Business and Personal Finance: How Accountants Can Help You

Accounting Is More Than Numbers – How Accountants Can Help You

When you are just starting out in business, having a professional accountant on your team can make your life as an entrepreneur a lot simpler. Without a background in business accounting or finance, it’s easy to get the numbers wrong, or sometimes even overlook certain numbers altogether. Also, when it comes to setting up an accounting system, getting it right from the start is a must, even if you use the most basic do-it-yourself software package. Trying to change it after the fact is pretty tough, if not impossible.

Once your business is up and running, you’ll find many more reasons to have an accountant. From creating more useful reports to going over the numbers with you to helping you make plans for next month or next year, having her available to walk you through the finances frees up your time so you can focus on the business of running your business.

Then comes tax time. Whether it’s sales tax, payroll taxes, or income taxes, having an experienced professional deal with the paperwork will remove a huge headache-producer from your life. Plus, on top of your time savings, you could end up saving money. Tax mistakes can be pretty costly, in part because late filings are subject to fees and fines. Also, professional income tax preparers really know their way around deductions, which can reduce your company’s income tax bill from a shade tree to a sapling.

When You’re Just Starting Out

Hundreds of new businesses crop up every day in the United States, and every year thousands of them fold. A lot of the time, those failures could have been prevented easily with better financial planning and management, two areas where an accountant can help. In fact, if you hook up with an accountant during the planning stage, he will be able to point out potential pitfalls before they show up, and help you figure out ways to prevent or deal with them.

READ:  Business and Personal Finance: Inventory Transforms into Cost of Goods

Alert !

While you may be comfortable with the CPA who’s been doing your personal taxes, he may not be the best person to deal with your business taxes. The two types are very different, and someone well-versed in personal returns may not have a lot of experience in small-business returns. That can lead to an unnecessarily high tax bill on your business income. It’s very important to make sure that whoever takes care of your business taxes knows the ins and outs of a business return.

If you’ve started working on a business plan (something no new business should be without), you know there are pages upon pages of numbers involved. When it’s your first business plan for your first business, coming up with those numbers is a daunting task. First, you have to figure out how much it will cost to get your company off the ground and where that money is coming from; without enough startup cash, your business may not even make it past the planning stage. Then you have to estimate what your sales and expenses (among other things) will be over the next couple of years.

Experienced accountants won’t even blink when you ask them to help you come up with these numbers; it’s their job.

These are some other things that accountants can do for startup businesses:

  • Help you choose the best business structure (like corporation or limited liability company [LLC])
  • Introduce you to bankers
  • Set up your accounting system
  • Teach you how to use your accounting system
  • Show you different ways to keep initial costs down
  • Help you get all the necessary tax ID numbers
READ:  How Much Boxing Gym Business Owner Makes?

Once Your Company Is Up and Running

After your company has been around for a few months, you will have a better feel for the way your business flows. You’ll also know by then which things you like to do yourself, which things you feel you have to do yourself, and which things you cannot wait to pass off to somebody else. A lot of the time, what falls into that last category are routine bookkeeping and paper- work tasks.

Once you know how to do tasks, and what the results of your work should look like, you may be ready to stop doing them yourself. That’s the time to consider bringing in a bookkeeper, whether you have enough volume to put her on your regular payroll or just enough to bring in an independent bookkeeper once a month. That person could handle all the detailed data entry, freeing up your time for other projects. You’d still have the ultimate responsibility for reviewing and understanding the final numbers, but without the time-consuming process of having to come up with them.

Payroll is another labor-intensive job that many small-business owners farm out. Many bookkeepers and accounting firms offer this service, and there are also dozens of dedicated payroll service providers. Most companies offering payroll preparation services can do everything from writing paychecks to filing all the necessary payroll tax returns. All you have to do is provide signatures and money, and record the grand totals in your books (or have your bookkeeper do it).

Speaking of taxes, having a business opens up the gate for a lot of different tax returns. In addition to payroll taxes, there are income taxes (both for your company and for you) and sales taxes. Some businesses (such as gas stations) are subject to specialized taxes, and have to file extra returns.

READ:  How to Sell the Hand Tool Business in 9 Steps: Checklist

Accounting professionals can help you figure out which returns are required for your business, prepare them for you, and provide you with detailed filing instructions so you don’t miss any deadlines.

Looking Toward the Future

An experienced accountant can provide invaluable help as your business grows. She can help you build on any success you have achieved so far; help you turn around a business that’s struggling now but has a lot of potential for success; and help you figure out the best ways to grow your company and what you need to have in place before that expansion begins.

The latter includes obtaining adequate financing, which is crucial to success. Your accountant can help you figure out how much cash you really need to get things going, as well as the best source of funds.