- Introduction
- Tax and accounting explained
- Reasons why your business needs tax and accounting services
- Why you need an accountant
- How to hire an accountant
Introduction
Accounting and tax services are essential to businesses, but many business owners fail to understand that a staggering 80% of U.S. businesses fail within their first 18 months. Basically, one of the major causes is result of poor financial management. Despite these consequences, many business owners still do it by themselves when it comes to managing their money. A recent report has it that 53% of small business owners don’t use an accountant at all. And even more shocking is that 27% of these owners simply make use of pen and paper to keep track of their business finances.
While we don’t want to conclude that these businesses are worse off for without accountant. We don’t want to underestimate the knowledge and experience an accountant can bring to the table. Many people don’t service their cars by themselves. Rather, they take it to a professional mechanic who will keep things running smoothly and spot out potential issues. Meaning that small businesses equally need the same attention from a professional as well.
Accountants work cover more than just tax filing. They will take a comprehensive assessment of your entire finances and then create a forecast. All these they will do to keep your business at a healthy, prosperous state. It always feel daunting to allow an outsider to have intimate details on how you run your business. Especially when you had trouble managing not only finances but your accounting and tax services as well. But to partner with an accountant will help you achieve your goals and equally set you up for long term success.
Tax and accounting services explained
Both accounting and tax services are essential to both small and large businesses. The services will help to keep your business on track in regard to different payments, financial development, business loan. As well as bookkeeping, and business expenses. Professionals will provide advice to small start-ups on the right investment and equally the best structure for their business in order to ensure financial stability. Thus, it is crucial for a business owner to know some outsourcing accounting and tax services for their business.
Types of accounting and tax services
- Public accounting
- Tax preparation
- Government accounting
- Tax planning
- Management accounting
- Tax problems
- Internal auditing
- Audit representation
- Bookkeeping
- Tax accounting
- Chartered accounting
- Forensic accounting
- Financial controller services
- Accounting audit
- Bank reconciliation
- Account payable
- Account receivable
- Payroll processing
Therefore, regardless of the type of accounting and tax services, all accountants will generally help in the assessment of a business finances. Bookkeeping, recording and analyzing all transactions of a business. The accounting and tax services might differ that depends on experience, business environment, and the management status. It’s thus crucial to know the appropriate kind of accounting and tax services that your business will require. You will equally seek professional help from specialized and professional accountants. Accounting and tax services need to comply with the laws and regulations of the corporation. As well as those of the federal, state and local government.
Reasons why your business needs tax and accounting services
Accounting and tax services are part of each and every successful business you know. Accounts do cater to all businesses that’s the reason why a business don’t exist or be able to function without the assistant of professional accountants. These professionals are known to play a very important role in tax preparation services, bookkeeping, auditing, and consultancy among other roles. Endeavor to carry out a research on accounting and tax services before you hire any professional.
Let’s now consider why you need accounting and tax services for your business:
To find the best business structure
Know that accounting is not all about you counting money as people do think. Trust me, it is much more than that. But with a professional accountant in your team, you are well equipped and knowledgeable to find the best business structure. Instances of business structures include the following: partnerships corporations, and LLC among many more.
Financial analysis
For your successful business, financial analysis is very important. You must have a successful business plan, making accounting very vital.
Advice on software to use
Your business do need accounting software in one way or another. Trust me! However, without the assistance of a professional accountant, you will end up landing a fake software for your business. This is the reason why you will need accountants to help with your accounting journey.
Tracking expenses
You need accounting and tax services to be able to track all your business expenses. During your business transactions, you might need to spend and equally earn. Without proper records, you will end up confusing your transactions.
Provide tax services
Your business need accounting and tax services to be able to calculate and prepare your tax returns. Therefore, you need a firm or an accountant to assist you with your company’s tax needs.
Because accounting and tax services are very important to your business, you will need some outsourcing firms to handle it at a very high level. Many businesses do adopt a method to hire a professional accounting firm to assist with the accounting of their business.
Let’s consider why you should prefer accounting firms:
For your accounting systems to be organized as well as automated
Days when businesses used to have big files and accounting books are long gone, trust me. These days, the internet has long replaced everything. All you just need now is to get yourself or business the most powerful accounting software to be able to get your accounts done. With these accounting firms, your business will have software and accounting technologies that are much more sophisticated and advanced.
For your business growth
We do know that the financial sector is a important sector of your business. If you need to grow your business more, then your finances must be involved. Without your business plan or proper records of your business, you may not have an idea of your company’s finances. Ignorance of where your business stands might hinder your business growth.
Saves your time plus money
To hire an accountant do take much time since a thorough deep search will be involved. Equally, you will have to spend too much money during the time of hiring and searching. To avoid this, to hire an accounting firm will not only save you the hustle of trying to look for a perfect accountant but it will equally save you money. These accounting firms make use of some accounting software that make their work easier for them.
Why you need an accountant
Make real-time decisions
When some accountants consult for business owners, they will often tell us that they wish they were able to easily calculate the potential consequences. As well as the implications of making a big office buying or hiring even more employees. To have an accountant as your own financial advisor will help you to budget and monitor cash flow on an effective steady basis. This will allow you to be able to navigate any hurdles that will occur in real time.
You need to take a collaborative approach with your accountant, this will allow you to make some key decisions together based on the latest data. And also take good advantage of a consultative relationship that will assist you make business decisions when you are expected to make them.
