Do I need an accountant for my small business?

Plenty of small businesses start with the owner or a trusted family member doing the books. Yet as the business grows, often so does the need for additional accounting expertise.

Knowing when that moment arrives—and what to do when it does—can be a key decision in the evolution of your business.

Accounting experts recommend that business owners be proactive about addressing increasingly frequent and complex bookkeeping and accounting duties to make sure they get done accurately and on time.

Signs that you may need accounting help

It’s when small business accounting duties become too complex or start to slip, that small business owners should move to action, says Cynthia Hemingway, an accountant and service manager for FourLane, a provider of outsourced accounting services that also advises clients hiring their first accountant. Hemingway says if one or more of the following occurs, you should consider getting some level of accounting support:

  • You can’t keep up with routine accounts payable and billable duties.
  • You filed for an extension on your taxes because you’re behind on your books.
  • You don’t know your business’s profit margins.
  • You aren’t sure if you’re withholding the right amount of taxes.
  • You have more than one location and/or are doing business in three or more states.
  • You’re spending more than six hours a week doing payroll.

Several years back, Hemmingway found herself facing many of these challenges. Ironically, she was running a small business that offered accounting and consulting outsourcing services, but was struggling to do those same things for her own business.

“I didn’t have time to do my books—and I am an accountant,” Hemmingway says. “As a small business owner, my first priority was getting revenue in the door, which didn’t leave much time for a lot of the accounting duties.”

If her story sounds familiar, it’s time to assess how to handle your business’s accounting moving forward.

Three small business accounting options to consider

1. Find part-time accounting help

Part-time accounting help can come in many different forms. Some small business owners can find a current employee who can handle some of the more transactional aspects of accounting. Another option is to hire on someone with good accounting and organizational skills part time.

Hemingway says both options can be successful, but each has potential drawbacks. Tapping a trusted existing employee can work if they have the time to handle accounting tasks as well as their other duties. Meanwhile, finding someone with the necessary skills and knowledge who wants to work part time for an extended stretch of time can be challenging.

Back when she owned her own business, Hemingway crafted her own solution by hiring an office manager who handled accounting duties part time but also had other responsibilities, including some billable client-related work that helped cover the cost of her salary.

2. Outsource your accounting

Outsourcing can be a great option for a growing small business, particularly because it allows you to select and modify the level of service you need.

“I highly recommend outsourcing payroll if no one in the business has prior experience on the withholding and remitting of taxes and the compliance reporting,” says Ann Stott, assistant professor in the School of Accountancy at Ohio University. 

Hemingway agrees, saying that small businesses often vary the level of service they get from an outsourced firm. Some might seek transactional support while others might need help with growth strategy.   

“An outsourced accountant can look at how you bring a dollar through the front door and track it through your accounting program to the financial statement,” Hemingway says. “Then they can provide analysis and give you a clearer picture of the story of your business and ways you can make improvements.”

3. Hire a full-time small business accountant

Many small businesses may never grow large enough to require a full-time accountant. Yet others may experience enough growth and increased complexity to warrant the hire. In Hemingway’s experience, most small businesses that need in-house support should consider hiring someone who also possesses CFO-style capabilities. That person can oversee accounting activities while also providing strategic and financial advice aimed at driving profitable growth

No doubt, your accounting needs will continue to change as your business grows. To keep ahead of that change, be sure to:

Staying on top of your accounting demands

  • Be aware if accounting duties start to slip or are becoming too complex or time-consuming.
  • Assess the range of options available to handle your bookkeeping and accounting.
  • Take action that offers the best fit for your business now, and will put you in a strong position moving forward.

Sound accounting practices are critical to maintaining steady cash flow, good credit, and strong profitability. By making sure that you have a strong plan in place to take care of the books, you can focus on other aspects of growing your business.

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