In the early stages of a company’s lifecycle, the key members within the organization, particularly the owner, may have to wear several different hats. On any given day, you might play the role of CEO, secretary, salesman, accountant, or even intern… depending on what the business requires. 

While this juggling act may work initially, as the company scales, the trick becomes unsustainable. For instance, taxes and financial planning become exponentially nuanced and time-consuming, especially if you operate within an industry with stringent regulatory or compliance standards. 

To that end, every growing business reaches the stage where having an accountant becomes a matter of necessity. But how do you know when it is the right time to hire an accountant? By paying attention to the signs. 

 

#1 Bookkeeping Takes Up a Disproportionate Amount of Your Time

 

As a business owner, your time is limited. Eventually, you can no longer afford to be pulled in a million different directions. It becomes cost-prohibitive to be directing your energy on tasks that are not a good use for your skill set. And as the business grows in revenue, transactions become more complicated.  

Just consider all the tasks an accountant could handle that likely take up countless work hours each week, including:

• General ledger/chart of account maintenance
• Responsibility for daily transactions
• Financial statement preparation and analysis
• Cost accounting and variance analysis
• Treasury and cash management, including bank reconciliations
• Payroll and fixed asset accounting

If you lack the time or expertise needed to address these various accounting activities, it may be time to hire a professional. Because when it comes to business growth, economies of scale and specialization are paramount. 

At some point, you need the freedom to focus on growing the business. If you do not have it, you could pigeon hole the growth cycle of your venture. 

 

#2 Tax Season Is Too Much 

 

If you have previously received a large refund or you owe a significant amount in back taxes, these are red flags signaling that you are not handling your business taxes accurately.  

To that end, tax season can be one of the most stressful times of the year—even for the professionals who understand the intricacies and nuances of tax laws, requirements, and regulations. But when you are the person in charge of making sure that your financials are in order, you may feel entirely out of your depth. 

All it takes is a single mistake to land yourself in hot water with the IRS. Even innocent errors and oversights can result in an IRS penalty. Simply not understanding the rules could cause you to lose out on chances to reduce your tax liabilities via deductions or business credits. 

By hiring an accountant, you could have someone capable of:

• Tax planning
• Personal tax planning
• Compiling and submitting taxes
• Filing financial reports and paperwork to IRS
• Ensuring you maximize your deductions and credits

As Forbes notes: “Remember, you’re paying yourself for all those hours you spend recording, sorting, calculating, inputting, researching the latest changes in tax law, etc. Even if the accountant’s hourly rate is higher than yours, it takes the accountant significantly less time to complete the work, and they do it more accurately.”

 

#3 You Plan on Expanding Out of State 

 

As soon as your business leaves the auspices of its current state, there will be new rules and regulations regarding the company and its taxes. During this expansion, you’ll likely:

• Hire new employees
• Open a new location
• Do business across state lines

If so, an accountant can ensure that you are complying with the state’s income, sales, and payroll tax reporting rules. Additionally, they can review your paperwork and identify possible incentives you could have overseen. 

 

#4 For Unique Situations 

 

As your business matures, there may be times when you require the expertise of an accountant. There are three specific instances where hiring an accountant becomes necessary, including:

• During an audit – If you are being audited, you will need an accountant. Even if you receive a simple request from the IRS for more details regarding your tax returns, you should hire one. Accountants know how to interface with the IRS and ensure that you respond correctly to resolve the issue. If you handle it on your own and make a mistake, you could land yourself in hot water. 

• Unexpected circumstances – Sometimes, personal affairs can impact the future of your business. For instance, if a business partner were to leave or if the company is considered a marital asset in the case of a divorce, either could change a business’ course. An accountant can help advise proper actions about taxes, business structures, estimate the business value, or produce financial statements for the company’s sale.

• Taking out a business loan – An accountant can help you determine if taking out a loan aligns with your business plans. If so, they can recommend the best loan structure, size, and payment structure while preparing the necessary financial statements.   

 

#5 You Need Help with Financial Reporting 

 

Is your business at the stage where it is time to take on new investment? If so, your company’s financial records will play a vital role in the investor proposal and decision-making process. You need accurate reports for your P&L, balance sheet, and cash flow statements. 

An accountant can whip up those documents, ensuring that they are accurate and contain all of the necessary details. In doing so, you set your business up for success and increase the likelihood that outside investors would be willing to risk their money on your business. 

Also, once you do enlist investment, you will need to periodically compile financial statements and reports to share with your stakeholders.  

 

CFO Hub—Helping You Find the Accountant Your Company Needs

 

Is the writing on the wall? Has the time come to hire an accountant? 

If so, you don’t necessarily need to invest in a full-time, in-house accountant. Not when you could outsource the job to an expert who is just as capable and far more affordable. 

Enter CFO Hub, the outsourced accounting firm that’s upgrading businesses for the 21st century. With CFO Hub, you can hire the right accountant—one who has the industry experience and accounting skills that match your business’ specific needs. Whether you need a single accountant, an accounting team, a controller, or a part-time CFO, we’ve got the solutions your business needs to grow. 
Contact us today to see how we can help!