As a CPA, I am part of the lucky group of professionals who generally does not have to convince potential clients of my value. You know you need specific people on your team for your small business, and an accountant is one. But do you know why? Maybe not. Let’s go through four reasons you want someone to serve as your accountant or CFO (hint, it’s not just bookkeeping).
1. TO BE AN EXPERT. As beautifully put by The Finance Femme, “accounting is a profession, not a skill.” You probably got into business to do a lot of things but being your own accountant was probably not on the list. The ideal situation would be to have someone else know all of the ins and outs of accounting and tax to take care of it for you, as well as knowing details about new services and related tasks as your business grows (if you are hiring your first employee, DIY payroll taxes are not something you want to depend on Google and YouTube to prepare you for.) Hire someone to know that information for you, while keeping you in the loop so that you aren’t completely removed
2. TO HELP YOU UNDERSTAND WHAT YOU’RE LOOKING AT. Even the most basic accounting systems will generally give you some form of financial statements. And nearly every financial checklist will tell you to review them on a regular basis (at least monthly!) But do you understand them? Do you know what the categories mean for your business, and how new business will impact those line items? Many small business owner's don’t, and not knowing will impact your ability to sustain, grow, and scale your business.
3. TO HELP YOU FIGURE OUT WHERE YOU ARE (TO HELP YOU PREPARE FOR WHERE YOU’RE GOING). Little Fish specifically serves small businesses, but what if you don’t want to stay small? Well, you can’t grow if you don’t know where the business currently stands. For example, knowing whether you are pricing properly is partly dependent on knowing how much you spend to make your product or deliver your service. If you review your numbers, you may realize that based on the cost to produce, it may be worthwhile to consider whether a price increase is necessary for the health of the business. Conversely, if a price increase isn’t warranted, it may be time to consider whether this is a product or service you want to continue to offer, considering the low profit margin associated.
4. TO BE THERE BEYOND TAX SEASON. Tax preparers are awesome resources (hey, Little Fish does taxes too!) But all tax preparers are not accountants, and when you are not up against a tax deadline, you want to be able to reach out to someone with questions that may impact the next tax season. Are you capturing costs for all deductible expenses that are applicable to your business? Do you know what’s deductible and what’s not? Are you tracking everything properly according to the prescribed standards? If you aren’t prepared, it’s an uphill battle to estimate income / expenses or recreate documentation several months after the fact.
So there you have it. If you knew that you needed an accountant but not why, I hope this helps. Whether you prefer a consulting or ongoing relationship with your CPA of choice, make sure that you select a professional who can identify how they will meet these needs for you.
DISCLAIMER: I am an accountant, not your accountant. Please speak with a professional about your specific accounting and tax needs before putting any of the aforementioned tips into practice.