Launching a startup already brings plenty of challenges. Managing finances shouldn’t be one of them.
Yet, for most business owners, finance management can easily becomedaunting.
When people hear the word “bookkeeping,” they often picture piles of receipts and dense spreadsheets, not to mention the math involved in tracking every dollar.
Due to this overwhelming image, many startup founders label robust financial management as unnecessary, only to face bigger problems down the road.
This can lead to several consequences, such as negative cash flow, missed payment deadlines, and lack of clues about business growth.
But it doesn’t have to be this way. The right approach can make handling your money matters a stress-free process.
Bookkeeping packages, specifically designed for startups, can help you stay on top of your accounts without headaches. Plus, finding an affordable option is easier than you might think—and we’ll show you how.
Key Takeaways
- 75% of accounting tasks can be automated with accounting software.
- Cash flow management, bank reconciliations, payroll management, and financial forecasting are some of the responsibilities of an accountant.
- Outsource your accounting needs to someone reliable who leverages technology and advanced tools to reduce time and cost.
Small business accounting – What does it look like?
Imagine a situation where your sales are strong and have surpassed expectations. What would that mean for your small business?
Of course, it’s great for business but from the perspective of finance management, you’ll be spending hours on spreadsheets, organizing data, tracking transactions, and reconciling bank records.
This would leave you little time to focus on core business activities and even less to think about growth and other business opportunities.
And come tax season, you’d be scratching your head in frustration, exhausted beyond imagination.
42% of SMB owners admit to having no financial literacy before starting their business.
Hiring an accountant can change things for the better.
With the addition of an accountant, you have an extra set of hands handling all things finances.
An accountant will help you set financial goals for the next quarter and identify tax deductions to maximize your profit earnings.
They will pay attention to every minute detail, making the most of every dollar.
The role of an accountant in a small business cannot be understated.
In fact, it wouldn’t be wrong to claim that they play the most important role in taking your business in the upward direction.
Tasks a small business accountant is responsible for
A small business accountant helps businesses with their finance management.
They provide extensive support depending on the size and specific needs of your business.
Now an accountant will combine efforts with the bookkeeper, providing you with financial insights to give your business a strategic edge.
Wondering what a regular day would be like for your accountant? Here’s a quick summary.
- They will manage cash inflows and outflows.
- They will be maintaining your account payables and receivables.
- They will provide financial analysis and identify growth opportunities.
- They will manage payroll and fixed assets.
- They will handle financial forecasting.
- They will create financial statements, like balance sheets and income statements.
- They will help you prepare for tax filing and identify all tax deductions possible.
5 steps to hiring a budget-friendly accountant
Let’s explore the 5 steps to hiring a budget-friendly accountant.
1. Understand your business needs
The most important step in hiring an accountant is identifying the difficulties you face on a daily basis.
Evaluate what type of financial help you need.
And to establish this, you’d have to review your financial history.
Go through different financial records and determine all cash flow problems. Review the state they are in.
Now, if the cash flow register is all over the place, you’d need hands-on support, especially if the tax season is right around the corner.
But if your finances are in good shape, you can do with a part-time accountant.
Also, determine if there are any specific industry-related problems.
For example, if you need support planning the budget for the next quarter or require major assistance with financial forecasting.
You basically want someone who can provide you with deep financial analysis and practical steps to improve your financial state.
To make things easier, look at the following questions.
- How much work do you have every month?
- What months are specifically busier for you?
- Are your financial records beyond your fixing?
- How much can you afford?
These questions will help you answer how much help you need and what type of need to be exact.
2. Decide your budget
Taking the previous point forward, it is important to know how much you can spend on hiring an accountant.
Thus, how spending power is a big deal in this case.
And let’s be honest, it’s always the intention to hire the best person for the job without paying them too much.
An average bookkeeper would cost you somewhere between $30-$50 per hour and $200-$800 per month.
