you identify areas for growth, giving you financial insights for informed decision-making.
4. Back-end tasks
Hiring an accountant is going to shape different aspects of your business.
In addition to financial management and payroll services, they help you with a number of other tasks. For example:
- They help you pay bills
- They help with generating invoices and bills
While all of these tasks are automated with NetSuite implementation, you still need someone to oversee and ensure accuracy.
5. Risk Management
A small business accountant secures your accounts and financial assets. They maintain data accuracy and protect your business from potential threats and fraudulent activities.
Their role becomes even more prominent when it comes to evaluating economic conduction and its implications on your business.
6. Tax Returns
Whether it is sales tax or income tax returns, a small business accountant can help you stay compliant throughout the tax season.
They have the expertise and knowledge to guide you regarding tax deductions so you can save money wherever possible.
Step 2: Choose between in-house and independent accountant
To choose between hiring somebody in-house or outsourcing your accounting and bookkeeping, one of the best ways is to evaluate the scope of responsibilities you want an accountant to perform.
62% of small businesses have hired an in-house accountant.
| Criteria | In-house accounting | Outsourcing Accounting |
|---|---|---|
| Cost | Higher due to salaries, benefits, and office space requirements. - | Typically lower, as you pay for services only when needed. |
| Control | More control and direct oversight over accounting processes.- | Less direct control, but you can set expectations through service agreements. |
| Expertise | Limited to the skills of your internal team. Can require additional training or hiring for specialized tasks. | Access to a broader range of experts, including specialists in different areas of accounting. |
| Scalability | Scaling requires hiring more staff, which can be time-consuming and costly. | Easily scalable, as you can adjust the level of service based on business needs. |
Step 3: Confirm the accounting software they use
When you hire an accountant, find out if they understand the accounting software your business uses.
94% of accountants use cloud-based software.
Ask them questions to see if they actually know how to work it.
This session will help you determine if the software is a learning curve for them or something they are already used to.
You can even conduct a test to evaluate if they can perform basic accounting tasks like entering transnational data, generating invoices, and reconciling financial data.
There are several top accounting software out there, but QuickBooks Online and Xero have the most with the maximum market share.
Step 4: Do they have expertise in your niche industry?
This is the most important aspect of hiring a small business account.
Do they even have expertise in your industry?
When you hire someone with industry-specific knowledge, they can help you identify trends and tax deductions.
Step 5: Evaluate their background and credentials
When you hire an accountant, it is important to evaluate their educational and professional background.
Make sure you verify their educational documents.
And as for their technical expertise and professional background, ask them the following list of questions:
- How long have you been working as an accountant?
- Which industries and business size have you worked with?
- What is your communication style?
- Do you use any accounting tools?
- Can you handle and help with tax preparation?
- How much would you charge?
- How do you prefer working? On-premise, remote, or hybrid?
- Can you create a business plan?
- What are your technical expertise?
- Do you know how to use NetSuite and third-party integrations?
3 tips to evaluate a small business accountant
While there are various ways you can evaluate if an accountant is suitable for your business, here are the top 3.
1. Evaluate their background
Hiring an accounting agency may be the most important decision you make for your business.
The best way to hire the best accounting agency is to see where their expertise lie.
Do they offer support for tax preparation? Evaluate their specialization and see the list of their existing clients.
It might help you figure out the industries they have the most experience working with.
When they have relevant experience in your industry, you’d have a much stronger opinion on whether to work with them or not.
2. Streamline communication
Before you get an accounting agency on board, get to know their preferred mode of communication.
You probably shouldn’t hire someone who is not willing to have an open and collaborative discussion with you.
A good accounting agency is one that is open to exploring different modes of communication and has regular sit-downs to discuss the financial health of your business in detail.
3. Find out if they can help you grow
When you hire an accountant, ask them one simple question: Are they willing to grow with you?
Be clear and set out your expectations. If they still sign up, maybe you’re headed in the right direction.
Assess their expertise in working with tools that support your company’s growth.
Can they handle large volumes of data and the pressure that comes with tax filing?
These are simple but important questions that will give you clarity on their role in the growth of your business.
The Bottom Line
Hiring a small business accountant can:
- Shape your business
- Streamline your finances
- Helping you manage your books,
- And strategize core finances.
Having a strong financial health in a business puts you miles ahead in terms of financial projections and mitigating risks.
Sometimes, outsourcing your accounting is in your best interest.
And this is where Ledger Labs comes into the picture.
We have helped businesses of all sizes and industries within our decade-long experience.
Let’s book a consultation call and walk you through how we can help you.
