You’re here because you’re wondering: At what point is it a good idea to hire an accountant for m y business? Let’s dive in.
How to find out if you need an accountant
If you’re a small business owner, then you might be wondering if you need a business accountant. In this article, we will outline 7 reasons you might need an accountant.
You have no accounting knowledge
Efficiently growing your business and minimizing your tax liability requires good accounting and tax knowledge. For example, a business owner must be able to prepare and read financial statements. Preparing these financial reports and tax documents does require a good grasp of accounting terminology and concepts.
Consider hiring an accountant to help you manage your taxes and bring you up to speed on this area of running a business. The earlier you get started the better. Filing individual tax returns as a business owner is a lot more complicated than it is as an employee, so working with an accountant can help you save both time and money.
You want to know what type of business to set up
Knowing what legal structure to set up as a small business is crucial.
For example, an LLC has a number of advantageous over a sole proprietorship or partnership but depending on your specific business goals a sole proprietorship might make more sense.
Consider talking to an accountant to understand the best option if you’re not familiar with the different legal structures available to you. A business accountant can handle all aspects of the incorporation process so that you are registered and taxed as an entity that will be most tax advantageous for you
You are short on time
Filing tax returns can be difficult, time consuming and tedious.
Hiring an accountant can be costly, but they can also find ways to legally save you money by accurately checking your tax credits and deductions.
Your business is growing fast
A bigger business means larger accounts and more business complexity.
As much as you would like to be involved in every part of your business. As your business grows, having the right tax strategy can make a substantial difference to your tax bill at the end of the year.
You are under a tax audit by tax authorities
Nothing strikes fear into a business owner more than the word “audit”. An audit just means that the IRS or State Department of Taxation wants to review your income tax return, either because of random selection, or because they believe there are inaccuracies in your return. Getting audited doesn’t mean you broke any tax laws, nor that there was an issue with your return. In most cases you won’t need a tax attorney, because a more reasonably priced accountant or enrolled agent can represent your interests effectively. An accountant will analyze your situation, identify possible outcomes and advise you on the best strategy to deal with the audit. An accountant can really help with the tax audit and streamline the process so you can save time and money by effectively handling the audit.
You need a business loan
Yes, you can get a loan without professional help but having an accountant prepare organized financial statements for lenders.
A good accountant can help you by persuading lenders, answering any pressing questions that the lenders may have and providing relevant information about the terms and conditions of your loan.
You are selling or buying a business
If you are buying a business, an accountant can help you spot potential red flags that you would have otherwise missed.
Accountants can also help you understand the true value of the business you’re buying so you get the best deal.
More importantly, if you’re selling a business that you have worked hard for, an accountant can help create the correct financial statements, tax documents and valuations that can be used as supplemental materials in the sale of the business.
How to find your accountant
The smartest way you can find an accountant is by asking for referrals. Start by looking at your network.
Is there a business owner in your network who is where you would like to be 10 years from now? Talk to them and ask for an introduction to their accountant provided you trust their opinion.
What to look for so you choose the perfect accountant
To set yourself up for success, consider meeting with potential candidates and finding out the answers to the following questions:
Do they work with companies similar to yours?
Consider asking for a list of companies that the accountant works with to get an idea of the types of clients. If they work with companies similar to yours, that’s a great sign.
Are they new to your industry or have they been working in it for years?
If the accountant has worked with companies similar to yours, then chances are they will understand the industry and the intricacies of your company.
What are their core offerings?
You should ask your accountant what services they provide. For example, Robert Hall & Associates can help you with:
- Individual Tax Preparation
- Corporate Tax Preparation
- Incorporating Services
- Financial Planning
- Accounting & Bookkeeping
- Estate Planning
- IRS Tax Audit Help
- & More
Can accountants help expand your business?
Whether you need a business loan or help with managing your taxes, an accountant can absolutely help you get to the next level by acquiring the financial resources to do so.
How will they communicate with you and how do they work?
It’s important to find an accountant that you can have a good working relationship with.
Are large firms going to assign a different accountant for each project or will you be able to work with the same accountant to build a long-term relationship?
Key takeaway
We highly recommending hiring a business accountant if your business is growing fast, you have limited accounting knowledge, you are short on time, you have limited tax code knowledge or if you are under audit by the IRS.
Speak to your network and look for referrals from those you trust so you can continue to grow your business by doing what you do best.
Are you looking for a reliable business accountant? As Enrolled Agents, our tax professionals are licensed to work in all 50 U.S. States, however, we specialize in providing knowledgeable tax preparation, planning and consulting to California businesses and residents within Los Angeles, Orange and Ventura Counties. Since 1971, the Enrolled Agents at Robert Hall & Associates have successfully provided their clients with professional tax advice that reduces liabilities and maximizes returns.
Our tax professionals provide Glendale, Burbank, Pasadena and cities throughout Los Angeles County, CA.
