Do I Need an Accountant for My Small Business?

Do I need an accountant for my business? Read more.

To say that running a service business is a lot of work would be an understatement. You have jobs to finish, clients to manage, and employees or contractors to hire and train. Plus, you’re also in charge of overseeing all of your accounting tasks, like payroll, expense tracking, and tax filings.

With all of that on the go, managing your own books is a lot of work for one person. That’s why many small business owners outsource their accounting tasks to accounting professionals and bookkeepers.

Bookkeepers, Accountants, and CPAs: Know the Difference

You’ve probably heard the terms bookkeeper, accountant, and CPA used interchangeably, but they’re each a different type of professional.

Bookkeepers track when money comes into or leaves a company. For example, a bookkeeper tracks when a payment is made by a client and when the company owes or pays money to a supplier or employee.

Accountants provide similar services as bookkeepers, but typically hold a bachelor’s degree. Accountants offer more high-level and in-depth information about a company’s finances. For example, they help with tax planning and financial advice as well as create a report detailing financial projections for the year.

CPA is short for Certified Public Accountant. These professionals have to complete work experience and an exam to receive their certification and become state-licensed. CPAs are mostly employed by larger companies that sell shares on the stock market.

In most cases, your service business’s finances can be managed by a bookkeeper or an accountant.

READ MORE: The difference between bookkeeping and accounting

What can an accountant do for your company?

Accountants are capable of handling a variety of finance-related tasks. They often help small business owners to:

  • Maintain, monitor, and process monthly payroll and payroll taxes
  • Plan a budget and track expenses
  • Prepare tax returns and submit payments
  • Offer tax advice to improve your income tax return
  • Follow tax laws
  • Oversee and record financial transactions
  • Track invoices and manage your accounts receivable
  • Recommend accounting software
  • Create monthly profit and loss statements
  • Oversee and monitor your monthly and annual cash flow
  • Calculate and set aside sales taxes

A good accountant will help you to determine your business needs and provide you with the support you need to be successful. Not every service business will be in the same financial situation or have the same requirements. So, your accountant should tailor the services they provide based on your small business finances.

The cost for an accountant varies based on whether they’re a bookkeeper, accountant, or CPA, your location, and the tasks you need them to complete. It’s a good idea to do your research and get a few quotes based on your business needs before you choose one to work with.

Does a business have to have an accountant?

The short answer is no. You aren’t legally required to have an accountant unless your company needs an audit, which must be completed by a CPA.

However, if you don’t have a bookkeeper or accountant, you are responsible for handling your service business’s accounting tasks. This includes payroll, tax preparation, tracking expenses, monitoring profit and loss, and more. Most of this can be done using accounting software, but it helps to have an accountant or bookkeeper to oversee everything.

You might be wondering, “can I do small business accounting on my own if I don’t hire an accountant?”

Yes! Many small business owners start out by doing their own accounting and eventually hire a bookkeeper or accountant to take over after the business grows.

READ MORE: This business added $120K to their gross profit and modernized their accounting

When To Hire An Accountant

The more your service business grows, the more accounting tasks you’ll have on your plate. It may be time to outsource your accounting service if:

  • You don’t have time to manage your own books
  • You aren’t confident you know enough about tax compliance
  • You’re ready to start hiring employees or contractors
  • You want to move from a sole proprietorship to an LLC or other type of business
  • You need help managing your cash flow
  • You want someone to collect, analyze, and report your financial data
  • You want someone else to run your bookkeeping software

When and whether you choose to hire a bookkeeper or accountant is completely up to you. If you decide that you don’t need an accountant after all, be sure that important accounting details aren’t falling through the cracks.

Can I hire an accountant part-time?

You can hire an accountant to help with a specific one-off task, like evaluating your tax situation. But, you may find that you need a little more help.

In that case, you can hire an accountant part-time to manage payroll on an ongoing basis. If you have a lot of business accounting to take care of, it might be worth hiring a full-time accountant.

Small business accountants and bookkeepers are just like many other employees or contractors. You can choose to hire a contractor or an employee, and whether you need their services on a part- or full-time basis.

Should I outsource or hire an accountant?

Whether you hire an in-house accountant or outsource the work to a self-employed professional depends on your business needs and preferences.

If you have a significant amount of consistent, ongoing work, hiring an employee may make the most sense. If you have a variety of different accounting tasks and the amount of work varies throughout the year, outsourcing is likely your best bet.

Remember, you can always start out small and add more accounting work as you go. Just make sure that whoever you hire has experience with service business accounting—even better if they’re familiar with your specific industry.

Should I hire an accountant for my small business?

If you’re struggling to handle all of the accounting tasks for your service business, or you need help managing any in-depth financial analyses, it’s probably time for you to bring someone on to provide bookkeeping services.

From data entry and financial reports to spreadsheets and tax software, accountants offer many different skills and services and can make a positive impact on your business. Adding one to your list of contractors or employees comes has its perks, including:

  • Giving you more time to focus on other aspects of your business
  • Ensuring your payroll, taxes, and financial statements are clear, concise, and correct
  • Saving you money through tax deductions and write-offs
  • Helping you to make informed financial decisions
  • Working with your existing accounting software

Whether you hire an accountant depends on your accounting skills and experience and what stage your business is in. If you’re in the early days and don’t have much to manage, you can probably get away with handling your own books using accounting software, like Jobber’s Quickbooks integration.

But if you’re feeling overwhelmed and you want to hand off your accounting tasks to a seasoned professional, hiring a bookkeeper or accountant is a wise business move. As an added bonus, they’ll be able to work with any accounting software you used in the past, putting your hard work from previous years to good use.

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This post was originally published in December 2017. It was last updated in November 2021.

Tags: FINANCE
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