The hourly rate of an accountant varies between $50-$150. On the other hand, they can cost you up to $2,000 per month.
The math is simple – the more work you want to get them to do for you, the more money you’d have to pay.
3. Explore different options
While you can leverage technology to organize and manage your finances, you can also outsource your finance management to a well-known service provider.
And if you require minimal support, you can even think about hiring freelance accountants.
75% of accounting tasks can be automated with accounting software.
Automation reduces the manual input, allowing employees to focus on core business functions and take strategic initiatives.
There are so many options, like QuickBooks Online and Xero.
Choose software that you can work with – while every software is a learning curve, once you get a hang of it, finance management will get simplified and quicker.
Accounting software automates tasks and increases workflow efficiency by improving data migration.
The best thing about accounting software is it provides you with real-time data for more informed decision-making.
As for choosing between outsourcing and hiring freelancers, the answer depends on your budget and bandwidth for handling the onboarding process.
While freelancers will cost you less, they will be paid only for the work they are paid for. Outsourcing is affordable but you pay for the results, not just tasks.
4. Evaluate candidates
Hiring an accountant is a challenging job because you want the best person for the job.
This means you’d have to review the profiles of various candidates.
The first step is to look at the qualifications.
Next, look at their experience.
- What type of businesses have they worked for before?
- What role did they play there?
- How much responsibility can they handle?
Test their technical skills and interview them in detail to find out what type of employee they would be.
Ask them questions about the communication method they prefer and its frequency.
You want someone who has the technical skills but at the same time, they should be a cultural fit for your company.
If you don’t like following up excessively, make sure to hire someone who works independently but is efficient and proactive in their approach.
5. Begin onboarding
Onboarding is crucial as you provide all important information about your business to the accountant.
The more transparent you are about your finances, the better.
Explain to them what you sell and for how long you’ve been doing it.
Tell them how you currently manage your finances and the tools you use to track your transactions.
Share your thoughts on the future – where you see your business going.
Explain how much you intend to spend and what your current budget looks like.
They also share financial records and bank details so their work becomes easier.
3 things your accountant must do
When planning to hire an accountant, one should have a list of things that they would definitely need from them.
What you can do is create a list of priorities.
Mention the things you want to get done with as soon as they begin.
Here’s an example of the three things that every accountant should do:
- Manage and improve your cash flow
- Create a budget for the next six months
- Prepare for tax season
Now these needs may vary from business to business.
The idea is to take inspiration and determine what your business needs. And provide that list to your accountant.
3 red flags to watch out for
Now of course you also don’t go hiring anybody with rose-tinted glasses.
Not every candidate that looks ideal on paper would be suitable for your business.
You need a good accountant, even if they cost you more than you expected.
The reason is simple: poor accountants do more damage to small businesses than no accountant at all.
This means you’ll have to be careful when hiring an accountant.
Interview them for the second time if you feel you didn’t understand something or want to discuss something that you missed out on the last time.
Ask for references and conduct proper background checks before you hire someone.
Here are the top red flags that you should look out for when hiring an accountant for your small business.
- Any accountant who tells you not to pay attention to receipts
- Any accountant who asks you to sign checks or financial statements without providing you context
- Any accountant who fails to give you an estimate for tax services
The bottom line
An accountant plays a crucial role in improving the financial performance of a small business.
They handle various responsibilities, making their hiring and onboarding process an important transition for your company.
While you should be mindful of the various red flags, make a list of must-haves that you expect from your accountant.
It will simplify the hiring process and ensure you hire the right person for the job.
Depending on your budget, you can either hire a full-time accountant or choose to hire freelancers and only pay them for the task.
But if you are smarter, you’d outsource your accounting needs and pay for results. Ledger Labs has 12+ years of experience helping businesses across industries and sizes. We specialize in accounting and bookkeeping and also provide tax support to small businesses.
Book a consulting appointment with us to find out more about our services and how we can help you.
