To understand just how important accounting can be to your start-up business, you have to understand how many small businesses go under every year because of financial struggles. According to the U.S. Small Business Association, the number of annual bankruptcies for small businesses has been skyrocketing since 2005. Over 60,000 companies declare bankruptcy each year, and about ten times more than that simply close their doors. Successfully managing your finances is the key to small business that you might not realize how badly you need. Innovation, marketing, and branding are the exciting parts of owning a company, but budgeting is the backbone. That’s why you need more than a bookkeeper – you need a real accountant as soon as possible. You might think you can’t afford one, but the reasons why you can’t afford to not have one could change your mind.
1. How much Capital do you Need?
That’s the question most entrepreneur’s ask themselves when they’re creating a new start-up business. Almost always, you wind up needing more money than you estimated, whether you procure it from loans, personal savings, or credit lines. Squandering your capital in a huge threat to businesses in their first year of life, and an accountant is there to make sure you understand cash flow and you’re not getting in over your head with costs. While accounting is usually separate from financial advising in large corporations, an individual accountant working for your business can be an essential person to go to for your financial outlook. They can help you figure out where to cut costs, how to manage inventory, and even choose the right bookkeeping software to keep track of your balances.
2. Preparing for Tax Season
While it’s a myth to believe that tax preparation is the only purpose of a small business accountant, it’s also important not to underestimate how vital small business tax deductions are. It’s difficult to juggle everything it takes to run a business and make preparations for the myriad of write-offs you’re entitled to as a business owner. An accountant will be able to organize receipts and records, educate you about deductions like entertainment, training, and professional software, and get you the most money on your taxes possible. The money you make on your tax return can often mean the difference between whether your business succeeds or fails, especially in the first year or two of its existence. Accountants will also make sure you’re up to date on the current tax laws and in compliance with government legislation, which can save you a lot of headaches in April.
3. Saving on Accountant Fees
You might be sold on all the things an accountant can do for you, but it still might seem like an extravagant reason to dip into your tight budget. If you’re thinking long term, it really isn’t. Smaller, independent firms or individual accountants can often save you money, but you should make sure you have researched their credentials and fully understand their pricing system upfront. Also, if you present your new accountant with organized books, they’ll have much less work to do, and that will save you money. Use them where it’s smart, such as involving them in big business decisions or financial deals. If you make the most out of their advice, you’ll soon feel like you are saving money instead of splurging.
Small business owners have a lot to worry about, and obscure regulations, unsolvable budget crunches, and financial pitfalls are some of the biggest obstacles. It’s okay to get help, and a reliable accountant equals some of the best help you are likely to find. When you’re trying to avoid closure and let your small business grow, an accountant’s services are not as optional as you may think. You can’t do it all, and being a great entrepreneur means knowing that.
Writer Brett Harris is an avid blogger. Interested in a career in accounting? You may consider best online accounting degree.