Keeping on top of your small business finances can be complicated, so hiring an accountant can be the solution. Steve Ash, marketing communications writer at Xero Accounting Software, highlights 10 points when taking on an accountant is the right thing for your business.
This article is part of a series on small business accounts and finance issues published in association with Xero.
- You need advice to write a business plan: If you're writing your business plan an accountant can give you invaluable help. They can use accounting software to add financial projections and other reports to get a better handle on the numbers. This helps you create a business plan that's realistic, professional and more likely to succeed.
- You need advice about your company's legal structure: Businesses have many different types of legal structure. You could be a sole trader, limited company or even a limited liability partnership. An accountant will explain the business legal structures and will help you choose the right one.
- You need help with your finances: If you’re doing the accounting on your own, things can soon become complex. You might feel that you're losing control of your debtors and creditors, or that your own financial understanding is too limited. Hiring an accountant can get you back on track.
- You're ready to delegate: One of the best things about running your own business is the ability to be in control of every part of the operation. But as you grow and focus more on leading the business forward, the time will come to delegate more financial responsibility. Hiring an accountant to run some of the financial elements gives you more time at the helm of the business.
- You have to deal with the government: There is plenty of tax and regulatory paperwork that you need to fill out as your business expands. Dealing with government issues can be quite technical aspects of the running of the business can be daunting. Accountants can help you with more than just tax returns, though. They can help you keep on top of all your regulatory and compliance requirements.
- In case you're audited: Once your business gets to a certain size or turnover, you may need to be audited. An audit can be a stressful, time-consuming and expensive experience. If you haven’t already hired an accountant, this is the perfect time to get someone on board. They’ll give you advice on the auditing process and make sure you comply with tax and audit compliance laws.
- When you're applying for a business loan or overdraft: When banks lend money they like to know they’ll get it back. Lending to small businesses has dropped in most countries since the recession. An accountant can present numbers and projections to convince the bank you can repay the loan.
- When your company is growing: Sometimes your business grows at an unexpected rate. Having an accountant can help you deal with these growth transitions – things like taking on bigger office space or hiring employees etc. This leaves you free to look at the bigger growth picture.
- Before you take on a franchise: Buying a franchise can be an effective way to start up in business. You get to be the boss but with the franchise company supporting you with brand, marketing and sales. An accountant can help you check whether a franchise opportunity is worthwhile and what the potential fees, charges and income will be.
- Before you buy or sell a business: You don't have to start a new company to go into business; you can buy one that's already up and running. But before buying an existing business, you should talk to an accountant. They’ll look at the company's accounts to make sure everything looks shipshape.
If you've been running your business for years, it's unlikely you won’t have an accountant in place when you come to sell the business on. But if you don't already have one running your books, an accountant will help put your financial records in order and produce statements of accounts to show prospective buyers.