Hiring an accountant for small businesses may help business owners with payroll matters, budget development, and keeping their finances in order, among myriad of other accounting & finance-related chores. Accountants also provide business consulting services, including financial planning & analysis. They also assist SMB owners with opening a business bank account and keeping all personal and business finance separate, especially for tax purposes.
In quite a few cases, SMB owners may have limited accounting and tax knowledge that can prove to be a hindrance in their business growth. In a research conducted by Letitia Meier Pleis, Metropolitan State University of Denver – Colorado, USA titled “A New Graduate Accounting Course for the Small Business Accountant”, 75% of new businesses fail within three years.
The leading causes of start-ups failing are related to accounting and tax issues. Often the entrepreneur has an exciting idea and focuses on the product or service, but has limited accounting and tax knowledge. Accountants can help SMB owners organize and manage company finances by expediting processes, such as managing payroll, recording transactions, following up on payables and receivables, making month-end and year-end closings, and generating performance reports Since accountants can interpret accounting records and financial reports, they can examine financial records, including key accounting ratios, and provide useful insights to business owners, helping them with making informed business decisions.
Similarly, an accountant can help an SMB’s owner by preparing a financial forecast and budget. Informed business decisions support businesses in gaining a competitive foothold.
Further, hiring an accountant may help SMB owners reduce unexpected expenses. A well-informed and competent accountant can provide SMB owners with a financial map, which helps them in implementing cost-effective business operations. Moreover, accountants may prevent SMB owners from making costly mistakes that can occur when SMB owners manage their own business accounting and end up making errors and losing track of financial transactions.
It can be taxing for SMB owners to keep track of credit card receipts when they are occupied with strategic decision-making for the business, customer relationship management, building referrals, and establishing brand loyalty, for example.
Finding the Right Accountant!
As elaborated earlier, accountants can provide valuable services to SMBs, which includes bookkeeping, budgeting & forecasting, FP&A, tax management, audit support, etc. They can also help SMBs in developing internal controls that can prevent and detect fraud and error.
However, finding the right accountant is important. But, when we say this, we need to know what it means. Accounting & finance is a vast field today with accountants specializing in a range of different and evolving roles. An accountant that a SMB needs is not necessarily the same as an accountant that a MNC needs. So, it is important to assess the required qualifications, skills and expertise of the accountant that a SMB plans to hire.
Best hiring practices suggest hiring an accountant who has experience in the same sector as your business; an accountant who knows your industry thoroughly can help you put together realistic financial projections, and give industry-specific advice.
Most importantly, your accountant should justify the salary. Expertise Accelerated provides trained remote accountants who are professional superior but come at just 40 percent of the US cost. Thus, US SMEs leveraging EA’s remote professional accountants get expertise along with 60 percent payroll savings.
How Accountants Help SMBs?
Inventory is the services or products that companies intend to sell to their customers. Accountants can help SMB owners identify where they are making the most profit in their business by helping them figure out the value and costs of their inventory. This is important for setting prices, getting insurance, budgeting, and working out taxes.
Accountants can help with payroll management, which includes calculating and paying salaries and incomes taxes on time, and maintaining a record of tax and salaries paid, and any deductions made thereon.
Accountants can help a SMB through budgeting and forecasting. This helps preemptively planning for expected market events that are due or in the process of unfolding and allocating and committing resources for such plans.
Research conducted by Associate Professor Eva Collins, Professor Stewart Lawrence, Professor Juliet Roper and Associate Professor Jarrod Haar from the Waikato Management School of the University of Waikato, titled “Sustainability and the role of the management accountant,” states “Our research has shown that companies need to have management accountants in strategy-setting roles to achieve the best sustainability outcomes.” Further, they may lack the accounting expertise required to manage their firm’s finances the right way.