The trickiest part of growing a business is knowing what to do when.
Every business is different, so there’s no guaranteed roadmap to success. That’s why 50% of businesses fail in their first five years. Many of those failures arise from poor financial management. Even a stable business can spin out of control if it doesn’t keep an eye on the figures.
So when is the right time to hand your accounts to a professional? Below, we’re looking at 7 signs it’s time to hire an accountant for your business.
1. You Want to Start Strong
Much like a building, a business needs strong foundations.
One of the most vital foundations of a business is its finances. It’s a lot harder to get your finances in order down the road if your bookkeeping has been sloppy from the outset.
Smart entrepreneurs often realize that the best time to get an accountant is before you truly need one. That gets your business off to a strong start. There’s also a powerful mentality in starting as you mean to go on. Thinking and acting like a larger business can smooth your path to becoming one.
Hiring an accountant at the very beginning could save you from chasing costly financial errors down the line. In a worst-case scenario, it could even save you from the punishing hands of the IRS if you’ve made mistakes in the early going.
2. You Lose Track of Money
Even a small business with manageable finances needs the help of a business accountant if it’s losing track of money.
We’re not all born accountants. In a small business, there’s a good chance you won’t have anyone with the skill set needed for effective accounting. The important part is acknowledging that weakness and dealing with it.
Your cash flow is the heart of everything you do as a business. Without a good understanding of your accounts, you’re making blind decisions. If you know your accounting skills are letting your business down, it’s time to hire an expert.
Losing track of your money leaves you vulnerable to huge risks. If you don’t know where that money’s going, it could be disappearing into dishonest pockets. You could even end up liable for missing funds if they’re going somewhere they shouldn’t.
3. You Lose Out to Taxes
Perhaps you know a little about accounting. But if you’re not a professional, then you don’t know what you don’t know.
Professionals in any field don’t simply have skills, they also have knowledge. In accounting, that knowledge could save you money come tax season.
Tax law is a complicated beast, full of caveats and loopholes. Without a business accounting background, you can’t hope to make full use of exemptions and deductions your business is entitled to.
This is money which could all funnel back into your business and improve your chances of long-term success. If you want to give yourself an extra financial edge, consider hiring an accountant to find out where you could save.
4. You Need to See Where You’re Going
A healthy business always knows where it’s going. But to form a plan, you need information.
Hiring an accountant can make charting your course easier. With a clearer picture of your finances, you can make realistic predictions for growth, seasonal revenue, and expenses.
The fewer variables involved in your strategy, the more likely it is to succeed. No business plan is water-tight, but a good gambler will tell you that life is about minimizing risk by controlling variables. Why leave your business plan to chance when you could hire an accountant to help you realize it?
5. Accounts Slowing You Down
Small businesses have a lot of plates to spin. Unlike larger businesses, they often don’t have the luxury of hiring expert departments to tackle every aspect of their operations.
This is why many small businesses struggle with finance, IT, and other business support systems. Yet any time you take away from your core business also limits your business growth.
If a small business isn’t careful, its daily administration can quickly cripple the operation.
Hiring an accountant hands one of these major support structures over to an expert. While you may have to pay more initially, you’ll soon make a return on that investment when you can dedicate more time to the business. Given their expertise, they’ll also complete the same task in a much shorter timeframe.
6. Avoiding Audits
If you’re taking your business accounts on without an accountant, you need to understand the risks.
Simple bookkeeping errors could draw the attention of the IRS. And if the audit hammer comes down, claiming ignorance won’t protect you from the damage it could cause.
Working with an accountant ensures your finances are audit-ready. Not only will you have more chance of surviving an audit, but you’re also less likely to face one in the first place. Given the stress and time involved in an audit, this could make a huge difference to your operations.
7. You’re Growing
When it has the right combination of luck and talented people, a small business won’t remain small. Yet that alone can be another hurdle for the business to overcome.
Growing brings growing pains with it. What worked for a small business won’t always work for a larger one. Accounting is one of those things.
Accounting becomes exponentially more complicated as a business grows. Even before you get there, it’s vital to maintain an understanding of your finances while you’re scaling up.
Hire an Accountant When The Time is Right
When the signs are clear, it’s time to hire an accountant for your business. There’s no overstating the importance of financial certainty to a small business, so failing to get control of your business finances could lead you to ruin. Work with a skilled accountant to keep your business healthy and growing.
Want to know more about managing your finances? Be sure to follow our blog.