Does My Start-Up Business Need an Accountant?

For aspiring entrepreneurs, building a successful start-up is about efficiency and cost-effectiveness. Often, that means operating with a lean team and minimal overhead. It is a time for tough decisions, and when it comes to hiring, you will likely be asking, “Do I need an accountant for my startup business?”

The short answer is: probably.

From business planning to tax services, accountants are indispensable to most start-ups. This article will explore when hiring a professional accountant is essential and when you may be able to go without one. Read on to discover when and how accounting services can set your business up for success.

What Businesses Need Accountants?

While the advent of software and online platforms has made accounting more accessible than ever, even technically-savvy business owners may struggle to keep up with their accounting needs. Hiring an accountant is the only surefire way to ensure balanced books, financial compliance, and so much more.

With that said, there are a few circumstances where business owners might opt to go it alone and take on accounting responsibilities themselves. These occasions include:

• Part-time business – If your business is not your main source of income, you may be able to fulfill accounting duties yourself. Of course, if you have plans to grow your business into something more than a part-time hobby, it is worthwhile to consult with an accountant and preemptively plan for when scaling eventually demands the role.

• Freelancers or sole proprietorships – For single-individual businesses with a small roster of clients, accounting should not be too demanding. Keep track of your expenses, save your receipts, and ensure your records are up to date. You may still need an accountant during tax season, but hiring a full-time accountant could be avoidable.

Outside of these particular instances, hiring an accountant is strongly advised. Even if you are currently keeping up with the accounting duties at your start-up, the process will only become more demanding as your business grows.

What Business Services Do Accountants Provide to Start-Ups?

Before hiring an accountant, you are likely to weigh their employment costs against the services provided. The average hourly cost of an accountant ranges between $150 to $400, though you are likely to pay significantly less per position if you employ a full-service financial team.

The question is, what are you getting for your money?

Tax season is not the only time start-ups and small businesses can benefit from an accountant. Consider the following fields of expertise that accountants may assist with.

Business Planning

Business success is about careful planning, strategizing, and preparing for obstacles and opportunities. 

Accountants can help at all stages of business planning and may be particularly useful during the following processes:

• Initial financing – For many businesses, the key to early funding is through a well-researched and convincing business plan. Not only can a professional accountant aid in drafting your business plan, but they can also provide expertise during funding negotiations.

• Securing licenses – From business licenses to regulatory certifications, a skilled accountant can provide the requisite knowledge to ensure your business is operating within full compliance with local, state, and federal guidelines.

• Optimizing operation costs – The cost of hiring an accountant is often quickly offset by their financial advice and expertise because they will review your operations to identify unnecessary expenditures. Your accountant may even recommend additional revenue streams that you were previously unaware of.

Record-Keeping and Monitoring

For many start-ups, the monthly, weekly, and even daily needs of bookkeeping and financial monitoring necessitate a regular accountant—full-time or fractional. It requires more than once-in-a-while consultations to keep accurate records and the whole business running optimally.

Accountants may provide the following record-keeping services, including:

• Identifying discrepancies – Inventory numbers, expense reporting, and income discrepancies can occur anytime. Fortunately, with a competent accountant regularly checking your bookkeeping, you avoid costly and time-consuming errors.

• Solving payroll problems – Whether you are paying your employees weekly, biweekly, or monthly, payroll is a long-term expense for a business. An accountant can assist with any payroll problems and make sure payments are correct and arrive on time. 

• Implementing automation – From self-generating spreadsheets to complex data processing, automation can help sustain your business for years to come. Consider hiring an accountant with the technical expertise to bring your business into the 21st century. 

Taxes and Compliance

A regular account is crucial to avoiding the stress and strain of your yearly or quarterly filings. According to recent studies, 65 percent of businesses report using accountants for tax services. Besides preparing and filing your business taxes, your accountant may also bring their knowledge to tax issues such as:

• Auditing – Whether you are fighting a claim against the IRS or looking to possess an internal audit for financial reasons, a professional accountant is crucial. Without proper guidance, an audit can be a major hindrance for start-ups, limiting growth and deterring potential investors.

• Liabilities and deductions – Fulfilling tax obligations can quickly become complicated depending on the nature of your business, and these problems are not something any start-up wants. Various interstate liabilities and specialized deductions may not be immediately apparent to business owners. Accountants will see to any additional requirements (or benefits) based on your state of incorporation or tax structure.

• Restructuring – Accountants can examine your business structure and offer recommendations for restructuring that may significantly boost your bottom line. Restructuring is a natural part of a growing business, and an accountant can determine when it may be most appropriate for your start-up.

Business Benefits of Hiring an Accountant

The wide-reaching services of a professional accountant are more than a means of bringing you peace of mind.

Accountants can make a distinct and measurable impact on your business in the following ways:

• Increased growth – Combining flexibility and scalability, your accountant can pinpoint and formulate routes for expansion. Whether you are interested in dominating the local, national, or international market, there is always room to grow. An accountant can help you take bold steps forward. 

• Outside experience and insight – More than just financial experts, accountants are also trusted advisors. An experienced accountant can provide you with a unique perspective and business acumen to assist you when making important decisions or determining company policies.

• Financial protection – From audits to fraud, your start-up business may be vulnerable without an accounting professional. Unfortunately, with every contract, business partner, and client, there is the potential for underhanded business practices. An accountant may be your first defense against unprincipled behavior and financial risk.