Accounting, taxes, and financial planning are tricky tasks to navigate, plain and simple. Thankfully, there are tools, like accounting software, you can use to streamline your responsibilities. But at some point, you might decide to hire an accountant for their professional guidance.
Not sure if it’s time to hire an accountant for small business?
Signs you may need to hire an accountant
You might not need to hire a full-time business accountant, but you may need an accountant’s services periodically or per project.
You’re a business owner, not an accountant. Getting expert advice from an accounting professional can help you check up on your business’s financial health.
Look out for these signs that you need to hire an accountant.
1. You’re starting a business
When you first open a business, you have to make a number of decisions. The choices you make at this stage shape the future of your company.
Hiring an accountant for their expert advice could help you see your best financial options. Not to mention, a professional could help you stay compliant with federal, state, and local regulations.
If you’re not sure how to start a business and don’t want to do it alone, you might turn to a small business accountant to:
- Help you choose your business structure (e.g., sole proprietorship, LLC, etc.)
- Follow government regulations for your structure
- Sign up for new employer accounts
- Provide different financing options
- Walk you through the process of setting up tax accounts
- Get business licenses and permits
Whether you need to obtain financing or not, you should also establish a formal business plan at the start of your entrepreneurial journey. A business plan includes financial reports and projections. An accountant can help you create, understand, and present your business’s financial figures.
2. Your business is growing
Did your sales explode overnight? Steadily rise? Either way, an accountant can help as you grow. A bigger business means more profits—and more spending. But if you fly too close to the sun, you could be hurting your business’s future.
An accountant has the expertise to project how successful your investments will be so you can confidently spend your revenue—without overspending. They can caution you about harmful business purchases and suggest smart investments.
Accountants play a leading role in year-end tax planning for business owners and can help you prevent overspending or under-spending. Their reports could prevent you from making a regrettable investment.
And if you’re experiencing business growth, you might need to update your business plan. A business plan is an ever-changing document that should evolve as your business does. You might talk with an accountant about making key business plan updates.
3. You don’t understand business taxes
Taxes can be confusing, especially if you’re filing your first small business tax return. Make a mistake, and you could wind up with IRS penalties. Not to mention, you could miss out on opportunities to lower your tax bill through tax deductions and credits.
Not sure where to start with your tax return? An accountant can help you make sense of it by:
- Letting you know which tax return form you need to file for your business structure
- Notifying you of filing deadlines
- Finding tax credits and deductions
- Helping you understand your accounting records
You may want to hire an accountant for taxes when you’re just starting your business (or at any stage in business ownership) to help ensure you fill out the forms correctly.
4. You need help with forms
When you’re a business owner with employees, there are a number of forms you need to file with federal, state, or local tax agencies in addition to your business tax return. You must file tax forms (e.g., Form 941) showing how much you paid employees and withheld in taxes.
To help you with this responsibility, you could also sign up for full-service payroll software. Full-service payroll files federal, state, and local payroll taxes on your behalf.
Did you take out a Paycheck Protection Program loan? An accountant can help you navigate the intricacies of applying for loan forgiveness on Form 3508.
5. You get audited
An audit can be a nerve-racking ordeal for business owners. During an audit, the IRS analyzes and exposes your financial history to find discrepancies.
Accountants can review your records and make sure they are accurate. They can reconcile accounts, check for missing information, and run reports to help you avoid tripping IRS audit triggers and keep your books up-to-date, clear, and accurate.
No telltale sign? It might be time, anyway
Sometimes, you don’t need a blaring sign to tell you it’s time to hire an accountant. If at any time you feel unsure about things in your business or want an expert’s opinion, you might consider talking with an accounting professional.
An accountant can help you save time, catch problems early on, and make sense of crucial business information.
How to find an accountant for small business
Ready to find an accountant for small business? First, you need to learn how to hire an accountant. You can:
- List out what you’re looking for in an accountant
- Look at directories for accounting companies
- Talk with accountants to learn about their expertise and pricing
You might reach out to accountants in your locality. Or, you can hire an accountant online, thanks to digital tools.
Follow these simple strategies to begin your search for a small business accountant.
1. Know what you need
Identifying your accounting needs is the first step to finding an accountant. What do you want the accountant to do for you?
Here are just a few tasks an accountant might complete:
- Record transactions
- Compile statements
- Review reports
- Prepare taxes
- Project growth
- Advise financial strategies
- Create a small business plan
- Research financing options
Some accountants will do bookkeeping while others focus on more complex tasks. If you record your transactions, you do not need an accountant working for you at all times. Instead, look for an accountant who will work with you periodically. If you do not want to do any of your accounting, you might opt to hire an in-house accountant.
2. Beginning your search: Where to look
Once you understand which tasks you need, you can begin your search. Look at directories for accounting companies and societies listed in your area. The American Institute of Certified Public Accountants (AICPA) also has a directory of CPAs.
Don’t limit yourself to online directories. One great way to find an accountant is through word of mouth.
Get referrals by talking with local small business owners. Your local chamber of commerce (or similar small business organizations) is a great source for recommendations. One of the notable chamber of commerce membership benefits is that local accountants (in addition to other local businesses) may partner with your chamber to offer discounted rates for their services.
Choosing an accountant: Questions to ask
You want to select the accountant you work with carefully. Narrow your search down to a few accountants and interview each. It’s crucial to meet your accountant face-to-face before hiring.
When you meet with accountants, discuss your business and your accounting needs. Let the accountant know what steps you have already taken with your accounting.
You will need to ask each accountant questions about their services. Here are some key questions to ask:
How often do you work with small businesses?
As a small business owner, you have unique accounting needs. You will want to work with an accountant who understands your specific requirements.
Ask about the accountant’s experience with your type of business structure. For example, if you are a sole proprietor, find out how much they have worked with sole proprietorships.
What kinds of accounting tasks can you help me with?
There are many types of accountants who have different specialties and training. Compare your needs to the accountant’s background and experience. Make sure you cover every task you expect the accountant to do.
How available will you be?
Consider flexibility when talking with the accountant. Find out if you will work directly with the accountant or if they have employees who will handle your books.
Also, ask if the accountant will come to your business location. You should know how quickly the accountant tends to respond to inquiries, too.
What are your fees and charges?
Accountants charge a wide range of prices. Find an accountant that fits into your business’s budget. Some accountants charge an hourly fee while others ask for a monthly retainer.
Get quotes before signing on with the accountant. Remember, cost is important, but don’t let it be the only factor when choosing your accountant.
Do you have any questions for me?
You want an accountant that will be engaged with your business. Ask if they have any questions about your business. If they answer “no,” it might be a red flag. You will get more value from an accountant who is involved with your company.
Finding your small business accountant
Whether you need an accountant for daily bookkeeping or occasional advice, finding the right one is essential for keeping your business healthy.
Take your time searching for an accountant who can provide all the services you need. Once you begin working with your accountant, they can act as a trusted adviser as you grow your company.
Software is a great tool for managing your books and working with a professional. Patriot’s accounting software makes it easy to keep your records up-to-date and pass them along to your accountant. We also offer free setup and USA-based support. Try it for free today!
This article has been updated from its original publication date of March 31, 2016.
This is not intended as legal advice; for more information, please click here.