Do I Need an Accountant for My Small Business?

Setting up and owning a small business is a huge milestone and one that can often seem never-ending. There are plenty of financial decisions to make, and one of them is whether you’re going to deal with all of the finances yourself or hire an accountant to help out. 

You might think that an accountant is just another expense when you’re supposed to be as frugal as you can, but that’s not always the case. A 2018 study conducted by the US Small Business Administration found that 82% of businesses that close within the first 18 months are due to cash flow problems. Cash flow issues often have to do with poor use of money rather than simply running out of it, which is why many actually have more success with accountants for small businesses. 

Keep reading to find out more!

What exactly is an accountant?

An accountant is someone who comes on board with your business to help ease some of the load and help you with everything, including your financial information, tax details, budgets, future planning, and more. They can also help analyse your finances, helping you find weak areas to work on in the future. Accountants can be incredibly helpful and beneficial in the long run for businesses of all sizes, but small business owners often think they can do all the work themselves. 

We have no doubt that some might be able to achieve this, but our point is that you don’t have to! A business owner will need to contend with their finances, and without a great plan for these, they’ll almost certainly fail within the first few years or months. So, you need a water-tight long-term roadmap to sustainable growth and any challenges that could arise going forward. That’s exactly what an accountant can help with, so you might find hiring one could help keep your business running throughout those turbulent first years. 

What can an accountant do for your small business? 

Small business accountants will offer various services depending on what you need, but there are some main things most deal with that can help you in multiple aspects of your business. Here are a few of the most common services that they’ll offer: 

Business planning 

A business plan is an essential tool that can streamline your everyday operations and daily business choices, helping you to see exactly what you’re dealing with. You can also use this to improve your chances of being accepted for a business loan if you need to apply for one. Being able to see your finances in one organised list offers an amazing opportunity to have everything laid out so there’s no confusion when you’re running your business. 

Financial software

Accountants use their own preferred software to manage your finances, some of which you might not have even heard of! These can often be used by anyone, but a simple knowledge of some of their functions often isn’t enough to offer you the maximum benefits. Hiring an accountant who knows the software in and out can help you get the most out of your finances, giving you a bigger picture of the future and helping you maximise your efforts. 

Business structuring

Small business accountants can also help you by offering you multiple options in terms of your structure. Most businesses might begin as sole traders, but this might not always be the best structure to continue with as your business continues to grow. There could be benefits to changing your business structure that you might not have known otherwise without an accountant offering you a second opinion. 

Cash flow advice

There’s so much to know about running a successful business, and half of that is knowing what to do with the money you make. Do you invest it back into your business or give yourself a salary? Should you be focusing on innovation or sticking with the services you currently offer? An accountant will be able to help you make these decisions on how to manage your cash flow so you don’t run into annoying issues such as bottlenecks. 

Final thoughts

When you’re running a small business where it’s just you on your team, such as freelancing, you probably won’t need an accountant to help manage your finances. However, when you’re looking to scale your business and take it to the next level, we highly recommend looking into small business accounting to help you manage your finances and plan for the future. Sure, you might be able to do it all yourself – but work smarter, not harder, we say!