Avoid an audit
Another powerful and compelling reason why you need to hire an accountant is to be able to avoid the dreaded audit. Unfortunately, many people do think or see an accountant as someone who is there to fix these issues after they’ve long occurred. The most important thing to remember is that an audit will easily be avoided when you are able to get the guidance and counsel of an accountant year round.
However, know that there are many explanations as to why your business is to be audited. From too much mistakes on your tax forms, to you being too charitable, to do excessive write offs. So, think and see an accountant as a long term partner who will be investing in your business and will care to keep it fiscally sound.
Get all your deductions
During a very busy tax season, many business owners are always thinking about how they will be able to maximize on their deductions. However, towards the end of the year it will be too late to make any impact on that. An accountant will be able to support you just by identifying easily these potential deductions. Throughout the year, they will equally be able to advise you how to make good strategic decisions for year end deductions. Many business owners do forget to track down and equally account for items like out of pocket expenses, depreciation and home office space. Remember never you leave your money on the table!
Save your time and energy
Many entrepreneurs are thinking that a tight budget do mean they will not be able to afford hiring a good accountant. But when you think about how much time and effort you will be spending on trying to be the manager of your finances. Not mentioning the possible errors you will be incuring during your reporting, and related losses from your poor financial decisions. The benefits will certainly outweigh your cost.
As a good entrepreneur, your focus will be on running your business. To invest in a professional accountant and equally engage them as an ongoing strategic business advisor will be there to assist you in maintaining that focus. As well as simultaneously keep your business on track towards your business goals and visions.
Plan for the future
Finally, one of the greatest benefits of you hiring an accountant is to get advice on how you van plan for the future. Together, you will pull reports from past months and thoroughly examine the seasonality of your own business Doing this will help you to determine the best time to purchase inventory. And budget for your big ticket investments so that you will be able to stay competitive and viable. As a business owner, you will be most preoccupied with the day to day operations of how to run your business. However, an accountant will take a step back and take objective look at the big picture. To be able to find the best means to support the longevity of the business.
Your life as a business owner will be isolating, especially when you’re just left with a pile of receipts and invoices to go through. Every end of the month or probably at the year. Well, it doesn’t necessary have to be that way. As the saying always go, “Many hands do make light work,” and to collaborate with an accountant who has the skill. As well as the expertise to guide you through your business journey will be able to set you up for lasting success.
How to hire an accountant
The perfect way to find a good accountant is through a referral from your attorney, your banker or even a business colleague. You will equally check in with the Society of Certified Public Accountants in your state, which will make a referral for you. While accountants basically work for large corporations, CPAs (certified public accountants) usually work for both large and small businesses. Never ignore the importance of a CPA. The title is only awarded to people have gone through a two-day, nationally standardized test. Most states do require their CPAs to have at least a college degree or its equivalent. Several states equally require them to have post-graduate work.
Once you have compiled your list, it is veey important that you determine how much of the work your business will be doing. and how much will the accountant do. Your next step is for you to interview your referrals. For each, you need to plan on two meetings before you make your decision. One of the meeting should be at your site. While the other should then be at theirs. During these interviews, your major goal is for you to find out about three things: their services, personality and fees.
Services
Most accounting firms are offering tax and auditing services. But what do you off bookkeeping as well? Management consulting? Estate planning? Will the accountant be able to help you design and implement your financial information systems? A CPA might offer services that will include analyzing transactions for your loans and financing. As well as preparing, auditing, reviewing and compiling your financial statements. They help in managing your investments; and to represent you before tax authorities.
However, you should know that smaller accounting firms are completely a better bet for entrepreneurs, they will not be able to offer all these services. Make sure that the firm in question has what you are in need of. If they are not offering specialized services, they will have relationships with other firms to which they might refer you to. In addition to these services, be sure that the firm has experience with the kind of you business and your particular industry.
Personality
Find out if the accountant’s style is compatible with yours? Make sure that the people you are meeting are the same ones who will handle your business. At most accounting firms, some partners will just handle sales and new business. Then they will pass the actual account work on to others.
When you evaluate competency and compatibility, ask these candidates how they would be able to handle situations relevant to you. Realize, too, that to have an accountant who will take a different approach will be a perfect thing. Just make sure that the accountant won’t pressure you to do things you won’t be comfortable with.
Fees
Ask about this fees upfront. Many accounting firms will charge you by the hour with fees that will range from $100 to $275. However, others will work on a monthly retainer. You should get a range of quotes from different accountants. Equally try as much as possible to get an estimate of their total annual charges based on the services you will discuss with them.
Don’t make the mistake of basing your decision solely on cost. However, an accountant who will charge higher hourly rate will likely going to be more experienced. And able to work faster than a novice who will charge you less. Equally make sure to ask for references, specifically from clients in your own industry. Call them and find out how satisfied they are with the accountant’s services, fees and availability. Then decide your next point of action.
Make the most of the relationship
After you have made a choice, state clearly the terms of the agreement in a well documentated engagement letter. The document will give in detail the returns and statements that will be prepared and the fees to be charged. This will ensure that you and the accountant have the same understanding.
Most importantly, make sure to hold up your end of the agreement. Don’t give your accountant a shoebox packed with receipts. It’s will be a good idea to be meeting or at least be in communication with your accountant every month. Always review the financial statements and go over problems so you will know where your money is going.