Accountants can help out at various stages during the growth of your business. They can handle much more than just your payroll and tax returns. So when should you consider hiring an accountant for your small business? Perhaps you operate a secondhand clothing shop, or you’re a sales consultant who travels the world. Maybe you produce addicting video games for smartphones. No matter what your trade entails, being in business is challenging.
That’s why having a corporate accountant to lean on can mean the difference between long-term sustainability and bankruptcy. Here’s why you need the support of an accountant if you work for yourself.
There are good reasons for hiring an accountant at different stages of your company’s growth. From a business plan to company formation, loan application to tax audit, an accountant can make life easier for you at each step.
That doesn’t mean you always need to employ an accountant full-time or hire one on a retainer basis. Sometimes just a couple of hours of their time will be enough.
Like all small business owners who are looking to save money, you may think you can’t afford an accountant. But look at how long it would take you to do certain tasks (such as taxes), and ask yourself, is that a good use of your time?
For example, let’s say it takes you 10 hours to do your taxes, and your time is worth $100 an hour. That’s a cost of $1000 to do your taxes yourself. And there’s always the risk you’ve made errors – especially if you’re multi-tasking like most business owners.
However, if you get an accountant to take care of time-consuming tasks like taxes, it’s quite likely they will cost less per hour than you would pay yourself. You’ll not only have extra time to free you up to generate revenue, but you’ll have peace of mind that an expert is taking care of the details.
Most entrepreneurs aren’t CPAs
Statistics from the Small Business Administration estimate that there are about 30 million small businesses in the United States. The entrepreneurs behind these companies are experts at what they do, but most are not trained in accounting.
Because small business accounting is far more complex than filing a personal income tax return, it makes little to no sense to attempt to learn the mind-numbing minutia contained within the 70,000-page federal tax code. It’s better to let an experienced corporate accountant who is adept at handling clients in your specific industry take care of your filing and business structuring needs.
Your tax audit risk goes up when you’re in business
Owning a business and earning more income both come with a higher risk of getting one of those dreaded “audit” notices in the mail. Among all business owners, sole proprietors tend to get audited the most. If you maintain a formal business entity, such as an S corporation or LLC, you may reduce your chances of an audit, although it’s not a foolproof measure.
Either way, you don’t want to deal with an audit all by yourself, so this reason alone should be enough to convince you to use an accountant.
You can’t afford to miss out on critical tax savings
While having a business is a large financial burden, the IRS offers a nice selection of tax deductions and tax credits to hardworking business owners. It can be challenging to try to identify all of the tax breaks for which you qualify—and to determine which measures apply specifically to your industry.
That’s why having small business accounting support could help you save thousands of dollars each year, depending on the size of your business. Plus, you certainly don’t want to take a deduction you aren’t eligible for and then get in hot water with the IRS.
Tax fraud affects everyone, including business owners
Tax fraud is an increasingly prevalent problem today. Each year, scammers claim billions of dollars from innocent filers through tax refund schemes and other illegal tactics.
By using the services of an accountant, you can ensure that all of your business filings are handled properly and on time, which reduces your chances of being a tax fraud victim. In the event that something does happen, an accountant can assist you in working with the IRS and other authorities to help resolve the issue.
Building a sustainable business entails engaging the right professionals along the way. If you’re not a web designer, you wouldn’t be the best choice to design your e-commerce site. While there may be a place in your business for the occasional DIY solution, you’ll be well served by having an experienced accountant handle your business taxes.
