Everyone knows they need an accountant, right? But not all business owners understand how their relationship with an accountant can change as their business grows. Today we want to talk about the key criteria business owners should be mindful of in terms of how their accounting should shift as their business scales.
ARE YOU JUST GETTING STARTED?
That’s no reason to opt out of accounting advice. First step guides like our Starter Kit will help you set a foundation for your business, including the most important things to pay attention to, steps you can take right now to avoid accounting and tax headaches down the line, and templates to help you get your feet wet on managing your business financial items.
HAS YOUR BUSINESS PIVOTED?
Crazy question these days (haven’t we all?) but the reality is, the accountant that got you here might not be able to take you to your next level, especially if the business you were running when you started with them isn’t the one you’re currently managing. This is especially true if you’ve changed from services to products (or vice versa) or shifted the industry you work in.
DO YOU HAVE MORE PEOPLE ON YOUR TEAM?
And even more important: has the way that you work with them changed? If you are moving from a team of contractors to a team of employees, you’ll want guidance and support around the categorization shift, payroll taxes, and how to budget from an increased expense that will ultimately affect your bottom line. Not to mention, if one of those paid employees is you, you’ll want to make sure that you’re accounting for it properly to avoid any tax time surprises?
IS YOUR REVENUE INCREASING?
Not only does increased revenue potentially mean a tax increase, you also may be due for a change in business entity. Often, financial milestones can mean the shift from sole proprietor to S-corp, or make you question whether you want to bring a partner on (or let one go). While an accountant shouldn’t be providing legal advice on how the change should be instituted, a good one should certainly be able to lay out the difference in tax burdens, and help you make a decision on which choice will help you most financially.
IS THE BUSINESS POISED FOR GROWTH?
It’s hard to make strategic decisions about how to grow a business without some support. Financially you may be aiming for a new revenue tier, but not be aware of how doing so could increase the expenses needed to achieve it. You want to be prepared not only for the changes that will bring, but also your ability to plan for it and manage cash flow effectively through the transition. The best way to do so is by hiring an expert to help you through it, and continue to act as a guide post as your business moves into a new arena of access and opportunity.
Having an accountant on your team looks different for everyone, but the goal of having ongoing financial and tax guidance should be near the top of your list. After all, what’s the point in striving to make money if you don’t feel confident that it is being tracked and managed appropriately? Get an expert on your team that can help you stay in your lane by focusing on the nitty gritty of your accounting life so that you don’t have to.